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Results from investing in just the S&P500

theleanist

Hi everyone,

I started investing using Degiro in 2017. I decided to only invest in the S&P500 (VUSA) and have been purchasing units fairly regularly since - Ive put in about €36k into S&P over the last four years.

So far ...the results have been really good, as outlined below.

The purpose of this thread is to give regular updates on (1) the performance of my first trade and (2) the value of my overall S&P500 investments.

Hopefully people find it an interesting thread to follow. For those interested I have a fuller breakdown of my workings with graphs etc on my website - I'll post links once I gain permission.

My first trade (Nov 21 update)

Purchased 26 units of the S&P for €40.685 in July 17
Current buy rate (as of 29.11.21) is €76.278
Works out as a 11.69% AER after tax
Best available regular saving rate available to me in July 17 was 1.5% AER after tax from the 10 Year National Solidarity Bond.

Overall value of S&P investments (Nov 21 update)

Amount invested since July 17: €36,864
Value before tax as of 29.11.21: €55,454
Value after tax: €47,832
Profit after tax: €10,968

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Comments

[Deleted User]

Don’t you have to remember each date of purchase and value on that given day to file your taxes on the 8th year? So multiple purchases more complicated? Maybe my understanding isn’t right yet!

jon1981

https://www.boards.ie/discussion/comment/118556815#Comment_118556815

The tax is no different whether you're dripping feeding it in or a lump sum, assuming you have actual gains. The benefitting of investing regularly is that you smooth out massive drops in the market by having readily available cash to take advantage of those very drops. You limit your downside exposure.

https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=1943bd1c7c50

[Deleted User]

https://www.boards.ie/discussion/comment/118556784#Comment_118556784

Just wondering can you explain why you think it’s better to invest regularly instead of once a year? Isn’t there tax implications? Trying to learn from the sidelines here thanks!

jon1981

https://www.boards.ie/discussion/comment/118533596#Comment_118533596

Good plan. Scaling into ETFs every 2-4 weeks is the best risk management approach vs dropping in a one off lump sum every year.

theleanist

Happy New Year everyone!

So…I'm sure January hasn’t been a good month for most investing here! Hopefully things settle soon in east Europe for everyone involved over there.

Just to recap

The purpose of this thread is to give regular updates on (1) the performance of my first trade and (2) the value of my overall S&P500 investments. I know the results are quiet small in comparison to some of the other figures posted elsewhere on the forum, especially on the Prize Bond thread. But, hopefully people find it an interesting thread to follow.

The performance of my first trade

I purchased 26 units of the S&P for €40.685 in July 17
The current buy rate as of 25.01.22 is €73.153
This works out as a 10.27% AER after tax
The best available regular saving rate available to me in July 17 was 1.5% AER after tax from the 10 Year National Solidarity Bond.
So, despite recent stock market drops, still far better results than if I had invested in a regular saver.

The value of my overall S&P500 investments

I purchased another 17 units of the S&P500 (VUSA) at a total price of €1,244 yesterday. This means, in total, I’ve invested €39,227 into the S&P500 (VUSA) since July 2017
The value before tax now stands at €55,480
The value after tax is €48,799
And the profit after tax is €9,571

My investment goal for 2022

I purchased almost €14K of the S&P in 2021. This was really good going, but was helped by Covid – I went nowhere so spent nothing! I don’t expect I’ll have such a frugal year in 2022. I do want to keep the momentum going however. My aim for 2022 is to purchase at least €12k of the S&P during the year.

massdebater

https://www.boards.ie/discussion/comment/118480113#Comment_118480113

That's interesting he's giving all his Berkshire shares to charities when he dies. That'll be a lot of shares to be sold then! Anyone know what % of berkshire Buffet owns?

theleanist

https://www.boards.ie/discussion/comment/118425631#Comment_118425631

Hi StupidLikeAFox, yes I considered a few options. When I started looking at the whole area of investing I hadn't a clue of index funds vs managed funds etc. I was thinking of picking individual stocks etc. But, after a bit of research I liked the strategy of just investing in index funds with the lowest fees. It was what I was most comfortable with, and seemed to provide a decent return from what I read. So, I decided to give it a go on that basis.

In terms of why S&P - It was actually something I read about Buffet and where he wanted his estate to be invested for his family after he dies. He had instructed his trustees to put 90% of his estate into a low cost S&P 500 index fund for his family after he dies.

"The 90/10 plan

Buffett's plan is about as simple as it gets. In his 2013 letter to Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) shareholders, he wrote that the instructions in his will state that the trustee is to invest 90% in a low-cost S&P 500 index fund, with the remaining 10% to be invested in short-term government bonds. (Note: all of Buffett's Berkshire shares will be distributed to charities.) "

Source: fool.com/investing/2019/09/08/warren-buffetts-investing-plan-for-his-family-why.aspx

Buffets reason why...

"I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers."

So, I thought if this is what Warren Buffet would choose for his family it would be a good place to start for mine!

TalleyRand83

Is there some merit in the etoro smart portfolios to avoid the tax hassle that ETF's bring (8 year deemed disposal)? I hope I'm correct about this.

I'm looking at the euro economy and Asian dragons smart portfolios as a wide reaching insta-diversication to go along with my own stock picks.

Something along the lines of allocating funds going forward:

50% My own pick portfolio (which is very heavily weighted towards US stocks)

30% Euro Economy

20% Asian Dragons portfolio

Pussyhands

https://www.boards.ie/discussion/comment/118425578#Comment_118425578

Apple will, as they say they will, be known as a health care company. You already see it in their ads. "X fell off his bike and was unconscious, Apple watch rang emergency services and gave coordinates.

notsocutehoor

I'd expect that Buffet's involvement at the moment is just a light hand on the tiller, his leaving/death will have an immediate negative impact on the share price (buying opportunity) but it will rebound quickly imo

StupidLikeAFox

OP, why did you go for S&P500? I know it's prob the most well known, but did you consider an all-world etf or diversifying a bit with an emerging markets etf?

Cyrus

https://www.boards.ie/discussion/comment/118424543#Comment_118424543

of course it matters what they do, yes Jobs was the main man, and they have prospered since he died, but that has been off the back of the products he introduced, people wont accept annual refreshes of the same devices forever, i hope they have something else to offer because if they dont it will be a similiar story to their demise a few decades back.

I am sure BRK.B will be left in very capable hands but you are naive if you don't think him dying will impact a) the share price in the short to medium term and b) the overall direction they take.

Pussyhands

https://www.boards.ie/discussion/comment/118424494#Comment_118424494

Doesn't really matter what Apple does. Steve Jobs was seen as the main man, who died prematurely in his prime. Buffet is 91, you're naive if you think BRK.B isn't going to be left in good hands.

Cyrus

https://www.boards.ie/discussion/comment/118423313#Comment_118423313

It'll be down longer than a day and I think long term apple may struggle , they haven't innovated since jobs passed away in my opinion and that will catch up eventually.

Geuze

https://www.boards.ie/discussion/comment/118422226#Comment_118422226

https://www.askaboutmoney.com/forums/exchange-traded-funds-etfs.105/

Plenty to read in AAM about ETFs.

Pussyhands

https://www.boards.ie/discussion/comment/118422613#Comment_118422613

Buffet dying may have an effect on the price on the day but it's not going to effect it after. The company is in safe hands. It's not like Buffet is managing Mr Beans.

Here's a snip from an article about Steve Jobs dying:

While the top executive’s health is an issue for investors in any company, at Apple the level of concern reaches fever pitch because Jobs has a hand in everything from ideas for new products to the way they’re marketed. Investors fear that without Jobs, Apple will not be able to sustain its growth of the last decade, which has seen Apple branch out from its Mac computers into the iPod and the iPhone.

So for Apple, Jobs was seen as one man involved in so much in one company. Yes stock was volatile for a time but look where it's grown since.

BRK.B is far more diversified in its businesses.

TalleyRand83

https://www.boards.ie/discussion/comment/118422613#Comment_118422613

Down

Kevhog1988

https://www.boards.ie/discussion/comment/118422499#Comment_118422499

Will that drive the price up or down?

Cyrus

https://www.boards.ie/discussion/comment/118422396#Comment_118422396

regardless, when he dies there will be a big sell off, perhaps (and most likely) it will be temporary.

mrcheez

I've invested in the NASDAQ (or at least a fund based around the top NASDAQ equities), but via a pension fund, so that might be a better alternative for long term investment with less tax penalties

Layne

https://www.boards.ie/discussion/comment/118422226#Comment_118422226

Your comments on Berkshire Hathaway about the age of Buffett and Munger is very valid. I wonder how much actual micro managing do they do on the fund on a daily basis at this stage. Maybe, the investment strategy of the fund would simply continue if they were borh to retire tomorrow??

Layne

https://www.boards.ie/discussion/comment/118422226#Comment_118422226

There is a simple explanation of tax treatment of ETFs here:

https://www.moneyguideireland.com/buying-exchange-traded-funds-etfs-in-ireland.html

Basically from how I understand it an ETF can be sold at any time with 41% paid on any gains. However, if after 8 years you have not sold, you must pay 41% of any gains on the 8th anniversary of purchase. This deemed disposal has to be paid regardless of whether you intend selling on 8th anniversary or not. Any sale after the 8th anniversary will be liable for 41% tax on profit minus any tax paid on the 8th anniversary.

Because of this investors tend to make 3 or 4 purchases per annum as opposed to monthly purchases purely to make the deemed disposal process simpler (only have to make 3 or 4 tax calculations as opposed to 12 for the year 8 of ETF).

OP has explained his strategy on this very well earlier in the thread, selling on 8th anniversary of each purchase and then reninvesting that amount for another 8 years.

Not very complicated but time consuming all the same.

[Deleted User]

https://www.boards.ie/discussion/comment/118422211#Comment_118422211

Could you explain the logic behind the 8 year tax point? I'm not sure I fully understand that tax. My plan is to buy a monthly installment, basically a chunk of my current monthly savings allocation. If you could explain how the tax works (or provide a link to an article or video) I'd be very grateful.

I actually asked about the Berkshire strategy here before and the consensus was that while it was certainly more tax efficient, the ages of Buffet, et al, meant that it might not be a solid long term plan.

Layne

https://www.boards.ie/discussion/comment/118422114#Comment_118422114

I am in the process of setting up something similar. Great minds think alike.....I hope!!

I'm on Trading 212 and Vanguard S&P 500 ETF is there (VUSA). Hoping to throw in set amount every few months (fewer buys will mean keeping tax payment manageable after the 8 year deemed disposal).

My only quandry is going with this ETF or the Berkshire Hathaway (BRK.B) stock which has done very well historically versus the S&P 500. Reading online many investors opt for this instead as their steady investment because it is easier to manage in that it is a stock and not an ETF. Also the tax payable is 33% vs the 41% for the ETF. Not sure if anybody on here has any views on this??

[Deleted User]

https://www.boards.ie/discussion/comment/118421367#Comment_118421367

I'm about to begin a long term plan of S&P ETF investing but I'm at a loss as to what platform I should use. I have an account with 212 so I'll probably just use that? 🤷‍♂️

TalleyRand83

https://www.boards.ie/discussion/comment/118421119#Comment_118421119

Are Revolut and T212 similar? I've had a slight concern that I'm very exposed to revolut (probably silly but my preferred stock buying app!)

Trying to avoid revolut for new positions but with regular topping up of revolut I now have 54k euro in it and growing

garbanzo

https://www.boards.ie/discussion/comment/118401825#Comment_118401825

Answer is below from their site.

Investor Compensation Scheme & Deposit Guarantee Scheme

DEGIRO clients' assets are segregated in separate entities and thus protected against the insolvency of DEGIRO. In the unlikely event that the segregated assets cannot be returned to clients, DEGIRO falls under the German Investor Compensation Scheme, which compensates any losses from non-returned assets up to 90% (with a maximum of EUR 20,000).

Furthermore, any money deposited on a DEGIRO Cash Account with flatexDEGIRO Bank AG will be guaranteed up to an amount of EUR 100,000 under the German Deposit Guarantee Scheme

Information about the German Investor Protection Scheme and the German Deposit Guarantee Scheme can be found in English on the BaFin website here.

enfant terrible

https://www.boards.ie/discussion/comment/118399095#Comment_118399095

Am I right in saying as an Irish person, I can not setup my own pension along with employer contributions(with all the tax benefits) and just invest it in the S&P500?

Thus avoiding pension fees and charges.

theleanist

https://www.boards.ie/discussion/comment/118401459#Comment_118401459

Hi Garbanzo!

Thanks for the comment!

That is true and it has crossed my mind a number of times. It may be something I consider this year. Spreading my risk in terms of brokers by using someone beside Degiro.

I did look into this previously, but i cant remember the details now in terms of what happens if Degiro go bust. Someone else may know or I'm sure its covered in the main Degiro thread.

Glad you took something from the post and thanks for commenting.

theleanist

https://www.boards.ie/discussion/comment/118399095#Comment_118399095

Hi Jim,

I think it's an interesting follow, but suppose I'm biased! I'm taking it from the point of view of someone who back in 2017 had no knowledge of investing. I searched through this and other boards, and found the whole area very confusing. For years I thought about giving stocks and shares a try, but was too worried about the risk and tax implications. So, I stuck with just putting money into the best savers available.

Agree with you that most experienced investors here will beat my returns. I'm in the bracket that you outline above, I "lack the skills and mentality to successfully execute such a strategy over say a 20 to 30 career".

Thanks for the comment, and as I said to Fritzelly, I hope you continue to follow along!