I was reading this forum over a good number of months, and information is relatively scarce, so I thought it might help some potential investors hear of people who went ahead with purchasing ETFs.
The basics of how I did it:
The basics of why I did it:
The basics of how I did it:
- Signed up for a stock brokering account with Saxo Bank UK.
- Once you apply, a sales rep will be in touch, and you can ask them questions
- You can choose between Saxo's Danish or UK banks
- There's an inactivity fee of £25 per quarter I believe
- Transferred cash to Saxo
- Decided on an asset allocation strategy
- All shares. 40% European index. 40% US index. 20% emerging markets index.
- Decided not to purchase bond ETFs as I can't get my head around how they work, even though a lot of talk is about the mix of your portfolio between equitites and bonds.
- Researched iShares ETFs to keep it simple, and chose a European MSCI maket index ETF, and a US MSCI market index ETF.
- Both are accumulating (they don't pay dividends).
- Both are domiciled in Ireland
- Both will be subject to the (at present) 41% tax every seven years (there are discussions on that elsewhere on AAM)
- The European one is Euro-denominated. The US one is USD-denominated, so I'm probably more exposed to currency exchange rates into the future with that one.
- I still have to pick an emerging market one
- Placed a purchase order for each of my chosen stocks (edit: I should say "ETFs", not stocks) on Saxo for 50% of my lump sum. Over the next two quarters, I'll spend the rest of my 50% lump sum, just for the sake of a taster of some "euro cost averaging".
- Each order cost €12, if I remember correctly
- In the future I'll either choose to pay the quarterly inactivity fee, or place small investment orders and pay the transaction fee.
- Outstanding question I don't have the answer for: whether Saxo will be withholding taxes on my potential gains, and whether I'll need to do anything about that.
The basics of why I did it:
- It's for a college fund that is planned to be accessed in 16 years.
- I chose ETFs over Irish Life index funds because the returns should be significantly higher after I compared fees over 16 years.
- I chose ETFs over individual shares. This is despite the tax situation on ETFs being a real penalty (ouch!), but still less of a risk that I perceive with individuals shares.
- I chose a three-fund strategy to try to keep it simple.