So a Memestock was my first Stock. What Now?

Robson99 wrote: »

Thanks for the heads up. Doing a bit if research here into the INV Trusts.

This website seems useful as a starting position (if you haven't already seen it) https://www.itinvestor.co.uk/

Black_Knight wrote: »

Is there a joint assessment CGT credit of €2540? Or do shares need to be jointly owned to qualify for it?

My understanding (*not a tax expert klaxon*) is that the €1270 is a personal exemption and cannot be transferred.

However, if your spouse has eligible CGT losses (after offsetting against her own gains, if any) you can offset them against a gain you make yourself.

I am not married so I have not looked into this in any great detail.

For those concerned about broker long term safety/viability, I found this article useful:

https://www.bankeronwheels.com/how-to-choose-a-safe-stock-broker/



Interactive Brokers seem to be the most secure, largely because they are the largest and most transparent, due to the fact that they are publicly traded and agency rated (the thinking being that public scrutiny should keep stuff safe/flag issues - in theory). So I think a monetarily small portfolio (under 20k, the amount covered by the Investment Compensation Scheme) with Trading212 is ok (stocks ultimately held with Interactive Brokers, but conceivably T212 could mess up something) with larger sums done directly with IB makes sense.

Lamar Thoughtless Napkin wrote: »

Opened an account with Interactive Brokers today, seemed very painless, ID etc. approved in minutes. Transferred a grand in to get started (from Revolut) which may take a couple of days to reach my IB account.

Soured on Trading212, just taking too long to open to new members (guaranteed they will start accepting new members any second now!) and when I considered their FX fees, and lodgement fees (from a Card) as well as other factors discussed previously (share lending etc.) I decided to just bite the bullet and go with IB. I will let people know how I get on, it seems very good so far, oodles of information. There is an online portal for simple trades (will use this most often I'd say) and there is also a "workstation" that you download, this seems very complicated and something like you see day-traders use. There is also a mobile app (not used yet).

You can also log into a "virtual" account and use that to mess around.

With the tiered pricing it is not that expensive, and for my uses cheaper than DEGIRO would be (if it had the trusts I wanted!).

Money hit my IB account first thing this morning. Very impressed with IB, took less than 24hours to get approved, set up and funded.

One thing to be careful of is that by default the pricing structure seems to default to "fixed" rather than the cheaper, for my uses (and most people I would think) tiered pricing plan. Having changed to tiered in the account settings, this will not take effect until the next working day, so no stock buying for me today!

They offer a virtual "paper" facility so I will play around with that. Have been looking at the Trader Workstation, it is actually easy enough to use, I will have no need for 90% of the functionality of it, but it does seem more stable than the web based client (although that could be my browser).

Supercell wrote: »

Looking at IB myself to consolidate my accounts, am currently on both Degiro and T212 and have particular things I don't like about both.

So for an individual tiered account you are looking at $10 per month minus commission fees which i assume is another word for transaction fees (hopefully correctly) which are €1.25 to €29 (0.05%) , do you pay anything else?, is the UK and US market pricing data real time or delayed, also do they do year end tax statements for CGT?

It is delayed, 15 mins I believe. You can subscribe to live data (which seems expensive) or you can "pay as you go" for a snapshot of data for a trade.

For my uses (buying to hold) I don't see why I wouldn't use a free live service like Yahoo or something, to get the figures to inform my purchase and tailor it accordingly - so I have not looked properly at the exact costs of live data and snapshots.

As for reports, there is a whole section where it seems you can generate pretty much any report you can think of. Once I have purchased some shares I will play around with it and let you know what I think, although I will maintain a spreadsheet I have designed for these records. I would be amazed if the report functionality on IB would not suffice by itself for what you want, I just like to have manual backups myself.

As for costs, my understanding is that the $10 (USD this is important) is the headline monthly charge, and that commissions are offset against this. So for example, a UK purchase for me will cost 0.050%, with a minimum of GBP 1.00 (Around €1.20 today, or around $1.40, which will be offset against the monthly $10.00). So my understanding is that if I make a few trades a month the $10.00 will be absorbed. When I have over 100K (ha!!) the $10.00 is waived (it appears to be waived for the first three calendar months). Important to note that if your account balance is under 2k the charge is $20.00 a month. (So I have three months to reach 2k overall which should be easily doable with my planned "top ups", provided everything doesn't go to hell!)

As for other charges (will leave aside "optional" ones like live data) and stuff that there may be for margin, option type things (which I have no interest in) there do not seem to be many:

1. Withdrawal Fees: You get one free one per calendar month, any more than that and there is a fee which varies depending on currency and how you want to receive the money.

2. Archived Statements: There is a charge for these (for ones that are not available through your account. You account goes back 4 years for daily statements, and 5 for annual. Should not be an issue, just print them off yearly).

3. FX fees. I am not exactly sure how this works yet, everywhere says some variation of "very good/low". My base currency is in Euro, most of my trading will be in GBP. I lodged 1k in Euro from Revolut, I will see how the fees work out to convert. If there are in any way substantial I will see if I can preconvert to GBP in Revolut and lodge in pounds to IB and see what happens. It appears the costs for spot currency changes are as follows: 0.20 basis point * trade value, with a minimum of 2.00 USD. I think this charge is also offset against the $10.00 a month, but am not sure, will see in practice. I think DEGIRO charge spot rate plus 0.1% and T212 0.15%

I believe a basis point is 1/100th of 1%.

So IB may be cheaper to exchange, especially if it is a larger sum? Does that sound right? Anyway for IB it looks like around €2 to change €1k to GPB, at what seems a great rate, no idea if that is good or not!

Next week I will see if I can lodge directly in GBP, or some USD, and see if it auto converts to my accounts base currency (Euro) or just arrives as I sent it, thus avoiding any fee.

Hope this was helpful!

Investment Trusts

Some have found what I have posted previously a help, so I thought I would elaborate more on the subject of Investment Trusts, the ones I have picked, and why. Again the caveat that while I have done some research, I am very much a newbie at this, don't take anything I say, especially opinion, as gospel. I am just saying what I am doing, and why. Ask me in ten years if I was more right than wrong!

The "safest" way for lay people to invest may be in funds/ETFs. These are basically instruments that track an index. So for example you might invest in one which tracks the S&P500 (The biggest American companies, as an EU citizen you can't really invest in this but anyway) so as the market goes up or down so does your ETF. You can just buy it and leave it to do its business, you don't need to keep an eye on things the way you would if you invested in a particular company. However there is a major problem with this strategy, namely the Irish tax laws, specifically "deemed disposal". Basically, every 8 years you have to pay a tax of 41% on any growth/profits and the same rate on exit.

This tax rate is pretty crippling, and certainly damages compounding.

Investment Trusts are the next best thing (and better in some ways). Basically, Investment Trusts are closed end funds, sort of holding companies that are actively managed by a board etc. There are lots of different types with different priorities and philosophies. The manager, depending on the rules of the Trust, can invest in a whole range of things, from shareholdings in particular stocks to bonds, commodities, cash, real estate etc. Most will either use or have the option of using "gearing" (borrowing/leverage). These ITs often have a base index they aim to "beat", which many ITs have a great record of doing. If your IT manager is good/lucky you can make very good gains above what you might in a comparable index, obviously the opposite applies too. Many pay good dividends. The downside is that the company charge a higher fee (usually) from the assets under control than happens with open ended funds/ETFs, but this would seem to me to be a small quibble, especially as IT's are treated, tax wise, the exact same as regular stocks. That is, you pay income tax as normal on dividends and the normal Capital Gains Tax when you sell. This is a massive advantage in two ways: CGT is 33% (less than for an ETF) and if you make a loss you can carry it forward and offset it against any future Capital Gain you may have. You cannot do this if you make a loss on an ETF.

I have checked the tax status of IT's in some detail. Revenue have never said that they should be treated the same as regular stocks. In practice they are. In theory, Revenue could change the rules and say they should be subject to deemed disposal, but this is very unlikely for two reasons: The first is that tax is being paid on an ongoing basis on any dividends. Secondly, is the way in which the IT's trade, they are subject to a premium or discount.

Premium and Discount

This is a very important factor to be aware of. IT's have a Net Asset Value (NAV) which is the real world value of their holdings. So lets say an IT owns only ten stocks, the entire value of which on the open market is £1,000,000. The value of the IT share that you buy on the stock market is not necessarily reflective of that value. Lets say it has ten shares, you would think that the value of the share would be £100,000. But not necessarily. The shares of the IT can trade at a premium or a discount to the NAV. So in our example the shares might trade at £90,000 or £110,000 giving it a discount/premium to NAV of -/+ 10%.

This means there is a great opportunity to essentially pick up shares for less than they are worth now and money can be made if the discount to NAV narrows, even if the underlying value of the shares the IT holds stay the same. You could also "overpay" by buying at a premium. You might think this sounds straightforward, and you should just buy whatever has the biggest discount and don't buy anything at a premium. No, not so fast, you need to investigate. There are often very good reasons for there to be a discount or premium. The NAV is not static, and can go down as well as up.

That said, sometimes discounts are caused by market panic over short term issues, so you can pick bargains up here.

There is also great opportunity (which appeals to me) to pick up particularly good bargains by buying Value orientated IT's at a discount to NAV. In theory, if I buy one of these at a discount, I am buying a company that has made investments that it felt were at a "discount" to their real worth, so I am getting a "double discount" which could give me great returns.

Some ITs try to make sure there is no or a very small premium or discount to NAV. They do this by issuing more shares when there is a premium, and buying shares back when there is a discount.

On the subject of investing styles (lots of variations I am being simplistic here):

Value Investing: Investors with this philosophy (put simply and in general) basically try and figure out the intrinsic value of a stock, and buy it if the market price is significantly below what the investor thinks the Intrinsic Value is. This Intrinsic Value calculation is usually based on fundamentals of a company, incorporating discounted cash flows. The idea is that the rest of the market will eventually figure out that the company is worth more than it is trading at, and the price will increase. This is the old-school approach to investing, the type of which Warren Buffet and co have famously used.

Growth Investing: This is basically investing in companies (often new or small) that have great potential to grow rapidly. TESLA and new tech companies I suppose are examples of this where loads of people have made massive amounts of money. This is the style of investing that has been the most successful in recent years (by a good margin).

Portfolio Picks and Rationale

I have tried to put together a balanced portfolio, in terms of geography, philosophy and investment areas/types. Some might find it helpful to put up a little more about the ITs I have picked, and why.

1. CGT
Capital Gearing Trust defines its objective as follows:
To preserve the real wealth of shareholders and to achieve absolute total return over the medium to longer term through investment in quoted closed-ended funds and other collective investment vehicles, bonds, commodities and cash.

Basically, I picked this as CGT has very low volatility, and weathers storms pretty well. This is a defensive investment which while it won't achieve massive growth, should the market go south it should protect my investment better than most. I am classifying this as "low risk" as per my risk appetite. Currently trading at a typical small premium and produces a dividend yield of 0.54.

2. RICA
Ruffer Investment Company defines its objectives as follows:
The principal objective of the Company is to achieve a positive total annual return, after all expenses, of at least twice the Bank of England Bank Rate by investing predominantly in internationally listed or quoted equities or equity related securities (including convertibles) or bonds which are issued by corporate issuers, supranationals or government organisations.

Another defensive pick, but a little different. This has somewhat of a Value tilt, and, amazingly, actually increased in value in March of 2020 when everything else was collapsing. Again the aim here for me is modest growth in good times, and protection of my investment in bad. Another "low risk". Currently trading at a premium of around 4% and produces a dividend yield of 0.66.

3. TMPL
Temple Bar Investment Trust defines its objectives as follows:
To provide growth in income and capital to achieve a long term total return greater than the benchmark FTSE All-Share Index, through investment primarily in UK securities. The Company's policy is to invest in a broad spread of securities with typically the majority of the portfolio selected from the constituents of the FTSE 350 Index.

I went back and forth on this one. It preformed horrendously during Covid, but since the company replaced its manager it has rebounded very well. This is a committed Value style trust, concentrating on the UK. I think the UK is very undervalued at the moment and there are great opportunities over the long term. I have included this as Value style trust, and for UK exposure. It is currently trading at a small discount of around 2% (it was 15 not too long ago!) and produces a dividend yield of 3.35.

4. AGT
AVI Global Trust defines its objectives as follows:
Established in 1889, the Company’s investment objective is to achieve capital growth through a focused portfolio of investments, particularly in companies whose shares stand at a discount to estimated underlying net asset value.
Unique
A concentrated portfolio combination of family-controlled holding companies, closed-end funds and asset-backed opportunities, unlikely to be found in other funds or indices.
Diversified
A concentrated portfolio of high conviction ideas, yet with broad diversification to sectors and companies through the holding structures of the portfolio companies.
Engaged
Seeking out good quality companies and engaging to improve shareholder value.
Active
Finding complex, inefficient, and overlooked investment opportunities.
Global
Bottom-up stock picking that is benchmark agnostic – seeking the best equity opportunities across the globe.

This is a bit of a different one. It is a Value style, that has a good amount invested in family holding companies. Potential for a very diversified investment here, with a substantial "double discount" as AGT is trading at a current discount of 9%. Current dividend yield is 1.8.

5. MNKS
Monks Investment Trust defines its objectives as follows:
The Trust aims for long-term capital growth which takes priority over income. This is pursued through applying a patient approach to investment, principally from a differentiated, actively managed global equity portfolio containing a diversified range of growth stocks – companies with above average earnings growth – which we expect to hold for around five years on average. Investments are made on an unconstrained basis. The portfolio, which includes stocks with a range of different growth profiles, will typically contain 100+ stocks from around the world and Monks should not be viewed as a proxy for any index.

Went back and forth over whether to pick this or its stablemate Scottish Mortgage (SMT). Both are Growth style, SMT has better historic performance (although MNKS is no slouch). What settled it is that too much of SMT is unlisted investments, and it is too top heavy in stocks like Tesla. MNKS is a bit of a watered down version of SMT with less volatility. I included MNKS in my portfolio as a Growth style investment, riskier but may provide higher returns than others in my portfolio. Currently trading at a small premium of around 2% and has a dividend yield of 0.18.

6. JMG
JPMorgan Emerging Markets IT defines its objectives as:
This Company aims to maximise total returns from Emerging Markets and provides investors with a diversified portfolio of shares in companies which the manager believe offer the most attractive opportunities for growth. The Company can hold up to 10% cash or utilise gearing of up to 20% of net assets where appropriate.

Another growth style, this time with focus on China and emerging markets which I wanted exposure to. Higher risk than some others, but could provide handsome returns. Has a current dividend yield of 1.07.

7. PCT
Polar Capital Technology Trust defines its objectives as:
Polar Capital Technology Trust plc provides investors with access to the potential of companies in the global technology sector. Managed by a team of dedicated technology specialists, PCT has grown to become a leading European investor with a multi-cycle track record – a result of the managers’ approach to investing, with the ability to spot developing technology trends early on and to invest in those companies best placed to exploit them.

Another Growth IT, it has provided amazing returns over the past few years. Included this as I wanted dedicated Tech exposure. Went back and forth on PCT vs ATT but because PCT is more geographically diversified and trading at a discount of around 8% below NAV I decided on PCT. A riskier investment, but should tech continue to boom it could continue to provide fantastic returns. Provides zero dividend.

8. BRK.B
About:
Berkshire Hathaway, Inc. engages in the provision of property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, and retailing services. It operates through following segments: GEICO, Berkshire Hathaway Reinsurance Group, Berkshire Hathaway Primary Group, Burlington Northern Santa Fe, LLC (BNSF), Berkshire Hathaway Energy, McLane Company, Manufacturing, and Service and Retailing. The GEICO segment involves in underwriting private passenger automobile insurance mainly by direct response methods. The Berkshire Hathaway Reinsurance Group segment consists of underwriting excess-of-loss and quota-share and facultative reinsurance worldwide. The Berkshire Hathaway Primary Group segment comprises of underwriting multiple lines of property and casualty insurance policies for primarily commercial accounts. The BNSF segment operates railroad systems in North America. The Berkshire Hathaway Energy segments deals with regulated electric and gas utility, including power generation and distribution activities, and real estate brokerage activities. The McLane Company segment offers wholesale distribution of groceries and non-food items. The Manufacturing segment includes industrial and end-user products, building products, and apparel. The Service and Retailing segment provides fractional aircraft ownership programs, aviation pilot training, electronic components distribution, and various retailing businesses, including automobile dealerships, and trailer and furniture leasing. The company was founded by Oliver Chace in 1839 and is headquartered in Omaha, NE.

This is not an Investment Trust. Berkshire should need little introduction, it is Warren Buffet's holding company. As detailed above it directly owns some amazing companies, and also holds stocks of a number of others. I included this for more concentrated exposure on US companies, with a Value style. It has huge cash reserves which is attractive too. Currently I think it is a bit undervalued, evidenced not least by continuing massive buybacks. Over the long term I hope it will continue to deliver modest to decent returns, and be less volatile than some, particularly in a bear market. It provides no dividend.

Obviously anyone thinking of investing in these should do their own research. I found the annual reports, and videos of annual briefings really helpful, as well as a few podcasts with interviews of the relevant investment managers.

Regarding my portfolio, I may add positions in certain individual companies, or add more ITs over time (particularly in specialist areas) but I see no reason why I should have to remove (barring something exceptional happening or a new better player arriving on scene) any of my holdings (I want to make as few CGT returns as possible!). I think this portfolio gives me a very good chance of achieving my goal, which is to make more on my money than if I just stuck it into the bank. I know it means little, but if I had this portfolio over the past five years I would have absolutely smashed that objective.

Bob24 wrote: »

I am actually curious about this as I am seriously thinking of opening an IB account.

If I get it right, you either need to manually pre-convert the amount or to use a margin account if you want to buy a GBP security with your EUR account.

Could you confirm if this is your experience if you don't mind?

Thanks!

Yes I believe this is the case, you have to manually convert it (within IB) before buying, or borrow the GBP against the value in Euro you own.

I will be spending 1k tomorrow (So about £850.00) and will let you know how it works out, I will manually convert it before buying.

Next week I will lodge some Dollars from Revolut and see what happens.

Right so I made some purchases this morning, here is what it cost me:

First I changed (sold Euro) €980.00 and got £839.91. This was a great rate. I paid a commission of €1.68 (i.e. the $2.00).

I then made 9 UK Investment Trust buys in 7 UK trusts. I messed up a little here and basically bought £100.00 (roughly) of each, then spent another £150.00 (roughly) topping up two stocks. This means I made two unnecessary trades and wasted money. Ah well.

I spent a total of £821.94 on the stocks themselves (i.e before commission/fees).

I am a little confused about what currency commissions and fees are displayed in, I am pretty sure they are in GBP (as that is the currency they are traded in) but don't take that as gospel. I paid a total commission on the stocks of £9.35, with total fees (Stamp Duty Reserve Tax? Fee works out at 0.5%) of £3.62 for a total cost of £12.97, giving me a total cost basis for these stocks of around £836.00.

I have paid total commissions of €1.68(about £1.44) + £9.35 = £10.79 which is around $15.00 This comfortably covers the $10.00 a month charge (which is not charged for the first 3 months anyway).

So to conclude, between commissions and fees, for 9 stock purchases and 1 fx trade, it cost me around €17.00 (around 4 of that being what I think is tax).

Or another way to look at it, is that I spent around €975.00 today (have a remaining cash balance of €25) and €17.00 of that €975.00 were "costs" which works out at 1.74% of what I spent (I think I have that right?).

shtpEdthePlum wrote: »

I got in to crypto six years ago. I made substantative profits off initial investment. I took profits out for car insurance and maybe some other things I needed at the time but reinvested the rest.

It is only now occurring to me that I need to pay taxes on the profits. Is there any way I can just give all the money to charity or something and not have to figure out how much I owe. I don't actually need the money any more, it was just a hobby. I currently have around 25k in various coins and some fiat.

I would actually forfeit the money rather than going back through the hundreds and possibly thousands of individual transactions and figuring out if it was a profit or loss and how much, because that is absolutely sh!t craic. Stupid prick government ruling every action we ever take.

No, I'm afraid not you have to pay tax, and should have, by the sounds of it, paid it years ago.

I would talk to an accountant about how to get you back to compliance.

shtpEdthePlum wrote: »

That is phenomenal advice. Thanks a million. So 33% minus allowance. Dark cloud lifted, I can actually enjoy investing again! Lesson learned.

Probably have to pay a fine actually though for the profits from years ago, will I? Could I end up going to jail? Balls

You won't end up in jail. How many years ago are we talking?

Had a go at trying to send "pre converted" currency (USD) to IBKR. It very much seems possible, just a case of putting in the right bank details. However, I am always nervous of messing this type of thing up, and transferring to an American account is a bit different than just putting in a BIC and IBAN. It seems straightforward enough, but I didn't chance it, especially seen as I will have to pay $10 a month either way, it seemed too much fuss to avoid the fee on exchange, only to have to pay it anyway! However, if you plan on making lots of trades each month, transferring directly with your currency of choice from Revolut is possible, and would save you money.

Just on the point of commissions, it is a little sad that because of them , you will start off in the red :-(. Hopefully it won't take long to go green! IBKR is a little awkward to use, to log in you get a text and have to put a code in each time. This makes sense and is secure, but is a little annoying if you just want to see how your portfolio is doing (although that said it has great tools that breakdown in detail your holdings, even on an individual basis, it breaks down ITs like funds so you can see what sectors, countries etc.) I have a spreadsheet with live prices which tracks things for me, but I also put my portfolio and transactions into WallMine which is very good with charts and stuff just to see how you are getting on at a glance.