Article - the (depressing) reality of Irish investment options.

bankrupt said:
Is there any investor advocacy group actively trying to change government policy? My perception of SF is that they are anti-investor but perhaps they would be interested at least in lowering the charges that funds routinely charge for pitiful performance?
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State price fixing isn't going to solve this or any other problem of this nature. Fix the unattractive investment environment and competition will fix the high charges problem.
 
T McGibney said:
State price fixing isn't going to solve this or any other problem of this nature. Fix the unattractive investment environment and competition will fix the high charges problem.
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Agreed. I did not intend to suggest that price fixing was any sort of solution, my question was more whether or not perhaps SF has the inclination to (as you say) "fix the unattractive investment environment." I suspect not but perhaps could be surprised.
 
bankrupt said:
Agreed. I did not intend to suggest that price fixing was any sort of solution, my question was more whether or not perhaps SF has the inclination to (as you say) "fix the unattractive investment environment." I suspect not but perhaps could be surprised.
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They want to make life harder for investors. They absolutely hate the very idea of unearned income.
 
The ETF taxation and deemed disposal every 8 years is the worst aspect of the Irish investment scene relative to any other European country.
I think the US domiciled etfs are more or less taxed under CGT but these are not open to buy anymore and you also have to prove to revenue that they are taxed under CGT since revenue have no clear rules on this themselves
 
joe sod said:
The ETF taxation and deemed disposal every 8 years is the worst aspect of the Irish investment scene relative to any other European country.
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Our high CGT rate doesn't help either.
taxfoundation.org

Capital Gains Tax Rates in Europe

Denmark levies the highest capital gains tax rate of all European OECD countries in 2020, followed by Finland and Ireland.
taxfoundation.org taxfoundation.org
Capital-Gains-Europe-2020-01.png
 
bankrupt said:
Quite a good summary of the depressing reality of tax-efficient investment options in Ireland I thought: https://www.theislandinvestor.com/post/the-irish-investment-market-is-pathetic

Is there any investor advocacy group actively trying to change government policy? My perception of SF is that they are anti-investor but perhaps they would be interested at least in lowering the charges that funds routinely charge for pitiful performance?
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From that article...
But when you dig a little deeper, the KID documents (where all fees have to be fully disclosed as part of UCITS regulations) show the fee as 2.2%.

Double the quoted price.
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Don't these regulatory documents divulge the maximum possible charges but the actual charges may well be (significantly?) lower depending on how the customer invests?
 
PMU said:
Not when it comes to certain favoured groups, e.g. 'artists'. SF welcomed the Basic Income for Artists scheme.
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What Is Unearned Income?​

The term unearned income refers to any income that is not acquired through work. Put simply, unearned income is any money you earn by doing nothing. This is in contrast to earned income, which is any compensation received for performing a service like work. There are many types of unearned or passive income, including interest from savings accounts, bond interest, alimony, and dividends from stocks.
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In common with most politicians,they love government handouts because it gives them power over the recipients of the handouts.
 
bankrupt said:
Quite a good summary of the depressing reality of tax-efficient investment options in Ireland I thought: https://www.theislandinvestor.com/post/the-irish-investment-market-is-pathetic

Is there any investor advocacy group actively trying to change government policy? My perception of SF is that they are anti-investor but perhaps they would be interested at least in lowering the charges that funds routinely charge for pitiful performance?
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The link rightly highlights the unacceptable charges in the Irish market but it seems to be rather confused on the tax situation. It seems to think that the reason these products sell is that there is a tax bias in their favour:
Second (reason why life policies are bought instead of ETFs), the tax treatment of ETF structures is comical in Ireland, and US ETFs aren't even an investment option. A 41% exit tax and an 8-year deemed disposal rule leaves investors stuck between a rock and a hard place.
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Policies from Irish Life and Standard Life are subject to this exit tax regime - in fact it was specifically designed for them when the old internal company tax system was abandoned in 2001. As it happens, life policies these days have a discriminatory bias in the shape of the 1% levy. But the link is right that the exit tax system is truly awful - I can't understand why anybody invests that way even if you have to go DIY, which these days is becoming more accessible.
 
Duke of Marmalade said:
I can't understand why anybody invests that way even if you have to go DIY, which these days is becoming more accessible.
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Because, for example, people are wary of the perceived risk, actual complexity (e.g. how to create an appropriately diversified basket of shares), and tax reporting burden involved in investing directly in shares? I still experience this sort of FUD myself and it takes some effort to overcome it. Years ago it was worse, and investing directly wasn't as simple as it is today, so I tended to invest in low charges unit linked funds. They've shown good returns over that time. I'm sure that I've suffered a significant opportunity cost in terms of returns foregone by not going with direct share investments. And definitely a significant tax penalty. But I've done much better than if I had left to money on deposit or on state savings etc. Many people will still do the latter and would be better off in indirect equity investments for all their flaws if they can't be convinced to invest directly.
 
@ClubMan
I take your point that going Direct is a right pain and so hard to avoid the exit tax system. But those charges can be avoided by going the ETF route.
 
I think you'd be mental to put yourself through the nightmare / risk of keeping track of deemed disposal and exit tax or messing around with investment trusts etc.. to get CG / Income tax rates. Having a life company handle that for you makes so much sense. Just throw money in and forget about it. Ideally deemed disposal wouldn't be there but it is so that's why the life companies are more attractive relative to what else is available.
 
Ent319 said:
I think you'd be mental to put yourself through the nightmare / risk of keeping track of deemed disposal and exit tax or messing around with investment trusts etc.. to get CG / Income tax rates. Having a life company handle that for you makes so much sense. Just throw money in and forget about it. Ideally deemed disposal wouldn't be there but it is so that's why the life companies are more attractive relative to what else is available.
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Everything has a price. KID is showing costs about 2.5% p.a. higher than an ETF. For 10k that €250 p.a., maybe you're right. For 100k it's €2,500 p.a., not so sure but I take your point that life is too short to be filling out deemed disposal returns every 8 years. The max that life companies are allowed to illustrate their investments to grow at is 5% p.a. for full equity exposure If that is the max then 3.6% costs leaves 1.4% on the table and that is subject to 41% tax. Are you sure that is better than the 2% deposit rates available as discussed in other threads?
 
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Duke of Marmalade said:
Everything has a price. KID is showing costs about 2.5% p.a. higher than an ETF. For 10k that €250 p.a., maybe you're right. For 100k it's €2,500 p.a., not so sure. The max that life companies are allowed to illustrate their investments to grow at is 5% p.a. for full equity exposure If that is the max then 3.6% costs leaves 1.4% on the table and that is subject to 41% tax. Are you sure that is better than the 2% deposit rates available as discussed in other threads?
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2.5% P.A. seems like a worst case scenario. You can get access to Vanguard funds from life companies for 0.9% AMC and 0% charge on the way in assuming you pay a certain amount. Also 5% is a small estimate for full equity exposure. If there was a Life fund as bad as you suggest then I'd agree - a deposit account would be better for many reasons.

The bigger question is are you one of the small number of people who should be investing in a life fund rather than paying off your mortgage, investing in pension, saving for the house deposit, investing in your education etc .. but that's a bit beyond scope of present topic maybe.
 
Ent319 said:
2.5% P.A. seems like a worst case scenario.
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I am sure there is better available but the link from OP was highlighting the dreadful gouging that is happening. It suggested two reasons why this happens: (1) broker commissions and (2) a preferential tax treatment. (2) was totally incorrect but points to the more pertinent question "why do folk fall for these appalling charges despite the crippling tax regime?". Maybe reason (1) is the explanation.
 
Ent319 said:
2.5% P.A. seems like a worst case scenario. You can get access to Vanguard funds from life companies for 0.9% AMC and 0% charge on the way in assuming you pay a certain amount.
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Yes, I flagged that point earlier. The article is arguably a bit misleading on that point. Or, like another topic mentioned earlier, the writer doesn't fully understand the relevant matters.
ClubMan said:
Don't these regulatory documents divulge the maximum possible charges but the actual charges may well be (significantly?) lower depending on how the customer invests?
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Also from the article...
A similar 60/40 portfolio made up of passive index funds (S&P 500 and U.S T bonds) would have returned roughly 6.5% a year over the same period for a fee of roughly 0.1%
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I wonder if these figures account for foreign exchange fluctuations?
 
The worst thing about the taxation of investment funds is the fact that there is no allowance for losses made on any funds. An investor can be in a position of selling a basket of funds some of which are in profit and some in loss. Even when the overall position results in a loss, Irish Revenue has its hand out for 41% of the gains from the funds in profit.

Even the humble saver with a bank account is given a lousy deal in Ireland.
33% dirt tax on all interest with no exemption.
In Belgium for instance the first 800 euro in deposit interest is exempt from dirt tax.
 
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