First Investment in Mutual Fund £20000?

[johnnynordmende]

Hi,

A bond of mine recently matured and I'm not in the market for a house or anything in property. I have £20000, so I was considering investing it in a mutual fund with Vanguard. Thinking 5 to 10 year investment, maybe more.

I don't have a financial adviser so am wondering should I diversify a little? I know that in regards to fees Etc, mutual funds aren't hit too hard!

Also I am in the republic of Ireland and wanted to invest in something that avoids the DIRT tax (Deposit Interest Retention Tax [broken link removed])

Anyone in a similar position recently who could give me a bit of guidance?

Regards

John

 

[Steven Barrett]

am wondering should I diversify a little

You can buy a global ETF if you want.

Like DIRT, you have to pay exit tax on your profits at the same rate. If you want to buy shares directly, you pay CGT at 33% but you won't be able to get the same level of diversification.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[johnnynordmende]

Like DIRT, you have to pay exit tax on your profits at the same rate.

Are there any 5 - 10 year investments in Ireland where I wouldn't lose half my yield to tax?
I consider 41% a bit excessive, especially in an non guaranteed investment!

John

 

[Marc]

John

You don't give much to go on here.

Vanguard mutual funds have minimum investments of typically €100,000 or more so unless you buy through an adviser you are going to have to buy ETFs and then of course you will need to buy through a stockbroker.

Both European variants are subject to exit tax at 41% on both income and gains.

Non ucit funds may be subject to capital gains tax at 33% but you would be liable to income tax at your marginal rate on any dividends which could be up to 55% when you include USC and PRSI.

If you are looking for an equity investment, a broadly diversified global equity fund via a US domiciled ETF purchased through a low cost US brokerage, with a low dividend yield would probably be the optimum here
Low charges typically around 0.1% to 0.2%pa
Gains subject to capital gains tax at 33% with loss relief available
Income taxed at marginal rates with credit for US withholding tax at source

 

[joe sod]

"Non ucit funds may be subject to capital gains tax at 33% but you would be liable to income tax at your marginal rate on any dividends which could be up to 55% when you include USC and PRSI.

If you are looking for an equity investment, a broadly diversified global equity fund via a US domiciled ETF purchased through a low cost US brokerage, with a low dividend yield would probably be the optimum here"

Hi marc so is that the consesus view now on US domiciled ETFs, that the CGT taxation regime applies rather than the exit tax regime that applies with european domiciled ETFs. I know revenue have not given a definitive response on this but it appears to be the consensus view