Link to where either of these companies promise to beat the markets?
What's a huge fee for €100pm ?
You do know that there are passive funds on their platforms?
Which ETF for €100 a month?
- Thread starter franc82
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Link to where either of these companies promise to beat the markets?
What's a huge fee for €100pm ?
You do know that there are passive funds on their platforms?
DublinHead54
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I'm investing in global companies that happen to be based in the US.
Do you use or have you used Google? bought any apple products? Used Microsoft windows? Had a Facebook account? Bought shampoo? Used a visa card?
The S&P 500 aren't companies that operate solely within the borders of the US. Heck Meta just made $14bln of profit last quarter. This whole geography diversification is less of an issue in the last 10 years.
Again if I worried too much about getting the perfect diversification I'd probably not invest.
That's what I understood but when I asked for direction from Revenue as how to file the amounts for year 16, I got a written reply via MyEnquiries stating that the year 16 tax was calculated on the gain since year 8
I am pretty sure that this is wrong, but when I queried this, I was given another written reply stating that this is the case. I have used this ever since, even though I am 90% sure this is not the correct way to calculate the exit tax. I have kept copies of the replies just in case ...
In practice it's the same result as calculating the gain between year 8 and 16, as long as the tax rate hasn't changed between the deemed disposal dates. But if the tax rate changes in the future then you must calculate the year 16 gain relative to year 0, and subtract the tax paid in year 8.
For example if it decreased after year 8 from 41% to 35%, and you only calculate the gain from year 8 to 16, you don't benefit from the lower tax rate applying to year 0 to 8 as well. You should correctly calculate the gain for the full period and subtract the overpaid tax at year 8. This benefit only applies to the units of the ETF that you still hold at year 16. If you sold some units at year 8 to pay the deemed disposal those units are fully realised and have no more tax liability.
Of course the tax rate could also increase and you'd have to pay more. Given the government consultation on fund taxation I would expect it's more likely to decrease in the future.
For example if it decreased after year 8 from 41% to 35%, and you only calculate the gain from year 8 to 16, you don't benefit from the lower tax rate applying to year 0 to 8 as well. You should correctly calculate the gain for the full period and subtract the overpaid tax at year 8. This benefit only applies to the units of the ETF that you still hold at year 16. If you sold some units at year 8 to pay the deemed disposal those units are fully realised and have no more tax liability.
Of course the tax rate could also increase and you'd have to pay more. Given the government consultation on fund taxation I would expect it's more likely to decrease in the future.
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A completely invalid point as already raised by plenty a lot smarter than I on this thread.
Surely it's irrelevant where the money comes from to purchase a house. Let's leave aside the other benefits of home-ownership, such as the removal of potential evictions for now.
Purely from a financial perspective, and given the two options, one of either the return on investment of owning your own home or the return on investment on the stock-market is going to win out. Surely, your opinion that buying a house through salary is a terrible decision whilst buying with dividends is a smart move can't hold true. If the long term return on investments was such a clear cut winner over the long term return on home-ownership versus renting, surely you'd continue to pump your dividends into these investments versus EVER buying your own home. How many people in Ireland do this - and I'm not talking just your average Joe, I'm talking everyone, include the super-wealthy?
Looking at it from another angle, the average gross yield of a 3-bed property in Ireland is 7.9%. That equates to €23,700 annually to rent a €300,000 house (and has been rising quickly in recent years). The interest only mortgage, if you could get one, on the entire €300,000 balance, would cost €12,450 (€11,250 less) at a rate of 4.15%.
The reality is that you'd only be tying 10% of that €300,000 up in the house to make these significant savings and would mortgage the remainder. In other words, allocating €30,000 to a mortgage deposit results in savings on the rent-v-mortgage costs of €11,250 per annum. If we allocate 1% of the house value, or €3,000, towards expenses incurred as a homeowner versus a renter, that's still €8,250 in savings.
To gain €8,250 in investment income from €30,000 to cover these savings as a higher rate tax payer would require a return of 52% annualised - just to stand still.
I've read Robert Kiyosaki's book myself and, whilst I believe he does raise a lot of valid points, taking his teachings as gospel and applying it to the decision of whether to buy or rent your own home in Ireland will, inevitably, turn out into a bad decision because the only way you can gain 52% annualised via investments is by going WAY, WAY beyond the realms of what would be considered prudent investment.
Gordon Gekko
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I agree. Money is fungible and income from one’s salary and income from investments aren’t all that different. There are major tax breaks to home ownership (e.g. PPR Relief). And that’s before one considers qualitative factors like security of tenure or Fair Deal.
There are sensible elements to some of the those US-centric financial self-help books but a lot of it is irrelevant to the Irish market. The basics from an Irish perspective are pretty clear. Buy a home, fund your pension, have a few bob for emergencies, and don’t invest outside of a pension until you’ve maxed out your AVCs.
There are sensible elements to some of the those US-centric financial self-help books but a lot of it is irrelevant to the Irish market. The basics from an Irish perspective are pretty clear. Buy a home, fund your pension, have a few bob for emergencies, and don’t invest outside of a pension until you’ve maxed out your AVCs.
Steven Barrett
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Assuming the fund does well, you'd pay about €15 in fees in year 1. I know it compounds but it's starting from a low base. For that, all admin and taxes are taken care of. All you need to do is fill in forms and a direct debit at the beginning. You don't even have to do a tax return.
If people want to spend hours of their time doing admin to save a few quid, that's up to them. But the charges aren't that big and frees you up to do other, more productive things than admin.
* regular investment plans are more expensive than pensions because they have shorter investment lives. If you think that you are going to invest in one of these plans for 20-30 years, the statistics from the life companies don't back that up.
You're addressing my comments from only a small angle. For a start, there is no such thing called zero risk when it comes to a house because all it takes a slow economy or a flood to drag down the value of a house. We recently had one in East Cork and the house prices went a little bit down after that albeit not by much.
To buy a 300k house with a fixed interest rate of 4.15% and a 25-year term your monthly repayments are 1447 and your interests at the end will be 164,284. I took into account the 10% deposit that you will be funding yourself. If paying 164k in interests is peanuts to you then good luck with that. I am not even adding the costs involved in maintaining a house, the property tax and related expenses.
You can invest decently 30k and get some decent returns. Claiming otherwise is just ridiculous.
Again Robert Kiyosaki isn't the only one who don't agree with buying houses. They're many others. Dan Malone who is a fully qualified accountant, tax advisor and financial advisor in Ireland on his Youtube account made a whole video with numbers to back up his claim. You should have a look, it is a pity because this platform doesn't allow me to paste external link. Also Ramit Sethi, a well known financial advisor, talks about that in great details on his platform. These people can't just lie and being so successful in their lives. He runs a YouTube channel called I Will Teach You To Be Rich.
Someone here mentioned that we should buy a house, then max out on pension, and increase our AVCs. How is it even possible to increase pension while dealing with a huge debt in a form of a mortgage? If I draw down a mortgage, surely unless I have paid it back it doesn't make sense investing on anything else? The more I drag this mortgage over the more I will have to pay back interests on that.
This thread isn't about mortgages but investing advice on ETFs, if people want to put all their money on a mortgage it is their prerogative, my initial post was about picking some ETFs to invest a monthly amount on them.
Your analysis needs to look at the cost differential between buying and renting. Even a look at historical house prices, mortgage rates and rent costs would give a bit of insight into this.
Also, Robert Kiyosaki hasn't a great track record and is pretty light on definitive advice. Ramit Sethi is the guy who tells you to get a side hustle walking dogs. Both of these make their money by having people buy their books, seminars and whatever. They haven't made money by following their own advice (unless Sethi eventually tells you to write a blog and run seminars). They are also dealing with a different tax regime which substantially changes the investment landscape.
I'll have a look at Dan Malone.
But you are not investing 30K.
As you said in your first post, you want to invest 100eur each month in an ETF for the next 5 years. That is a total of 6k.
So what realistically will that 6K investment return? Factoring in a good case scenario, compound, and CGT, I would suspect that a 6k investment will do well to see a net profit of 3K or 4K after 5 years. It has been said elsewhere in this forum that market investments double every ten years (if you have got the right one), that means an average annual growth of 7% for each of the 10 years.
By all means buy ETFs, I myself are seriously considering doing this. But you do need to be realistic, the individuals who made big bucks trading from their kitchen table are very few. I would be slow to forego having a mortgage and home so I can go all in on ETFs.
Finally, I don't view that getting a mortgage is a sign that someone lacks financial literacy. Until very recently I had a mortgage. In my home, I am a renting a room and subscribing to ARP. That is a total monthly income of 1400eur (tax free) with next to zero capital risk.
Gordon Gekko
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You’re the one who keeps bringing up mortgages and then you want to stop talking about them when your wild claims are debunked.
That €164k cost was incurred to buy a €300k asset.
Rent over the same period would cost around €450,000 (i.e. €300k x 6% x 25 years). After which you have nothing.
€464k spent, after which you own a house.
Versus €450k spent, after which you own nothing.
I wonder which I’d prefer…
How do you work out these fees? In reality, they are way higher than that. But there is another major issue when it comes to investing with the like Zurich or IrishLife: the way they handle the deemed disposal tax. They deduct it from the fund and don't offer any other facility to pay it even with cash. This has the consequence of cancelling out any compounding.
Let me illustrate my point with a few number if you don't mind please. Investing 400 euros a month over 8 years with 8-9% returns will be close to 12k 'profit' of what 5k is payable in tax. If I sell part of the fund (which is worth 52k) to finance that then the compounding gets reduced next to nothing as the sale is taxable at 41% (9k of the fund needed to sell to cover the 5k). So the only way to avoid that is to finance ti from somewhere else or in the next 8 year period one would 'lose' about 17k from the final return (130k vs 147k). The tax credit, if given in this case, doesn't offset that compounding loss.
In terms of fees for IrishLife Pinnacle fund for instance, if you invest 250 euro per month with a starting balance of 5k, the charge works out almost 1.5% a year which is a lot! You get some ETFs charging between 0.12 and 0.4 %. Assuming a mere return of 3.55%, the charges from year 1 to 5 will be: 418, 678, 689, 624, 699 which is equal to 3108 euros in total. If that is not a lot then good luck to you. The real question is what are they offering for that? Well not much, we know that in the long term they can't beat an index like the S&P 500. If I invest the same amount of money in an accumulating S&P 500 index I will get more for my money. Working out an exit tax can't be that hard as I only need to fork out 41% on any gain that I made during the selling of the assets.
Finally, I have a screenshot of an actual Pinnacle account which highlights these costs but the platform is preventing me from publishing it just in case you're challenging the numbers.
As said by @DublinHead54, where a country has it's HQ is not so important as where it operates. The top US companies are all global multinationals. The truth is that the US has the largest market capitalisation, so if you want to follow the "world" then you must naturally have a tilt towards the US.
S&P500, Developed World, All Country... these are all perfectly good, diversified indexes. S&P500 ETFs have a lower TER since they invest in fewer companies. The extra diversification of World ETFs comes at a cost as well. I personally prefer FTSE All-World but I don't think S&P500 is a "wrong" choice, especially for someone starting out like the OP with €100 to invest.
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As already pointed out to you, money is fungible.
The source of the money or what account it comes from is irrelevant.
The uninvested cash that you are proposing to use to pay the exit tax is similarly not earning any (compound) returns.
Steven Barrett
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Fees are based on 1% amc.
If you are paying for tax out of your own pocket, you are saving more than €400 a month then as you are always going to be saving future tax costs.
It's not for everyone. The most cost efficient way of doing anything is to do it yourself. Lots of people are happy to outsource and then spend their time doing other things they enjoy while someone else is looking after the admin and taxes for them.
DublinHead54
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Maybe we need an Ireland ETF, lets not forgot companies like Meta have 25% of their revenues "generated" in Ireland
.Djimi Traore
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It's all been said by now so I won't labour the buying v renting thing but I would advise some critical thinking on the people you are taking advice from. Both Robert Kiyosaki and Ramith Sethi provide a lot of good advice, especially to beginners and they cover the basics very well like cashflow planning, benefits of long-term investing etc. You have to take their advice with a massive caveat though in that it's all based on the US, a completely different market to Ireland. They also have big conflicts of interest. Kiyosaki flogs investment seminars and is always predicting the end of the world. Sethi believes that everyone can do their own thing and you should never pay an adviser which again might work in US but is horrendous advice for Ireland.
I think it's pretty clear based on the actual figures quoted above that buying is the sensible choice over renting.
However, if I wanted to put the blinkers on and think that Robert Kiyosaki is God almighty when it comes to making financial decisions in Ireland, I'd look at his base advice that 'assets are something that put money in your pocket, whereas liabilities take money out of your pocket'.
Now, still thinking of Robert Kiyosaki as the only show in town when it comes to financial advice, I consider my house a liability. However, the need to rent is also a liability - and a much, much, much bigger liability at that, with no end-date in sight.
If one were to want to TRULY follow the Robert Kiyosaki bandwagon in Ireland, they would probably buy the house and look to avail of the, very generous, €14,000 rent-a-room scheme. If Robert himself knew the tax system here in Ireland, I'm sure he'd advise that buying is the way to go.
A lot of his advice is also based on taking on lots of 'good debt' to invest in assets. Have you approached any of the banks here in Ireland looking to take on debt to invest in the stockmarket, or anywhere else? When you do, let us know how you get on
Back to the original topic, I'm in agreement with most on the thread - no ETF is worth investing €100 a month into given the Irish tax system. I've had lots of tax returns to deal with, both in the UK and Ireland. Given how complicated they can get when you've multiple income sources, I'd need to be expecting returns far in excess of any other investment options to invest in an ETF here.
However, if I wanted to put the blinkers on and think that Robert Kiyosaki is God almighty when it comes to making financial decisions in Ireland, I'd look at his base advice that 'assets are something that put money in your pocket, whereas liabilities take money out of your pocket'.
Now, still thinking of Robert Kiyosaki as the only show in town when it comes to financial advice, I consider my house a liability. However, the need to rent is also a liability - and a much, much, much bigger liability at that, with no end-date in sight.
If one were to want to TRULY follow the Robert Kiyosaki bandwagon in Ireland, they would probably buy the house and look to avail of the, very generous, €14,000 rent-a-room scheme. If Robert himself knew the tax system here in Ireland, I'm sure he'd advise that buying is the way to go.
A lot of his advice is also based on taking on lots of 'good debt' to invest in assets. Have you approached any of the banks here in Ireland looking to take on debt to invest in the stockmarket, or anywhere else? When you do, let us know how you get on
Back to the original topic, I'm in agreement with most on the thread - no ETF is worth investing €100 a month into given the Irish tax system. I've had lots of tax returns to deal with, both in the UK and Ireland. Given how complicated they can get when you've multiple income sources, I'd need to be expecting returns far in excess of any other investment options to invest in an ETF here.