60K investment safety split between 3 different online brokers?

[LLB123]

I have 60k to invest and want to do it via an online brokers/fintech for ease of use and so I can keep an eye on the go and also because I primarily want to use some USD I have on deposit earning nothing.

Strategy:
20k EU - Trade Republic in a single share 'proxy ETF' (Berkshire)
20k EU - Revolut; 5k each in four tried and trusted popular tech shares (Apple/Nvidia etc).
20k USD - eToro entirely in Vanguard VOO ETF

I'd prefer from a growth and compounding point of view to just put the whole shebang into a single ETF and forget about it, but all of the online brokers protection limits seem to only run to 20k for securities, which makes me think it's 'safer' to split it up.
Am I missing anything? I'm aware of the ETF deemed disposal thing but when the time comes will more than likely dispose any gains in the US where I plan to retire!

 

[ClubMan]

I'm aware of the ETF deemed disposal thing but when the time comes will more than likely dispose any gains in the US where I plan to retire!

The ETF deemed disposal rules are irrelevant if you're buying shares that will be taxed under CGT rules (and income tax if there are dividends). Or is the Vanguard thing an ETF? If it is and you're taxable in Ireland across any 8 year anniversaries then surely you'll be liable for the deemed disposal taxes?

I concluded a while back that the deemed disposal taxation rules and rates rendered it too messy to invest in ETFs and I plumped for diversified conglomerate shares like BH instead.

 

[LLB123]

The ETF deemed disposal rules are irrelevant if you're buying shares that will be taxed under CGT rules (and income tax if there are dividends). Or is the Vanguard thing an ETF? If it is and you're taxable in Ireland across any 8 year anniversaries then surely you'll be liable for the deemed disposal taxes?

Yes Vanguard is an ETF, I've edited above for clarity. Aiming to retire or at least part-reside in the US over next 10 years all going well, but prepared to suck up the deemed disposal if at the time I'm still tax resident here.

 

[ClubMan]

Nothing wrong with your investment choice per se as far as I can see but it's difficult to know for sure without more knowledge about your overall situation - e.g. if you had a high rate loan then that might merit reduction/clearing with the spare cash etc.

 

[LLB123]

I concluded a while back that the deemed disposal taxation rules and rates rendered it too messy to invest in ETFs and I plumped for diversified conglomerate shares like BH instead.

I'd happily invest the lot in BH but with only 20k protection limit for online brokers makes me pause!

 

[Corola]

20k USD - eToro entirely in Vanguard VOO ETF

Check with eToro that you're actually investing in an ETF and not a CFD.

eToro General Risk Disclosure

eToro encourages responsible trading. As a regulated platform we are required to notify our clients of the risks involved with online trading.

www.etoro.com

CFD stands for “Contract For Difference,” meaning you are not buying the underlying asset, but, rather, purchasing a contract to settle the difference in the initial and ending price of the asset.

 

[LLB123]

Check with eToro that you're actually investing in an ETF and not a CFD.

eToro General Risk Disclosure

eToro encourages responsible trading. As a regulated platform we are required to notify our clients of the risks involved with online trading.

www.etoro.com

OK, that's thrown me, what's the difference essentially? Aware at least that CFDs are more complex trading instruments, so does make the eToro investment more of a shareholding. And thus gains liable to CGT?

 

[Corola]

CFDs - you don't own anything listed on a stock exchange, it's basically an IOU between you and eToro. It may be leveraged, carrying a lot more risk and you could be subject to a margin call where they close out your position at unfavourable price. The fees may be higher.

Unless you are 100% sure you are directly buying the underlying ETF, don't use eToro.

 

[LLB123]

CFDs - you don't own anything, it's basically an IOU between you and eToro. It may be leveraged, carrying a lot more risk and you could be subject to a margin call where they close out your position at unfavourable price. The fees may be higher.

Unless you are 100% sure you are directly buying the underlying ETF, don't use eToro.

This info is gold, thank you so much for the heads up. Is this the same for all eToro offerings including shares? Could switch my strategy to Berkshire only at eToro and use Trade Republic for the ETF, but I can't see an offering for Vanguard or equivalent on the Trade Republic platform.

 

[Corola]

I don't use eToro, but this person explains it well:

eToro will sell you a Contract for Difference , based on any US ETF at present. You pay the full price for the ETF but it is not yours , I would describe it as a bet on the future value of the ETF with eToro. You can sell when you please , and eToro will pay you the market price. Interest paid by the ETF is refunded to you by eToro. .
At present CFD are taxed under the CGT rules on any gains , and interest is charged at your marginal rate of income tax, and USC. Any losses are allowable against CGT.
If you have confidence in eToro , ( and I know of no reason to doubt their stability ) , this might be a method to solve your problem.
On a personal level I have held several CFDs with eToro , over the past 18 months , and have had no problems .
You can buy long or short , or on the margin , but I feel these methods are only suitable for the more experienced ( and braver ) investor.

 

[LLB123]

I don't use eToro, but this person explains it well:

Interesting because unless I'm mistaken, the CFD is essentially a deemed disposal workaround since CGT rules apply. But perhaps not worth a 20k holding if it's merely a 'bet'!

 

[Corola]

I can't see an offering for Vanguard or equivalent on the Trade Republic platform.

VOO is a US-domiciled ETF, but you can find the equivalent Irish-domiciled versions, for example VUAA for S&P500 index or VWCE for FTSE All-World index.

Unless you have a specific reason for wanting US-domiciled VOO, then Irish-domiciled is safer.

 

[LLB123]

VOO is a US-domiciled ETF, but you can find the equivalent Irish-domiciled versions, for example VUAA for S&P500 index or VWCE for FTSE All-World index.

Unless you have a specific reason for wanting US-domiciled VOO, then Irish-domiciled is safer.

Exactly what I need. Very much appreciate your help @Corola, thank you so much.

 

[Corola]

the CFD is essentially a deemed disposal workaround since CGT rules apply.

Workaround or loophole to be closed perhaps.

It's not exactly the same because the US-domiciled ETFs you could buy as a CFD are not subject to gross roll-up in the same way. They are distributing, i.e. obliged to pay out their dividends on which you would be subject to income/exit tax. Whereas the Irish-domiciled ETFs are accumulating, i.e. reinvesting their dividends free from tax which is the reason for deemed disposal.

 

[mc-BigE]

just on a little side note regarding Trade republic, i started putting 1000 euro into it per month from feb 2022 onwards, and mainly picking up well known shares with the 1000 euro, sometimes 4x250 euro , 2x500 and pick nice well known shares (Lilly/apple/tesla/NVidia/amazon etc etc) its been working well for me, (little bit of a wobble last month when the share prices fell) my question is , how secure is trade republic? , should i think about selling up and removing money out of there once you reach say 20K