Beginning to Invest - All questions go here please

AlmightyCushion · 15-11-2019 11:58am

Jim2007 wrote: »

There is no such think as a fee free fund, except in the advertising. These guys are not there to make you rich, they're their to make their employers and themselves rich and they don't do it by giving stuff away free. The beauty of a fee free fund is that punters stop looking at the costs.....

*sigh* When I say fee free, I mean that DeGiro don't charge fees to buy them. When you're buying in such low quantities like the OP wants to do then this could save them a lot of money.

Jim2007 · 15-11-2019 5:52pm

AlmightyCushion wrote: »

*sigh* When I say fee free, I mean that DeGiro don't charge fees to buy them. When you're buying in such low quantities like the OP wants to do then this could save them a lot of money.

You can sigh ally you want, of course you pay.... for every free transaction you think you are getting, the broker is paid a routine commission depending on who your transaction is processed, so getting you the best price is not an objective. I've spent 30 years in this game.... absolutely notting is for free.

TheDalioLama · 16-11-2019 2:47pm

What's the rationale for investing into a stock portfolio over a combo of overpaying your mortgage/ maximising pension contributions?

The latter appears low risk and guarantees a certain return (mortgage interest saving) & has tax advantages (pension). Whereas stock market gains in Ireland are taxed a bit on the heavy side, and that's after taking on some risk.

Doesn't seem worth it. Am I missing something?

sk8board · 19-11-2019 3:33pm

TheDalioLama wrote: »

What's the rationale for investing into a stock portfolio over a combo of overpaying your mortgage/ maximising pension contributions?

The latter appears low risk and guarantees a certain return (mortgage interest saving) & has tax advantages (pension). Whereas stock market gains in Ireland are taxed a bit on the heavy side, and that's after taking on some risk.

Doesn't seem worth it. Am I missing something?

like everything, it depends on your personal scenario - e.g. if you have a tracker mortgage, you'd be mad to pay it off early rather than investing the money, as your invested funds only need to return 1% after tax to pay for itself.

I have a 2.9% mortgage and choose to not pay it down, as in the long term returns have proven to at least match that after tax from investing the money, but most importantly I still have access to the invested funds at a few hours notice, whereas money paid into the mortgage to pay off your house can't be accessed without selling the house.

it also depends on your financial values - owning your house outright is a great feeling.

Jim2007 · 20-11-2019 1:52pm

sk8board wrote: »

like everything, it depends on your personal scenario - e.g. if you have a tracker mortgage, you'd be mad to pay it off early rather than investing the money, as your invested funds only need to return 1% after tax to pay for itself.

But you would not be mad to:
- Invest in a high risk asset class
- Fail to diversify among classes
- Fail to diversify within the class
- Borrow to invest
- Accept a low return rate on high risk investment

There is a reason why Irish households lost more wealth in the last recession and failed to recover as quickly....

Don't confuse owning a house and investing.

Blacktie. · 20-11-2019 2:09pm

sk8board wrote: »

I have a 2.9% mortgage and choose to not pay it down, as in the long term returns have proven to at least match that after tax from investing the money, but most importantly I still have access to the invested funds at a few hours notice, whereas money paid into the mortgage to pay off your house can't be accessed without selling the house.

it also depends on your financial values - owning your house outright is a great feeling.

I currently have a 2.75% APR on my mortgage and was looking at the difference between overpaying or dumping the overpayment into the market. It looks like I'd need an averaged return of 6% to break even and everything above it is profit. It just doesn't seem worth it to me.

FastFullBack · 20-11-2019 3:50pm

Blacktie. wrote: »

I currently have a 2.75% APR on my mortgage and was looking at the difference between overpaying or dumping the overpayment into the market. It looks like I'd need an averaged return of 6% to break even and everything above it is profit. It just doesn't seem worth it to me.

Really good blog on the topic here

Basically if you invested the over-payment amount, basically it will take longer to pay your mortgage, but at the end of it you'll have an additional asset you wouldn't have had if you went down the over-payment route. Certainly food for though.

Blacktie. · 20-11-2019 4:20pm

FastFullBack wrote: »

Really good blog on the topic here

Basically if you invested the over-payment amount, basically it will take longer to pay your mortgage, but at the end of it you'll have an additional asset you wouldn't have had if you went down the over-payment route. Certainly food for though.

Yeah I've considered that. So I'm over paying to pay off the mortgage in 15 years instead of 33 or whatever it is now. So I'm comparing the amount of money I'd have left after 33 years for both scenarios where I 1-invest and keep the payments at minimum and 2-overpay the mortgage. Taking into account the fees and also the deemed disposal rules I'll need a 6% return to make it worth it. This is assuming I withdraw all the cash at the end but not sure how to compare like for like without doing that.

If we're just talking the break even point of 6% with scenario one I pay over twice the amount of taxes than scenario 2 but the end value is the same.

That article is calling for a 9% return. While not unheard of that's considered a very good return. The market has been unusually booming for the last few years since the major recession of 08. I just can't see it keep going that way and don't believe in this idea of perpetual growth.

sk8board · 21-11-2019 12:16am

2.9% mortgage would require around 5% return before tax.
I had a 1% tracker, paid off in 2012, which would be less than 0.5% rate today (less than the rate of inflation).
I don’t regret paying it off, as it’s a great feeling, but I know I could have done more with the money too.

Perhaps a bigger question to consider is if you might need that money in the short/medium term.
if you put money into a mortgage, it’s essentially gone forever (or until you sell, but then you still need to live somewhere presumably).

Also, personally I wouldn’t pay off my mortgage before having a fund for kids college, or the next car change or whatever; never mind a 6-month rainy day fund.
Touch wood if you found yourself sick, having your money tied up in the house won’t be of any use.

rodge123 · 15-12-2019 1:19am

Looking to start putting about €300 a month aside for our daughter who is two. Might help her through college or with a property in 20+ years.

Unsure if we should pay it into a fund of some sort or pick and choose companies to invest in individually.
Pro and Cons of each option? What are best long term growth prospects if picking a fund? Lot of research and market watching required if going to invest individually?

Cheers

Mango Joe · 16-12-2019 5:11pm

A couple of quick newbie questions please - Any advice or thoughts appreciated.

I came across a company recently trading on the Dublin and London Stock Markets? I had thought it was one or the other?

There was a massive difference in share price between each?

Can anyone please explain?

Also I was wondering how much money one would have to have available to buy stocks and actually have a chance at making a profit after all taxes etc to make the risk/entire venture worthwhile.

For example - If I had €10,000 and invested in a stock that increased in value by 50% then how much of the €15,000 total value of the stock will actually remain once brokers fees and any taxes are paid?

Finally whats the nearest equivalent an Irish Investor can easily buy into in terms of ETFs Vanguard, S&P 500 and so on? - Is there any standard advice people give around this? I'm mainly asking after reading online of people advising to just buy in and hold in a market that historically just appreciates in value over time.....

Thanks

Bob Harris · 17-12-2019 12:24pm

Mango Joe wrote: »

A couple of quick newbie questions please - Any advice or thoughts appreciated.

I came across a company recently trading on the Dublin and London Stock Markets? I had thought it was one or the other?

There was a massive difference in share price between each?

Can anyone please explain?

Also I was wondering how much money one would have to have available to buy stocks and actually have a chance at making a profit after all taxes etc to make the risk/entire venture worthwhile.

For example - If I had €10,000 and invested in a stock that increased in value by 50% then how much of the €15,000 total value of the stock will actually remain once brokers fees and any taxes are paid?

Finally whats the nearest equivalent an Irish Investor can easily buy into in terms of ETFs Vanguard, S&P 500 and so on? - Is there any standard advice people give around this? I'm mainly asking after reading online of people advising to just buy in and hold in a market that historically just appreciates in value over time.....

Thanks

I'm guessing exchange rates would explain it.

As for tax

5000 profit
less expenses e.g. 50
= chargeable gain 4950

4950 - 1270 (capital gains exemption) to give you the taxable gain
3680 x .33 (cgt rate) = 1214.40 you owe the revenue.

FastFullBack · 22-12-2019 12:32am

Anyone have recommendations for Fintech ETF's that are in euro and can be accessed on Degiro. I've been searching but can't find anything.
If there is no fintech then maybe a good tech ETF in euro?

ShoulderChip · 26-12-2019 12:31pm

Hi,

I am helping my dad invest the proceeds of a house sale (~200k) which he wishes to invest to get some return over the next 20 years but also eat into.

I will probabky advise him to put a small percentage in peer lending and the rest in funds, thinking global equities, a ftse250 tracker and some in commodities etc.

I am unsure of the tax implications for investing in Ireland for a) peer lending (u think its treated as income tax), b) etfs, c) other forms of funds, investment trusts? and D) simple shares (this I can search for the capital gains etc.

Just wondering where I can find the answers critically for b and c and any pointers, thanks!

Jim2007 · 26-12-2019 9:32pm

ShoulderChip wrote: »

Hi,

I am helping my dad invest the proceeds of a house sale (~200k) which he wishes to invest to get some return over the next 20 years but also eat into.

I will probabky advise him to put a small percentage in peer lending and the rest in funds, thinking global equities, a ftse250 tracker and some in commodities etc.

I am unsure of the tax implications for investing in Ireland for a) peer lending (u think its treated as income tax), b) etfs, c) other forms of funds, investment trusts? and D) simple shares (this I can search for the capital gains etc.

Just wondering where I can find the answers critically for b and c and any pointers, thanks!

Get proper advice, you clearly are not in a position to advice on such a sum of money, especially given the objective.

For instance Peer to Peer Lending is just sub prime lending - you are not a expert in this area and on to top of which which would you go lending your father's money to people who can't get a loan anywhere else?????

Like wise commodities are a high risk category, in which you need expertise and probably should not be considered in small portfolios such as this.

Generally speaking FTSE indexes are only occasionally used in portfolio construction because they tend not to give a good representation of the target market.

For your father's sake and your relationship with him, go get proper advice and don't do a DIY job on it based on random comments from the internet.

Nimil · 03-01-2020 10:55am

Hi all,

I mostly stick to ETF's, but I'm thinking of putting a small part of my portfolio into stocks. But I'm not sure I understand all the differences in the same stock offered on different exchanges. For instance, on degiro AMD is offered in USD on nasdaq and EUR on xetra. Which would you go for and whats the difference between them, beyond a larger bid-ask spread on xetra due to smaller volume?

I'm interested in the tax particulars as well. I believe US share dividends are taxed at 15% if you fill out the W-8BEN form (and you then report 5 or 25% extra to revenue), would it be the same for the euro stock or would a german tax be applied instead?

El Tarangu · 03-01-2020 3:23pm

After reading a fair bit online about investing in ETFs, I recently opened a DeGiro account. I was waiting for my first transfer to appear in the account, to buy-and-hold some ETFs... and then the Americans killed that Iranian general in an airstrike this morning.

The funds have now appeared in my account - very small amount, €500 to test the water, with a view to investing €5k this year, and a few €K each year over the next few years.

Should I invest now, this minute:

Pros:

the markets are down, so I would get a good price
Any short-term volatility will even out over time, unlikely to effect the funds much over a timeline of a few decades
It would only be a small initial amount; any losses I might make would be insignificant in the grand scheme

Cons:

The volatility increases the risk of a loss, particularly for the novice investor

So, what do you think? Am leaning towards going ahead and pulling the trigger anyway; as I said, I would be sitting on fund for many years, so any short-term advantage/disadvantage would probably be negligible, particularly on such a small amount.

Thanks

shuffles03 · 19-01-2020 6:08pm

Hi,

I’m completely new to investing and I want to start putting funds into the following:

SPHD
VYM
VXUS
VWO

Can someone recommend an app/service that would allow me to invest in the above?

I’m Irish but living in Spain.

Cheers in advance!

Jim2007 · 19-01-2020 8:45pm

shuffles03 wrote: »

Hi,

I’m completely new to investing and I want to start putting funds into the following:

SPHD
VYM
VXUS
VWO

Can someone recommend an app/service that would allow me to invest in the above?

I’m Irish but living in Spain.

Cheers in advance!

- If you are resident in Spain, then 90% of the conversations about funds on this forum will not apply to you because under Spanish tax law it is possible to defer Capital Gains Tax indefinitely, while the boys and girls in Ireland must pay up.

- Unless you are in your 60s and indent to use it as income, investing in stock with a high dividend yield is probably not the best strategy for the long term

- Have you looked at your investment in terms of sectors and geography? At a glance you seem to have several overlaps and will pay for the privilege of investing in the same thing twice or even more.

- Unless you have well over 100 to invest, you do not need so many funds, especially since you seem to be concentrating on large caps. As simple world index, with say one other fund to skew it from a tactical point of view should be fine.

shuffles03 · 19-01-2020 9:18pm

Cheers for the detailed response. Haven’t looked at geography yet - I was looking at it from the point of view that I’d be better off investing in funds like the above instead of trying to individually choose stocks and build a portfolio that way.

I’m 36. I was under the impression that the above funds were good (apart from the overlap though). Index funds could be better? I’m looking to invest for the long term.

So potentially, something like the VTI could be good?

What’s a good service/app to use?

Thanks again for the advice.

shuffles03 · 20-01-2020 8:31am

I just saw that VTI is no longer available for Europeans.

Based on that would VWRL or VWCE be good alternatives?

Megamemnon · 21-01-2020 6:41pm

rodge123 wrote: »

Looking to start putting about €300 a month aside for our daughter who is two. Might help her through college or with a property in 20+ years.

Unsure if we should pay it into a fund of some sort or pick and choose companies to invest in individually.
Pro and Cons of each option? What are best long term growth prospects if picking a fund? Lot of research and market watching required if going to invest individually?

Cheers

Hi there, Two posts that might answer your questions in more detail are: Investing in ETFs for your kids college years mrsmoneyhacker.com/how-to-get-the-government-to-pay-for-your-kids-college-years/ and this one on investing options in Ireland with all the pros, cons, tax rates and expected growth mrsmoneyhacker.com/investment-options-in-ireland/

PureLamb · 23-01-2020 1:49am

looking for the most efficient way to buy some individual stocks (both Irish and worldwide). Is Degiro my best option? I'd be looking to invest <€5000 per year. Am I right in saying that tax does not have to be paid on gains of less than €1270? If you make a €1000 gain on 5 different stocks, how does tax work for this?

I'm also not clear how the tax witholding works with Degiro. I pay 1% stamp duty when I purchase a product. Capital gains tax is witheld and paid by Degiro. So basically any money I withdraw from Degiro has tax paid on it already. Is this correct? Is there a more tax efficient/fee efficient way of buying individual stocks? Thanks

Timmaay · 23-01-2020 9:22am

The 1270e capital gains exemption doesn't apply to stocks unfortunately from what I know.

Bob Harris · 23-01-2020 9:38am

The Capital gains exemption of 1270 most definitely applies to share disposals and property, land etc

The exemption of 1270 is for all of your gains. You can apply it to whichever gain you like but the total is 1270.

The Witholding tax (subject to change this year it seems) may not cover your tax liability on dividend payments.

In your tax return you get a tax credit for the amount of WHT paid and then pay tax+prsi+USC on the gross amount of the dividend like you would on any income. The tax rate depends on whether you are standard rate or higher rate.

Timmaay · 23-01-2020 2:37pm

Thanks for that clarification rob, I'm new to all this and thought I read something a few days ago saying the 1270e didn't apply to shares but I stand corrected. That brings me to my next question, the 1270e is largely a use it or lose it figure every year correct?, so if you have say build up a tidy capital gain of shares and want to cash out does it make sense to then try disposal of them across a number of years to maximise that allowance?

Bob Harris · 23-01-2020 3:20pm

Timmaay wrote: »

Thanks for that clarification rob, I'm new to all this and thought I read something a few days ago saying the 1270e didn't apply to shares but I stand corrected. That brings me to my next question, the 1270e is largely a use it or lose it figure every year correct?, so if you have say build up a tidy capital gain of shares and want to cash out does it make sense to then try disposal of them across a number of years to maximise that allowance?

Correct, use it or lose it. You can offset losses on disposal of shares to reduce the CGT liability though.

mpjg1995 · 10-02-2020 11:46pm

Hi

I have a few questions I've no investing experience in shares. I do understand there is risk and dont put in what you cant afford to lose
I'm just wondering if I was to invest 6k in dividend paying shares would there be much of a return say I split 2k between biggest US or Irish dividend paying dividends.

Which is the best dividend paying shares to hold i.e Irish or US shares

If buying US dividend paying shares I believe I have to fill out a non US resident tax form. If I buy shares using Degiro will they ask me to fill this form before I buy the US shares.

Thank you.

mrunsure · 20-02-2020 7:29pm

I'm considering early retirement at age 50 in about 5 years time and have lived in the UK all my life. I've been saving in UK ISAs (Individual Savings Accounts) for the last 20 years which is how I have managed to contemplate early retirement. In retirement I plan to live off my investments.

I'm considering retiring in Ireland. I realise the ISA wrapper will not be recognised in Ireland and I will have to pay CGT on gains. As far as I can make out, the annual allowance is only €1,270 a year and the rate of taxation is 33%. In the UK the allowance is £12,000, the rate is either 10% or 20%, but if your money is in ISAs then you don't even pay that. So if I retire in the UK my investments are effectively tax free. So I have to work out if living in Ireland is worth paying the extra tax.

Am I missing anything here? Are there any other allowances or tax efficient saving schemes in Ireland?

Shedite27 · 07-03-2020 11:21am

I've a few questions, some of which seem to have been asked previously so following up on these

Like this poster, when a share is offered on different exchanges, is there difference in the performance, price changes etc? I realise there's difference in charges and tax implications.

Nimil wrote: »

I'm not sure I understand all the differences in the same stock offered on different exchanges. For instance, on degiro AMD is offered in USD on nasdaq and EUR on xetra. Which would you go for and whats the difference between them, beyond a larger bid-ask spread on xetra due to smaller volume?

Bob, you mention below it's a use it or lose it each year. Does it make sense each year so, even if you want to retain your position, to cash in €1250 worth of gains each year, and then rebuy that same day?

Bob Harris wrote: »

Correct, use it or lose it. You can offset losses on disposal of shares to reduce the CGT liability though.

And finally, growth/profits on shares, is that only payable when you cash them in? Is there any Assumed Disposal principle like on EFT’s?

Shedite27 · 07-03-2020 2:03pm

Also, US ETF's, are these accessible to Irish investors through Degiro? Reading a link someone posted on here, it quotes the following

As mentioned above these are no longer available to purchase in Ireland as an individual investor due to EU legislation, these MAY be available through professional money managers but the fees would negate the benefits, you may also access if you open a US investment account with a minimum investment of 10,000$ but I have not confirmed this and am not sure about the tax complications

Taylor365 · 07-03-2020 8:23pm

Shedite27 wrote: »

Also, US ETF's, are these accessible to Irish investors through Degiro?

No

garbanzo · 26-03-2020 7:55pm

No posts in here since the Covid-19 story really hit us hard. I imagine investors are hiding behind their sofas this last wee while. It’s been a fairly shocking few weeks in the stock market. Keep the faith everyone.

This too shall pass.....hopefully !

Jim2007 · 26-03-2020 8:50pm

garbanzo wrote: »

No posts in here since the Covid-19 story really hit us hard. I imagine investors are hiding behind their sofas this last wee while. It’s been a fairly shocking few weeks in the stock market. Keep the faith everyone.

This too shall pass.....hopefully !

Very unlikely, but definitely possible for speculators. Learn the differences...

Mantis Toboggan · 29-03-2020 12:00am

Flutter entertainment share price is 6550 in London but 73.29 in Dublin.

What's the correlation here?

Skelet0n · 29-03-2020 12:03am

Mantis Toboggan wrote: »

Flutter entertainment share price is 6550 in London but 73.29 in Dublin.

What's the correlation here?

Sterling and euro.

London is in pence.

Technope87 · 30-03-2020 12:44am

Apologies if this has been asked a million times before but I’ll ask anyway.. is it worth while investing in small amounts every month or is this just a waste of time/ money?

For example I’d be keeping it simple and just buying a Share or two in a bigger company such as Microsoft/Apple or whatever at the end of the month. I would be aiming to buy them and hold them long term 15 years plus.

I see a few online trading platforms such as 500plus/ trading 212 offering no fee trades so I was curious about putting a couple hundred into some stocks at the end of the month instead of just adding to my savings/ my pension fund.

Is there hidden fees and charges that I am missing that makes this a bad choice due to the low amounts?

new2tri19 · 30-03-2020 2:30pm

I'm trying to buy applegreen on degiro and it says market is closed . That's on Irish stock exchange in euro , I seem to be able to buy it on London stock exchange in gbp , why is irish market closed thanks

Thargor · 31-03-2020 9:40am

Can previous investment losses be written off against dividend earnings the way they can with CGT on gains?

Bob24 · 31-03-2020 9:45am

Thargor wrote: »

Can previous investment losses be written off against dividend earnings the way they can with CGT on gains?

I don't believe so.

Dividends are an income, not the same thing as capital appreciation (if you don't want your stare to generate income and prefer capital appreciation so that you can offset it against capital losses, either go for companies which distribute small/no dividend and keep the cash meaning on average the share price tends to increase faster than dividend paying companies, or for accumulating ETFs).

MidnightQueen · 31-03-2020 3:43pm

I'm new to investing. Lots of recommendations to use DeGiro as a platform. I'm looking to invest a small sum in American shares. Is DeGiro the best for that? I understand theres capital tax on that too for 30% if you eventually sell your shares. Help much appreciated.

Jim2007 · 31-03-2020 5:08pm

MidnightQueen wrote: »

I'm new to investing. Lots of recommendations to use DeGiro as a platform. I'm looking to invest a small sum in American shares. Is DeGiro the best for that? I understand theres capital tax on that too for 30% if you eventually sell your shares. Help much appreciated.

You'd probably want to define what a small about is.... you need to remember that nothing is free, look at what the cost acquiring the shares plus the holding costs, plus and related taxes and remember who have to clear that amount to start to benefit.

beggars_bush · 31-03-2020 8:39pm

I'm looking for an investment product that is relatively safe for 2-3 years

anyone got any suggestions?
would a product that primarily invests in bonds issued by eurozone governments and bond-based financial instruments be a sound bet?

Bob24 · 31-03-2020 10:56pm

beggars_bush wrote: »

I'm looking for an investment product that is relatively safe for 2-3 years

anyone got any suggestions?
would a product that primarily invests in bonds issued by eurozone governments and bond-based financial instruments be a sound bet?

If you want bonds for a 3 years timeline, you could directly get Irish government bonds, with no management fee and no tax due on the interest: https://www.statesavings.ie/our-products/3-year-savings-bond

Now just a word of warning: while you are right that government bonds are usually considered very safe, they are debt owed to you and with the coronavirus situation and the recession which is on the way governments seem to be spending like there is no tomorrow with no consideration for balancing budgets. If one day debt becomes unsustainable and at an election the winning candidate is the one saying “burn the creditors” - one of those creditors will be you.

dxhound2005 · 01-04-2020 12:02am

Bob24 wrote: »

If you want bonds for a 3 years timeline, you could directly get Irish government bonds, with no management fee and no tax due on the interest: https://www.statesavings.ie/our-products/3-year-savings-bond

Now just a word of warning: while you are right that government bonds are usually considered very safe, they are debt owed to you and with the coronavirus situation and the recession which is on the way governments seem to be spending like there is no tomorrow with no consideration for balancing budgets. If one day debt becomes unsustainable and at an election the winning candidate is the one saying “burn the creditors” - one of those creditors will be you.

If that happens, then we are all truly sunk. Anyway I think they are not the sort of bonds people are asking about. And they want some better return than €10,000 turning into €10,100 after three years.

Are my State Savings products (including Prize Bonds) guaranteed?
The repayment of all State Savings money, including Prize Bonds, is a direct, unconditional obligation of the Irish Government. When you save with State Savings you are placing your money directly with the Irish Government. State Savings forms part of the sovereign debt of Ireland which is managed by the National Treasury Management Agency (NTMA).

Bob24 · 01-04-2020 9:24am

dxhound2005 wrote: »

If that happens, then we are all truly sunk. Anyway I think they are not the sort of bonds people are asking about. And they want some better return than €10,000 turning into €10,100 after three years.

What do you have in mind in terms of what the OP was asking about? They mentioned they were looking at eurozone government bonds. At the moment even much more risky greek bonds won't offer much better yield than state savings products once you take the tax advantage into account, so if EZ gov bonds is what they are after I think state savings is a good place to start.

The only way I ca thing of to get significantly better return with EZ gov bonds is by betting on were interest rates are going, and reselling the bonds with a profit at a latter stage (i.e. relying on capital appreciation rather than interests), but this becomes speculation and I don't believe this is what the OP is looking for. And if that was the idea, I don't think I would go for EZ bonds - I'd pick bonds for countries which still have somehow positive interested rates and for which there is more opportunity for rates to go lower.

And it is for another thread I guess, but IMO debt haircuts are a real possibility in the coming few years.

Jim2007 · 01-04-2020 9:54am

Bob24 wrote: »

And it is for another thread I guess, but IMO debt haircuts are a real possibility in the coming few years.

Absolutely not on government bonds, corporate bonds is a different matter.

Bob24 · 01-04-2020 10:08am

Jim2007 wrote: »

Absolutely not on government bonds, corporate bonds is a different matter.

Debt was already unsustainable for some governments before the virus situation, and the current spendings are massive what tax collection will drop massive, this will call for debt relief mechanisms. It don't have to be haircuts/defaults (although I still thing it will be on the table for some countries - Greece and Italy probably being at the top of the list), it could also be very negative real interest rated once inflation is taken into account (what at the end of the day is not dissimilar to a haircut as far as the impact on the purchasing power of bondholders is concerned).

dxhound2005 · 01-04-2020 11:58am

Bob24 wrote: »

What do you have in mind in terms of what the OP was asking about? They mentioned they were looking at eurozone government bonds. At the moment even much more risky greek bonds won't offer much better yield than state savings products once you take the tax advantage into account, so if EZ gov bonds is what they are after I think state savings is a good place to start.

The only way I ca thing of to get significantly better return with EZ gov bonds is by betting on were interest rates are going, and reselling the bonds with a profit at a latter stage (i.e. relying on capital appreciation rather than interests), but this becomes speculation and I don't believe this is what the OP is looking for. And if that was the idea, I don't think I would go for EZ bonds - I'd pick bonds for countries which still have somehow positive interested rates and for which there is more opportunity for rates to go lower.

And it is for another thread I guess, but IMO debt haircuts are a real possibility in the coming few years.

The confusion, if there is any, is that a product which is a straight savings product with a fixed 1% return after 3 years, has the word Bond in its title. And as a NTMA savings product, it is unconditionally guaranteed by the Government.

Anyone who wants to know about savings products can see the details on the State Savings site. They can tie up their money for various periods, up to 10 years if they judge it to be wise. Nobody can second guess what will happen in the future.

Or if they want to save with the banks, this list of Best Buys is kept up to date.

https://www.askaboutmoney.com/threads/savings-best-buys.90481/

Jim2007 · 01-04-2020 12:50pm

Bob24 wrote: »

Debt was already unsustainable for some governments before the virus situation, and the current spendings are massive what tax collection will drop massive, this will call for debt relief mechanisms. It don't have to be haircuts/defaults (although I still thing it will be on the table for some countries - Greece and Italy probably being at the top of the list), it could also be very negative real interest rated once inflation is taken into account (what at the end of the day is not dissimilar to a haircut as far as the impact on the purchasing power of bondholders is concerned).

It will not happen to with government bonds because they would just be shooting themselves in the foot. Do a bit of actual research into bond ownership, institutions required to hold government bonds etc.... it would be a pointless exercise.

Beginning to Invest - All questions go here please

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