Investment Trust options

Sarenco said:
I don't think that UK investment trusts are necessarily "better" than accumulating ETFs.

However, I think that investment trusts are a good option for somebody with significant capital outside a pension wrapper, with a low marginal income tax rate. For example, a retiree on a modest pension and a paid for house who receives a significant inheritance.

I'm afraid I don't know anything about Degiro - I don't hold any equities outside my pension.
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Thanks, I wonder has there been anyone who has run the figures on ITs vs ETFs?
That makes sense for low income individuals as they can take the dividends @20% tax and get growth at 33% plus they dont have to sell after 8 years like ETFs.
I think the returns on some Investment Trusts can be higher than the Index, for example SMT or F&C IT although they are arguably not as safe as holding a global equities tracker.

ETFs allow dividends to compound tax free which might is a benefit, despite the deemed disposal they are a comfortably safe long term investment.
 
Younginvestor93 said:
Where is the best place to purchase them if it is still possible with Brexit, I can only find Murray International Trust and City of London Investment Trust at the moment on the LSE?
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Are you sure they are ordinary shares and not preference shares that are listed?
 
Younginvestor93 said:
That makes sense for low income individuals as they can take the dividends @20% tax and get growth at 33% plus they dont have to sell after 8 years like ETFs.
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Dividends taxed at 25% from 01 JAN.
Yes, lower rate tax payer could claim back excess, but its an ordeal.
The form ask for a lot of proof, including screenshots from Bloomberg.
 
RedOnion said:
Are you sure they are ordinary shares and not preference shares that are listed?
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City of London Investment Trust looks to be available. Ticker: CTY
LSE. C. I think common stock. Ordinary Shares.

Scottish Morgage not available. F&C IT not available, only I had it in my favourites is the only reason I can see. I can't search for it. No company profile, financial or ratios and cannot be traded at the moment.


Any idea whats that about?
 
fistophobia said:
Dividends taxed at 25% from 01 JAN.
Yes, lower rate tax payer could claim back excess, but its an ordeal.
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Irish DWT (if that’s what you are talking about) does not apply to dividend payments from UK investment trusts to Irish resident taxpayers.
 
fistophobia said:
Dividends taxed at 25% from 01 JAN.
Yes, lower rate tax payer could claim back excess, but its an ordeal.
The form ask for a lot of proof, including screenshots from Bloomberg.
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Is there 25% DWT on UK share dividends to Irish Residents?
 
fistophobia said:
Dividends taxed at 25% from 01 JAN.
Yes, lower rate tax payer could claim back excess, but its an ordeal.
The form ask for a lot of proof, including screenshots from Bloomberg.
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Another hassle for Irish investors, nothing is straightforward here! What do you think is the best option for outside pensions investments in Ireland?

Straight up stock picking, low dividend ITs or just suck up deemed disposal on the Etfs, or buy your own forest? I here its tax free!
 
Sarenco said:
Not really. There’s no DWT to worry about - @fistophobia is mistaken.

Ok, thats on dividend income from US stocks hes referring to is that correct?
I must research how that works, Im not well versed in how much dividend income you get, how much is witheld and how much yiu announce to revenue?
Buy a home and pay off the mortgage ASAP.
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When thats done and the pension is maxed?
 
Younginvestor93 said:
When thats done and the pension is maxed?
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To be clear, you've bought a house, paid the mortgage, and you're maxing your pension contributions?

Or are you asking hypothetical questions again?

There isn't one 'right' or 'best' answer that works for everybody.
 
RedOnion said:
Or are you asking hypothetical questions again?

There isn't one 'right' or 'best' answer that works for everybody.
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Hi Red Onion, Its a hypothetical question, to get a sense of what a long term plan would look like. I understand the advice recommended by most I have read is get on the property ladder, pay the pension, pay the mortgage down and if you then still have excess income....this is the part I am not 100% sure of what to do next. Euro Cost Averaging money into the best outside pension vehicle, would be the next best option to accumulate wealth I think. What that vehicle is not straightforward in the Irish context from what I understand. At the moment, I think its a 3 way contest between individual stock picking/ Uk investment Trusts/ Accumulating ETFs.
 
fistophobia said:
Yes. As of 01 JAN. Irish brokers deduct.
for UK shares, this is new development.
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Why would Irish brokers deduct UK DWT from dividends on UK shares paid to Irish tax residents?!

The UK doesn’t even apply DWT to dividends paid by investment trusts (other than REITs).
 
Sarenco said:
Maintain a high equity allocation within your pension fund and keep your after-tax savings in cash.
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I agree with high equity allocation, I would go 100% global equities when a long way off pension age.
I don't agree with leaving a lot of after tax income in cash, if yu have excess cash then I'd like to just keep investing rather than have it sit in a deposit account. Get money, Buy income and all that!
 
Younginvestor93 said:
I agree with high equity allocation, I would go 100% global equities when a long way off pension age.
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Most folks won’t be a “long way off” retirement by the time they are mortgage free, particularly if they always maximised their pension contributions (which I think generally makes sense).

In your case, I think you should focus on your career and saving a cash deposit for a house purchase - obsessing about the “best” use for your after-tax savings is a waste of your time.
 
My best investment in life - take a big mortgage as owner occupier.
Younginvestor93 said:
Hi Red Onion, Its a hypothetical question, to get a sense of what a long term plan would look like. I understand the advice recommended by most I have read is get on the property ladder, pay the pension, pay the mortgage down and if you then still have excess income....this is the part I am not 100% sure of what to do next. Euro Cost Averaging money into the best outside pension vehicle, would be the next best option to accumulate wealth I think. What that vehicle is not straightforward in the Irish context from what I understand. At the moment, I think its a 3 way contest between individual stock picking/ Uk investment Trusts/ Accumulating ETFs.
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You could pay off mortgage for the first house then trade up and start paying mortgage again for bigger one. Enjoy living in it and there will be no CGT on disposal if it remains owner occupier. Additionally, if you want to rent out a room (I won't), you can avail rent a room relief. Do you think any of three options you mentioned can give you better returns long term.
 
Sarenco said:
Why would Irish brokers deduct UK DWT from dividends on UK shares paid to Irish tax residents?!

The UK doesn’t even apply DWT to dividends paid by investment trusts (other than REITs).
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S,

Let me clarify - calling it DWT, its more accurately Encashment tax.
Yes, its 25% with-held at source by Irish brokers.
This has only happened this year.
I am talking about a standard UK equity.
I will try and find out about investment trusts, checking by ISIN.
 
Younginvestor93 said:
Thanks, I wonder has there been anyone who has run the figures on ITs vs ETFs?
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The higher the dividend, it is more advantageous to be in an ETF or fund and let them accumulate tax free. However, dividends on the MSCI for example is about 1.5%. At this level, it is more advantageous to pay income tax and CGT.


On the tax situation on a whole, it is what it is. The exit tax on investments is too high but do you what, so is income tax and USC. We live in a high taxation country. There is no point in comparing the tax situation of Irish investments with the tax treatment of the US. It's a different country and the US doesn't have to pay for the social protections that are provided here (get Covid in the US will cost you $73,000 if you don't have insurance).

If you want it changed, write to the Revenue and your TD and complain about it and offer some suggestions.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
SBarrett said:
The higher the dividend, it is more advantageous to be in an ETF or fund and let them accumulate tax free.
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What position do you think investment trusts will be in going forward, is there news on them coming out regarding Brexit fallout?

Degiro have already taken down a few of them. I wonder could they go the way of ETFS and revenue could ask for 41% tax on them although I am not sure if revenue have ever 100% clarified that they are taxed at 33% even now?
 
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