# Experienced property investor, but virgin stock market trader.



## landlord (14 May 2015)

I am over exposed in Irish property and wish for advice on diversification. I have €100,000 to invest.

Brief history….I have 7 properties in Dublin, 6 of which are rentals. All are in negative equity, however they are very profitable on a cash flow basis, albeit being on interest only with 17 year terms left.

I have no experience of the stock market and have been told that keeping the costs down is as important as picking the right shares. I would be a low to medium risk investor and am considering investing €25,000 in each of the following.

*FTSE 100 TRACKER*

*Legal & General UK 100 Index *- 0.10 per cent (0.06 per cent through Hargreaves Lansdown)

*FTSE All SHARE TRACKER*

*Fidelity Index UK -* 0.09 per cent  (The charge is 0.07 if purchased through Fidelity.)

*EMERGING MARKET TRACKER*

*Fidelity Index Emerging Markets -* 0.25 per cent (0.23 per cent if purchased through Fidelity)

*GLOBAL SHARES*

*Legal & General International Index Trust *- 0.14 per cent (0.09 per cent on Hargreaves Lansdown)

My information has come from the following article….

http://www.thisismoney.co.uk/money/...915/A-guide-cheapest-index-tracker-funds.html

Any advice appreciated.


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## hikicker (14 May 2015)

They are all funds that you've listed. From your initial post I understood that you were interested in buying actual stocks which is a different thing and also has different (better) tax and cost implications


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## landlord (14 May 2015)

Ok sorry I guess the trackers are means of indirectly investing in stocks? 
Would these trackers be safer than directly investing in stocks, considering I have no experience. I thought these costs seem quite low, just the CGT to pay on top?


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## hikicker (14 May 2015)

landlord said:


> Ok sorry I guess the trackers are means of indirectly investing in stocks?
> Would these trackers be safer than directly investing in stocks, considering I have no experience. I thought these costs seem quite low, just the CGT to pay on top?



ETFs wouldn't be as tax efficient as shares (when selling) but there are people far more qualified than me on this forum to advise you on those issues. WRT shares, costs become in issue when buying in smaller amounts as the commissions/stamp duty as a percentage is higher with respect to small investments. TD charge €20 per trade so you can see the percentage cost difference in investing €100 versus €10,000

I'd advise a bit more research before you start investing that sort of money, there is a very good book by a regular poster here Rory Gillen (3 steps to investment success), well worth a read.


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## Jim2007 (14 May 2015)

There is an awful lot of over lap in those funds: FTSE All Shares includes the FTSE 100 and no doubt the Global Shares will also include some or all of the FTSE 100...

And even though you live in Euroland you have almost totally ignored it...


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## landlord (14 May 2015)

Jim2007 said:


> There is an awful lot of over lap in those funds: FTSE All Shares includes the FTSE 100 and no doubt the Global Shares will also include some or all of the FTSE 100...
> 
> And even though you live in Euroland you have almost totally ignored it...



Any suggestions then for greater diversification.

How about adding/replacing some of the above with....

*European trackers*
Those people looking for a fund that tracks the European indexes could consider the Fidelity Index Europe excluding UK which costs 0.12%, but you can cut that to 0.1% if you buy via Cavendish Online or Fidelity. It tracks the MSCI Europe excluding UK Index.

and

*US trackers*
The cheapest US tracker fund is the Fidelity Index US, which has ongoing charges of 0.1%, although you can reduce that to 0.08% if you buy the fund through Fidelity or Cavendish Online.


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## hikicker (14 May 2015)

landlord said:


> Any suggestions then for greater diversification.
> 
> How about adding/replacing some of the above with....
> 
> ...


Buy ten stocks of companies in different industry sectors at €10k each, you will be very well diversified then. Any of the above funds will give you diversification anyway however there are tax issues with selling funds that don't apply to shares/stocks. ETF's don't seem to be a very good idea if you are tax resident in Ireland however shares will only attract capital gains tax when sold. DYOR.


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## landlord (15 May 2015)

It's strange since so many people recommend stocks and shares over property as an investment. Yet the complexities associated with purchasing stocks shares funds etc....seem overwhelming. 
Picking 10 individual stocks in different sectors would be impossible for me as I wouldn't have a clue what to pick. That's why I'm more interested in a fund and preferably passive to keep the cost down. What are the tax implications of buying into funds and can you even buy into funds when domiciled in Ireland. 
I'm starting to feel that investing back into property is the way to go for me.


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## Fella (15 May 2015)

I've done lots of research it is complicated to me anyway my conclusions where (they may not be right!, but) 
I don't think 10 stocks is enough to get the diversification I needed anyway 

Buying an all world ETF that reinvests dividends is the best bet , the problem with funds is you can't offset the losers against the winners before paying tax so I think it's best to just buy one all world tracker this has at least a thousand stocks in it (not got numbers to hand) when you sell it or you are assumed to sell it at 8 years you pay exit tax at 41% instead of shares at 33% , I would rather pay the extra % for the diversification , also if dividend are reinvested you are not paying tax on them when recieved but get the accumulating effect on these up to 8 years this has to be worth some value I just haven't calculated it properly yet.


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## Boyd (15 May 2015)

Doesn't that make dollar cost averaging for ETFs really awkward I.e. If you buy in once a month you'll have 8 * 12 = 96 distinct tax chargeable events after eight years?

Im looking at somehow investing in US, EEA or OECD ETFs since they are taxed at CGT rather than exit tax and AFAIK the eight year rule doesn't apply. The problem is finding one or more that are accumulating.


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## ronaldo (15 May 2015)

For someone with so many properties in negative equity, the advantage of shares over funds is even greater.

For example, if you end up with a €100,000 chargeable gain in shares, you could decide to sell a property that has gone down in value by €100,000 since it's original purchase. When done on the same year, or before, this would remove the €33,000 tax liability completely.

For the above reason, you're best to avoid high-dividend shares, where dividends will be taxed as income at your marginal rate. Instead, you should go for low/no dividend shares that you expect to grow in value more.

One example of a share that doesn't pay a dividend is BRK (Berkshire Hathaway). One could argue that this particular share, by itself, is well diversified. This is because it owns, or holds a large share of, companies across many different sectors. Have a look at the link below and you'll realise that BRK could be considered a fund in itself, except treated the same as a share from a tax perspective.

Talking about the expected performance of individual shares isn't allowed on the forum but I believe talking about the advantageous tax-treatment of BRK in comparison to a fund, potentially holding a similar selection of assets, is permitted.

I wouldn't hold BRK alone in a portfolio though - although I would have no problem holding a higher allocation to it that to a typical individual share. For example, you could consider 30% BRK and 10% to a selection of seven other shares across a variety of different sectors.


http://en.wikipedia.org/wiki/List_of_assets_owned_by_Berkshire_Hathaway


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## landlord (15 May 2015)

To be honest I don't intend to sell any of the properties for a long time. As they are generating a v good nett income. 

I think I'm getting confused with the word "stock" and "share". Is BRK a stock, which effectively is a company in this case which invests in other stocks. Is that not the same as a fund?  
If I have an account with TD Waterhouse (opening soon) can I invest in BRK and profits would only be subject to CGT?
What other stocks would be similar to this in terms of medium to low risk, no dividend and diversified?


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## hikicker (15 May 2015)

ALL STOCKS COME WITH RISK!! A couple of food based companies on the iseq have seen there share price double in the past year and a current oil producing share I own is up 30% in a month but this can swing the other way. Again I highly recommend that you read up a little bit on it, it isn't that difficult as you are investing long term I presume rather than trading which is a different kettle of fish completely. If you concentrate on ftse100 companies or even iseq there are number of companies in food/energy/financial/manufacturing etc that would give you a good spread. Look up price to earning ratios on these companies and make a decision. One could argue that there may be value in certain bank shares at the moment, others would not. it is essential that you do your own research. As I said before, spending ten or twenty euro on a couple of books will give you a much better understanding.


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## Sarenco (15 May 2015)

A massively leveraged portfolio of seven properties and ten stocks - what could possibly go wrong?

2006 called and it wants its investment plan back...


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## hikicker (15 May 2015)

I assume the 100k isn't borrowed money


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## Sarenco (15 May 2015)

hikicker said:


> I assume the 100k isn't borrowed money


 
I'm sure it isn't but buying equities while you are carrying debt is essentially the same as buying equities on margin.

That might be justified in the context of making contributions to a tax-deferred retirement account (as there is annual limit on such contributions) but there is no getting away from the fact that investing on margin (i.e. using other people's money) is a highly aggressive strategy that can go horribly wrong.  Just look at some of the former titans of Irish industry that have come undone in recent years by pursuing this strategy.


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## hikicker (15 May 2015)

Fair point, he is obviously on very low rates if he is making cash on these properties yet is in negative equity.


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## Sarenco (15 May 2015)

...and interest-only mortgages at that. 

Investing in equities while in that position is essentially doubling down on what is already a highly risky speculative bet on asset prices.  A sharp interest rate increase could bring down the whole house of cards.


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## hikicker (15 May 2015)

Sarenco said:


> ...and interest-only mortgages at that.
> 
> Investing in equities while in that position is essentially doubling down on what is already a highly risky speculative bet on asset prices.  A sharp interest rate increase could bring down the whole house of cards.



I didnt' realise they were interest only. Yep, playing with fire indeed....


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## landlord (15 May 2015)

100k not borrowed. 

I have Cash reserves too. 

Yes over exposed in property. 
Although I have no mortgage on one of the properties, bought last year, hoping to avail of the seven-year no capital gains tax deal. 

All the rest are approximately achieving 4-5 times the rent compared to the ECB +0.75 interest only mortgages. Extra rental income has been saved not squandered. 

Will start reading up on the markets as suggested.


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## Sarenco (15 May 2015)

Hi Landlord

If your total borrowings exceed your total cash reserves, then you are investing in property and equities on a leveraged basis.  Nothing wrong with that per se but, particularly if done to excess, you could find yourself in a world of pain if circumstances change. 

Don't forget that current rents and interest rates are far from guaranteed.

If you are absolutely determined to invest in equities (outside of a pension wrapper) before paying down your borrowings then you might take a look at some UK income investment trusts (City of London, Bankers Trust, etc.) , which look like _relatively_ good value to me at the moment.


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## ronaldo (15 May 2015)

With six rental properties, the OP has a low-risk portfolio because the rental income is likely to cover the mortgage repayments at ECB + 0.75% interest, even if one or two properties are empty.

Therefore, the biggest risk here is that 3+ properties sit empty for an extended period of time - how likely is this in Dublin?

A less likely risk is that rent falls, or the ECB interest rate increases, to a level that results in the rental income not meeting the mortgage repayments - how likely is this when on such a great tracker rate? The OP has the figures available to him/her to be able to figure out how high the ECB rate would need to rise, or rents would need to fall, for this to happen.

The third, least likely, risk is that the properties are worth less than today's value in 17 years time when the OPS interest-only mortgage deals end.

So the question is - are the three risks identified above so great that the OP should consider liquidating part of his portfolio resulting in immediate losses - I don't think so.

Of course, the OP could also simply pay down some mortgage capital - but on such a tracker rates, I personally wouldn't. I would do as the OP intends and invest a lump sum in the stockmarket followed by regular future investments. This approach is highly likely to result in higher returns than paying down mortgages secured at such low rates.

Many will disagree with my thoughts but that's because most peoples risk tolerance is lower than mine and, likely, the OPs.


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## Gordon Gekko (15 May 2015)

The OP is funded at ECB +0.75% and will be long real assets in a world where there's QE.

Not a bad position.

BTW US ETFs are treated like shares for tax purposes. Maybe look at some kind of Dividend Aristocrats ETF or Global Brands ETF.


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## Sarenco (15 May 2015)

You should be very familiar with US estate tax, withholding tax on dividends and FATCA compliance before investing a substantial sum in a US domiciled ETF.  You might cure an Irish tax problem only to give up all your gains to Uncle Sam!


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## Gordon Gekko (15 May 2015)

Sarenco said:


> You should be very familiar with US estate tax, withholding tax on dividends and FATCA compliance before investing a substantial sum in a US domiciled ETF.  You might cure an Irish tax problem only to give up all your gains to Uncle Sam!



Not if you purchase through an Irish broker.

In practice, no US estate tax is collected. Withholding at 15% arises and is available as a credit against the higher Irish rate of tax. And FATCA is of no relevance.


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## RichInSpirit (15 May 2015)

Open a spread betting account and forget about tax!


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## Sarenco (15 May 2015)

Gordon Gekko said:


> Not if you purchase through an Irish broker.
> 
> In practice, no US estate tax is collected. Withholding at 15% arises and is available as a credit against the higher Irish rate of tax. And FATCA is of no relevance.




Well, US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities and there is no credit against Irish CAT.  15% is the correct withholding rate if you have made the appropriate US filings.  FATCA certainly becomes relevant if your paperwork is not in order!


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## Gordon Gekko (15 May 2015)

Sarenco said:


> Well, US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities and there is no credit against Irish CAT.  15% is the correct withholding rate if you have made the appropriate US filings.  FATCA certainly becomes relevant if your paperwork is not in order!



None of the above is correct.

- US estate tax does not arise in such circumstances. The deceased spouse would have to be a US citizen in order for the $60k pitfall to be relevant. And even then, if the shares are held through an Irish broker, the tax is never collected.

- Any Irish broker will arrange for you to avail of the 15% rate.

- Any Irish broker will deal with the FATCA side of things (which is virtually non existent for an Irish person).


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## Sarenco (15 May 2015)

Gordon Gekko said:


> None of the above is correct.
> 
> - US estate tax does not arise in such circumstances. The deceased spouse would have to be a US citizen in order for the $60k pitfall to be relevant. And even then, if the shares are held through an Irish broker, the tax is never collected.
> 
> ...



No, with certain exceptions US estate tax applies to non-US citizens and non-US residents as regards any US assets (including securities issued by US companies) and appropriate filings must be made where assets have a value in excess of $60,000.

Here's a link to an IRS note on the subject:

[broken link removed]

I didn't say that an agent couldn't look after US filings on your behalf but they still need to be addressed.  Irish brokers are rarely regarded as being inexpensive and you need to be confident that they have the necessary expertise to make the necessary US filings and that these are actually completed.


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## Gordon Gekko (16 May 2015)

Sarenco said:


> Well, US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities



That isn't what you said (see above). The statement is incorrect. US estate tax only arises in such circumstances if the deceased spouse is a US citizen.



Sarenco said:


> No, with certain exceptions US estate tax applies to non-US citizens and non-US residents as regards any US assets (including securities issued by US companies) and appropriate filings must be made where assets have a value in excess of $60,000.
> 
> I didn't say that an agent couldn't look after US filings on your behalf but they still need to be addressed.  Irish brokers are rarely regarded as being inexpensive and you need to be confident that they have the necessary expertise to make the necessary US filings and that these are actually completed.



Irish brokers don't take care of the US filings. Nothing gets filed. No tax is paid even though a liability can exist, and the US do nothing to chase the tax. Any obligation is the investor's. The US have no visibility on gifts or inheritances of shares as all that's visible on the US side is a change of legal ownership (e.g. Private Bank Nominee 1234 to Private Bank Nominee 5678).


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## Sarenco (16 May 2015)

I'm not following you - are you saying that a US estate tax liability doesn't arise for non-US citizens or are you saying that a liability does arise but can be evaded?

The first $60k of US assets are exempt from US estate tax for non-resident aliens so I don't see any inconsistencies between my statements but you might clarify.

Can you explain to us how an Irish broker can arrange for a 15% withholding without filing the appropriate paperwork?


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## Gordon Gekko (16 May 2015)

Sarenco said:


> I'm not following you - are you saying that a US estate tax liability doesn't arise for non-US citizens or are you saying that a liability does arise but can be evaded?
> 
> The first $60k of US assets are exempt from US estate tax for non-resident aliens so I don't see any inconsistencies between my statements but you might clarify.
> 
> Can you explain to us how an Irish broker can arrange for a 15% withholding without filing the appropriate paperwork?



You said that "US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities". That is incorrect and it's the third time that I've quoted it.

Most Irish brokers have QI status with the US which enables the treaty rate of 15% to be applied at source. That's standard stuff.

A liability can arise and does arise but nobody pays it and the IRS don't chase it. So yes - Widespread evasion on a worldwide basis.


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## landlord (16 May 2015)

Hey guys......
Remember me?.......?......the OP and my original post ! You seem to be going off on a tangent there!
Coincidently I also hold US citizenship, but am now even more confused about whether I can trade in U.S. stocks through say TD Waterhouse, without any tax issues.


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## ken (17 May 2015)

landlord said:


> Hey guys......
> Remember me?.......?......the OP and my original post ! You seem to be going off on a tangent there!
> Coincidently I also hold US citizenship, but am now even more confused about whether I can trade in U.S. stocks through say TD Waterhouse, without any tax issues.


HI Landlord confusion oh yes ..on stocks etc and what to invest in i'm also a landlord with an interest in stocks etc .....well here is another option for you to consider ....not from me but direct from Ray Dalio no less ..and with us citizenship this shouldn't be an issue...consider no more than 7.5% of your fund into gold ..7.5% into commodities 15% intermediate us bonds 40% long term us bonds 30% in stocks readjust yearly ...ok landlord ..love to hear the feedback and all the opinions on this from the guys on here


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## Sarenco (17 May 2015)

Gordon Gekko said:


> You said that "US estate tax applies to transfers between spouses on death if you hold more than $60k in US equities". That is incorrect and it's the third time that I've quoted it.
> 
> Most Irish brokers have QI status with the US which enables the treaty rate of 15% to be applied at source. That's standard stuff.
> 
> A liability can arise and does arise but nobody pays it and the IRS don't chase it. So yes - Widespread evasion on a worldwide basis.



Yes, you have said repeatedly, without explanation, that what I have said is incorrect and have then gone on to say that a liability does arise - hence the confusion.

Yes, I am aware of the fact that most Irish brokers (not sure about TD Waterhouse) have QI status whereby they act as withholding agent for the IRS.


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## Jim2007 (17 May 2015)

Sarenco said:


> No, with certain exceptions US estate tax applies to non-US citizens and non-US residents as regards any US assets (including securities issued by US companies.........



From a practical point of view this tax law is unenforceable unless of course you request the share certificates to be issued in your name.  Millions and millions of U.S. shares are traded every day in nominee accounts and the IRS have no idea who owns the shares.

Even FACTA for the most part can be ignored if the broker has no desire to operate a business in the U.S. nor do business with U.S citizens or Green card holders.

The only thing you need to deal with is reclaiming the 15% retention tax that is applied to dividends and similar distributions and this is between you and the Irish revenue authorities, nothing to do with the IRS.


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## Sarenco (17 May 2015)

landlord said:


> Hey guys......
> Remember me?.......?......the OP and my original post ! You seem to be going off on a tangent there!
> Coincidently I also hold US citizenship, but am now even more confused about whether I can trade in U.S. stocks through say TD Waterhouse, without any tax issues.



Hi Landlord

Yes, apologies for the off-topic discussion.

In my opinion, investment trusts offer the best compromise for Irish stock investors in terms of achieving diversification at a reasonable cost and relative simplicity from a tax perspective outside of a pension wrapper.  Dividends are subject to income tax and gains are subject to CGT with loss relief, etc.

Unfortunately you will have currency conversion costs and stamp duty (0.5%) in addition to your broker's commission.

You will obviously need to do your own research but here are some sample portfolios to get you started:

http://www.johnbaronportfolios.co.uk/

Alternatively, you might consider investing in a global investment trust such as Foreign and Colonial Investment Trust plc (FRCL) as a core holding and then adding to it as you see fit.

Good luck.


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## Sarenco (17 May 2015)

Jim2007 said:


> From a practical point of view this tax law is unenforceable unless of course you request the share certificates to be issued in your name.  Millions and millions of U.S. shares are traded every day in nominee accounts and the IRS have no idea who owns the shares.



Understood but there will obviously be a change in beneficial ownership (and presumably a new W-8BEN required) on the death of the shareholder.  I suspect the fact that the OP holds US citizenship also complicates matters.


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## Jim2007 (17 May 2015)

landlord said:


> Hey guys......
> Remember me?.......?......the OP and my original post ! You seem to be going off on a tangent there!
> Coincidently I also hold US citizenship, but am now even more confused about whether I can trade in U.S. stocks through say TD Waterhouse, without any tax issues.



Yes OP this is bad news because it means you will have tax issues.  In opening an account with most on line brokers you will be required to declare your U.S. citizenship which at a minimum will result in additional paper work and depending on your circumstances may give rise to a U.S. tax liability.  Do you already submit an annual U.S. tax return?

In addition to restrictions on share dealing, you should be aware that at some financial products offered for sale to EU citizens across Europe can not be held by U.S. citizens.  Most often those products are domiciled in Luxembourg, Lichtenstein, Switzerland or Ireland.  So read the small print.


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## Gordon Gekko (17 May 2015)

Sarenco said:


> Yes, you have said repeatedly, without explanation, that what I have said is incorrect and have then gone on to say that a liability does arise - hence the confusion.
> 
> Yes, I am aware of the fact that most Irish brokers (not sure about TD Waterhouse) have QI status whereby they act as withholding agent for the IRS.



Sarenco, are you deliberately missing the point? Your statement regarding spouses was blanket when in fact it's only an issue between a US citizen spouse and a non US citizen spouse.


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## Sarenco (17 May 2015)

Gordon Gekko said:


> Sarenco, are you deliberately missing the point? Your statement regarding spouses was blanket when in fact it's only an issue between a US citizen spouse and a non US citizen spouse.



I'm not deliberately trying to miss your point, I'm simply trying to clarify your position.

You agree (I think) that, in general, a liability to US estate tax arises for any non-resident alien on inheriting US assets (including securities issued by a US company) with a fair market value in excess of $60,000.  It doesn't matter whether the US assets are inherited from a non-US citizen.

The only reason I mentioned a transfer to a spouse on death (the second part of the sentence that you take issue with) is that such an inheritance would be exempt from Irish inheritance tax and therefore the US estate tax would be a sunk cost.

What am I missing?


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## Gordon Gekko (17 May 2015)

Sarenco said:


> I'm not deliberately trying to miss your point, I'm simply trying to clarify your position.
> 
> You agree (I think) that, in general, a liability to US estate tax arises for any non-resident alien on inheriting US assets (including securities issued by a US company) with a fair market value in excess of $60,000.  It doesn't matter whether the US assets are inherited from a US citizen or a non-US citizen.
> 
> ...



The fact that it's only really an issue for spouses if the deceased spouse is a US citizen...


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## Sarenco (17 May 2015)

Ok, so if a non-US citizen dies and leaves material US assets to a non-US citizen spouse are you saying that there is no liability to US estate tax? Or are you saying that there is a liability but it can be ignored?


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## galway_blow_in (18 May 2015)

some contributors are being quit hard on the OP , his idea is pretty sound in that he openly admits to having little experience when it comes to investing in the stock market , he is right to go with index funds rather than individual stocks , its all very well saying that the tax situation is less desirable when it comes to ETF,s but the first priority should be to avoid losses and for inexperienced investors , buying individual stocks is very risky , its a shot in the dark

OP , if I were you I would do the following

open an account with the likes of saxo or TD investing or whoever ( avoid the irish brokers as they are extortionate in terms of fees )

pick the following three ETF,s on the Amsterdam exchange so that way you are denominated in euro

VUSA = the S+P
VEUR = a fund which covers about 600 stocks spread across europe
VFEM = emerging markets fund

an even simpler alternative is to buy one single global etf , this is comprised of thousands of companies , about 50 % north America , thirty % Europe , the rest is in japan and emerging markets

this can be bought on the Amsterdam exchange under the ticker symbol VWRL

all of the above are vanguard etfs which are the cheapest of all etf providers and the worlds second largest after blackrock - ishares


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## landlord (18 May 2015)

galway_blow_in.....thanks very much for the advice....
A few questions....requiring easy to understand (Please) answers

Why do I need to be denominated in Euro?

I guess the cost for buying them depends on the broker. I think TD Waterhouse charge only 20 euro to buy or sell. If I sell in 5 to 10 years, are there maintenance costs? Am I right in saying because it's an ETF, I pay my marginal rate of tax, or is it a straight 41%? How about USC and PRSI?
What happens regarding tax with any dividends received?
What is this rolling 8 year thing I have heard discussed?

Also I read Rory Gillens book "3 steps to investment success" recently and found it fascinating, specifically the chapter on value investing in the FTSE 100. 
In summary..... Picking 15 of the top FTSE 100 stocks (in terms of low price to earnings ratios), or picking 15 of the top 30 across the sectors, will ensure that you obtain GOOD VALUE stocks. 
Keep the stocks for a year and then repeat the exercise, selling those which fall out of the top 15 and buying those which enter the top 15. 
Has anyone adopted this approach? Is it risky? I would be interested in investing a small amount this way.  The rest in more secure diverse ETFs. 
Selling individual shares attracts CGT only? No USC or PRSI?


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## Jim2007 (18 May 2015)

landlord said:


> Also I read Rory Gillens book "3 steps to investment success" recently and found it fascinating, specifically the chapter on value investing in the FTSE 100.
> In summary..... Picking 15 of the top FTSE 100 stocks (in terms of low price to earnings ratios), or picking 15 of the top 30 across the sectors, will ensure that you obtain GOOD VALUE stocks.



This is a well known strategy it has been around for along time.  Do a search on 'Dogs of the Dow',  in post places I've seen it used it worked out very well over the long term.  However in each case it was being applied to small (under 30/40 positions) well diversified large cap indexes such as the SMI, STOXX50 and the CAC 40.  I have not seen it operate on such a large index as the FTSE, but my concern would be that you might end up very heavily weighted in a particular sector.  So do your research.


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## landlord (18 May 2015)

Just out of curiosity where can you find a listing of the FTSE 100 stocks and their price to earnings ratios?......I am wandering how diverse the top  15 or top 30 will be.


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## landlord (18 May 2015)

When I click on UK INDICIES, then FTSE 100 I can view all the stocks, but I have to click on each individual stock to view the price to earnings ratio. Is there anywhere that lists the ratios with the list of all 100 shares? Thanks


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## galway_blow_in (19 May 2015)

RichInSpirit said:


> Open a spread betting account and forget about tax!



spread betting is for a minority of experienced investors who are highly tolerant of risk , its not for newbies


landlord said:


> galway_blow_in.....thanks very much for the advice....
> A few questions....requiring easy to understand (Please) answers
> 
> Why do I need to be denominated in Euro?
> ...




you don't have to buy the ETF,s I recommended in euro denominated form , by all means buy in dollars , the dollar denominated options are more liquid anyway , some prefer to keep things in euro as it avoids having to transfer from euro to dollars when you first open your account

maintenance costs will not be very high , certainly a lot less than what irish life or the likes of bank of Ireland finance would charge

I don't know about the tax implications , if you plan to buy and hold , I doubt its all that relevant , the amount of dividends you receive will be small on those index funds but the broker will send you dividend schedules yearly


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## Boyd (19 May 2015)

All relevant information regarding  ETF tax and 8 year rule is discussed herehttp://www.askaboutmoney.com/threads/the-tax-treatment-of-etfs-for-irish-residents.188821/


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## Rory Gillen (23 May 2015)

Think about getting a bit of training on investing. I often use the following analogy: 'What has investing and driving a car got in common?'

If we want to drive and control the risks involved in driving, we take lessons. We pay attention to the rules of the road, we slow down in congested areas, we stop at the traffic lights. When we control the risks in driving we can gain from the enormous benefits of driving.

So, too, it is with investing. Rule no. 1: Learn what risks you face when investing in risk assets (like shares, hedge funds, commodities etc). Rule no. 2: Adopt a strategy to mitigate those risks. Do that and over a long period of time you can obtain the superior returns on offer from equities and other risk assets.

*Rory Gillen
GillenMarkets.com*


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## landlord (25 May 2015)

Is it still the case that there is a 1 % stamp duty charge on share purchase, but not on ETFs?


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## Boyd (25 May 2015)

landlord said:


> Is it still the case that there is a 1 % stamp duty charge on share purchase, but not on ETFs?



Yep, read this: http://www.consumerhelp.ie/stocks-and-shares


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## galway_blow_in (26 May 2015)

landlord said:


> Is it still the case that there is a 1 % stamp duty charge on share purchase, but not on ETFs?



1% stamp duty on applies on irish shares anyway , in the uk its .5% , most of Europe the same and there is no stamp duty on American shares


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## Sarenco (26 May 2015)

No stamp duty on European shares (ex-Ireland, ex-UK), although a financial transaction tax may be introduced at some stage.

It's also worth bearing in mind that investment funds/ETFs will pay stamp duty on acquiring shares in Irish & UK companies.


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## landlord (31 May 2015)

Let's say for example you have 2,000 euros to invest.......
If the same Vanguard S and P 500 ETF is listed on both the Amsterdam (denominated in euro) and the New York (denominated in dollars) Stock Exchanges, then would there be much difference if for example (1000 Euro/1,000 Euro converted to Dollars) were invested in each exchange for one year and then the latter converted back to Euro?

The fund doesn't  have the same ticker, however the underlying stocks in the Amsterdam denominated ETF would be physically replicated.see link below.

http://www.etfstrategy.co.uk/vangua...n-nyse-euronext-in-amsterdam-and-paris-48652/

So the differences between the funds are....

S and P 500 ETF (VUSA) ON EURO STOCK EXCHANGE ......
TER 0.09%
41% exit tax on gains and distributions (dividends)
No loss relief.

S and P 500 ETF (VOO) ON N.Y. STOCK EXCHANGE.....
TER 0.05%
Conversion costs Euro to dollar on setup
CGT 33% on exit and income tax, USC and PRSI on distributions (dividends)
Loss relief 
Conversion costs dollar to Euro on exit. 

Now for the maths.....?.....


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## landlord (13 Jun 2015)

Many thanks to everyone who assisted on this thread and other threads. After taking all the advice on board, I have a plan!!

MY STRATEGY/PRIORITIES.......

PAY OFF DEBT !!
3000 a month has/will be going toward paying off mortgage "CAPITAL"(home/RIP)

LUMP SUM INVESTMENT
50%---- iShares Core EURO STOXX 50 UCITS ETF (SXRT) (EUR) accumulating (TER 0.10%)
20%---- iShares Core MSCI World UCITS ETF (IWDA) (EUR) accumulating (TER 0.2%)
10%---- iShares Core Emerging Markets IMI UCITS (EMIM) (EUR)  accumulating (TER 0.25%)
10%---- PRSA AVC (still confirming if I am able to do this within SFT limits and considering tax free lump sum and max annual age related contribution limits )
10%---- cash

MONTHLY INVESTMENTS €500-€1000
(Euro/pound/dollar cost averaging) into zero income value stocks.
Starting with Berkshire Hathaway B. (i'm not sure if this is classed as a value of stock but it is certainly a highly recommended zero income stock).

REASONING.......

This portfolio would be geared towards the long-term, medium risk, lump sum, investor with little appetite for continuous tax accounting and a fear of a long term strengthening of the Euro.

Medium risk considering a 15-20 year window.

Reduced currency risk. Portfolio geared more towards Euro stocks. (due to concern over the euro strengthening during the 15 to 20 year investment period).

No currency conversion costs (for the lump sum part) and minimal stockbroker purchasing costs.

8 years deemed disposal at 41% for EU (UCITS) ETF will have to be accepted over the U.S. ETFs better 33%CGT for the benefits to the long term investor. (inability to get accumulating US ETFs)

Zero Income (accumulating funds) avoiding dividend income tax at 40%, USC 8% and PRSI 4%.

Benefit from compounding (dividends reinvested).

No tax annual tax headache, due no income to account for.

Reduced exposure to the lack of "loss relief" given the 15-20 year investment.

Relatively Low cost TERs

No stamp duty on ETFs (or the U.S. stock Berkshire Hathaway)

Reasonable tracking errors.


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