ETFs for Dummies
- Thread starter Cricketer
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As an example, you can open an account with DeGiro, do a bank transfer to get the funds to them, then use their online portal to buy the ETFs of your choice.
There are some nuances around which ETFs to choose and how to pay tax on them, but you’ll find plenty of info about that in other threads here.
There are some nuances around which ETFs to choose and how to pay tax on them, but you’ll find plenty of info about that in other threads here.
Thanks Zenny. Would anyone like to share (ha!) their 'ETFs du jour'?
Don’t invest in an ETF until you understand the tax
Exchange-traded funds may be less attractive than they appear due to onerous tax reporting requirements
Thanks @Sarenco, I had previously looked at that. Making the (big) assumption that I could handle the tax, are there any particular ETFs that are worth considering? I have €100k invested with Zurich (€40k in International Equity, €35k in Prisma 4 and €25k in 5Star5 Global, 1% AMC). I'm paying tax at the top rate and will continue to do so. Retired on DB pension, debt free, no dependents. Investment horizon 15 years. I can afford to invest an additional 10/20k per year if I wish.....Don’t invest in an ETF until you understand the tax
Exchange-traded funds may be less attractive than they appear due to onerous tax reporting requirementswww.irishtimes.com
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If you are 20% tax payer, when you pay the tax on disposing of ETFs is it still a flat 41% that you pay on the gains?
The specific example is that I know someone who invested ETFs about 4 years ago which have made a nice gain.
She is currently in the top tax bracket. But she is taking a career break now for the next two years and will have no income.
She has savings to get her by. But could she take advantage of this and sell her ETFs and only be taxed at 20%? OR is that impossible with ETFs?
The specific example is that I know someone who invested ETFs about 4 years ago which have made a nice gain.
She is currently in the top tax bracket. But she is taking a career break now for the next two years and will have no income.
She has savings to get her by. But could she take advantage of this and sell her ETFs and only be taxed at 20%? OR is that impossible with ETFs?
Yes. Exit tax is the same rate for everyone, regardless of marginal tax rate.
Younginvestor93
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That's a solid investment. You can go about your life and never think of it now for 8 years. The longer you leave it the more it will be and you only have to pay tax on your profits 8 years to the day you bought it. You can pay that out of your cash deposits aswell and not even touch your funds leaving them there for another 8 years if you want. Well done!Update from the OP here. I opened an account with Degiro and put 20k in a Vanguard all-world (VWCE) ETF. I intend to leave it there for at least 10 years. It's in the lap of the monetary gods now.
Only time will tell if it was or not. "Investments may fall as well as rise."
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Younginvestor93
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Yes, but almost zero chance of you not being up with a decent profit over the next 10 years, and if by some miracle you are not, just wait a little longer and then you will be way up.
Sorry but that’s simply untrue.
If history is any guide, there’s a ~5% probability that the return on a global equity index fund will be negative over any given 10-year period.
More importantly, there’s a ~20% chance that global equities will underperform bonds - or even a simple deposit account - over any 10-year period.
The first decade of this century would be a good example of such a period.
Younginvestor93
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Good point, I checked the figures and you are correct. Although if you wait it out another couple years you are up again and will have made good profit on your investment. Not a loss unless you sell!
Bonds don't stand a chance over a longer period and are nearly always pointless if you are far from retirement.
Equities have under performed bonds for longer periods than you might think.
Stocks for the long run?
It's commonly stated that stocks provide superior long-term returns to bonds. But what does "long-term" mean in this context? Over the last 20 years, the S&P500 has produced an annualised 4% return, with all dividends reinvested. That's an annualised real (after-inflation) return of less than...
www.askaboutmoney.com
Younginvestor93
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I'm curious though. Did you happen to come across investment trusts in your research before making your investment. If so, I wonder did you give any thought to them and what was the rational behind the decision for investing in VWCE?Update from the OP here. I opened an account with Degiro and put 20k in a Vanguard all-world (VWCE) ETF. I intend to leave it there for at least 10 years. It's in the lap of the monetary gods now.
I know that there's plenty I don't know. It's a one-off investment so the tax return won't be onerous. VWCE is accumulating so any gains are reinvested. More importantly, I have no idea what companies are likely to do best in the coming years and while buying individual stocks would be tempting, I don't know enough to do so. VWCE is an all-world fund so very well diversified. Investments in total now amount to one third of my assets (I'm in my late 50s and not long retired) and I'm comfortable with that balance. I'm disciplined; I've enlisted so now I will soldier. For good or ill, that's my rationale.
Younginvestor93
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Thanks for your reasoning on that one. I agree with you, stock picking is not for the majority, plus it is time consuming and stressful to keep on top of it all. Not a set and forget option. I would be clueless also. You sound like you have a solid plan, so good luck with it!