Advice required trying to start an investment Portfolio

[Anthony2015]

Hi All,

New to the forum so I hope some of the more experienced investors or guys who have done similar can guide me Here is some info about me:-

We are Irish and mid 30's currently expats living in Dubai (Non-Residents) but moving back to Ireland in 2017 (contract up). Want to ensure what I do is with this relocation in mind.

Having saved hard every month we have USD 150k available to build a portfolio (after considering short term emergency cash 6 months and also I have taken out an amount for a deposit on a house).
After having the baby I made a commitment to myself that I need to spend time studying and planning for our future. I am reading all I can on investing and building a portfolio and on the various different strategies to take.

I am thinking along the lines of the following:-
A. Open a Brokerage account with Interactive Brokers UK or TD International, will decide soon. Both provide access to global funds/ETF's etc.

B. Decide on a portfolio stragtegy (2 Fund or 3 fund); Split the lump sum into 3 and put it into the portfolio over the course of 1 year. Also put in excess savings per month to rebalance the portfolio. I was thinking a mix of Vanguard and iShares with a 60/40 or 70/30 stocks to Bonds split. Also the stocks to be split between Europe and International;

C. Invest for the long term (15 - 20 years) and remain diligent and stick to this;


Questions:-
A. Does this seem like a logical approach?

B. Could anyone please suggest a good mix of Funds/ETF's/Index trackers that would provide this low cost diversified portfolio.


C. From a tax efficiency perspective can anyone advise the best approach to take. We will still be non-resident for the next 2 years but after that will move back to Ireland. Am I better for now to select funds domiciled in UK or US etc. in order to avoid paying Irish income tax on Irish earned Income?

D. Are we better using funds that are non income generating over the long term so that we will not have to pay income tax on the dividends at a high rate and instead just pay CGT at the time of selling the funds;

E. Is there any way of investing in a form of Irish pension (UK type SIPP or ISA) from abroad?


Sorry for all the questions but I would really appreciate any advice you could give to me on how to get started.
Thanks all.
Tony

 

[Sarenco]

Hi Tony

This is probably not what you expect to hear but, if I was in your position, I'd stay in cash.

Often the best thing to do financially is not to do anything at all.

Here's my thinking:

You're planning to return to Ireland in two years time with your family and, from what you have posted, you have decided that you want to put down roots and buy a family home.

Let's start there.

Notwithstanding our world beating property crash, average house prices in Ireland are still high relative to average disposable incomes and mortgages rates are high relative to most other eurozone countries, with no mortgage interest relief. Variable mortgages rates on new home loans are currently in the range of, roughly, 3.3% - 4%. The more you can put down by way of a deposit, the lower your rate.

At current valuations, it is generally accepted that it will be something of struggle to achieve a nominal return of 3.3% - 4%, after fees, expenses and taxes on the sort of investment portfolios that you have in mind over the coming decade. Over the next two years - who knows?

In my opinion, your priority should be maintaining, and ideally increasing, your cash war chest so that you can take out the lowest mortgage possible when you do come to buy your family home.

Unfortunately, the taxation of passive income from investments is fairly punitive in Ireland outside of a pension wrapper, particularly if you have material earned income. We do have tax-deferred pension vehicles but it makes no real sense to invest in these vehicles with income that has already been taxed or is tax free. We have no equivalent to ISAs or Roth IRAs.