whatsmoney
Registered User
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- 91
Due to current Irish bank worries and terrible deposit rates I am checking
into buying ETFs and have been doing some research into this.
Here goes my analysis so far with some questions I hope can be helped with.
----------------------
Buying, WHICH BROKER?
In choosing the best broker to use, I have read a little bit and come down
to either keytrade or NIB. There seem to be a lot of complaints about sharewatch. Using Dolmen, Goodbody's or Davy's seems very expensive
and using a non euro broker eg in USA would mean you are adding a currency fluctuation risk.
Keytrade pros:
Very cheap, easy to setup account, no annual charge
Keytrade cons:
Upon opening a keytrade account, you open 3 accounts, 2cash and 1trading. THis would perhaps bring the Irish tax man too mcuh into the
picture. From a previous post 'If you have money on deposit overseas you
have to complete a Form 12 at year end. This may also entail making full
returns and being issued with a Notice of Assessment. Liable to be taxed
at full tax rate of 41% on any interest earned overseas.'
This 41% should only apply to savings interest, ETFs gains should be taxed
at I think 27%.
Question is, if you sell your shares and the proceeds are transferred to
your savings account in keytrade before transferring back home, could the Irish tax authorities try to screw you over when declaring the money at year end?
Are you caught with any other foreign tax or need to make any foreign
tax returns?
NIB pros:
Irish based. Relatively little tax headaches, no annual charge.
NIB cons:
0.75% rate, which could prove expensive depending on how much invested.
My questions on keytrade and NIB, where are the ETFs stored after they are bought?
If they are in their possession, what insurance do I have if NIB/keytrade go bust?
I read in another post that Sharewatch are insured on up to 1million euro on your holding with them. Is this the case with keytrade and NIB?
Would i be better advised to open a CREST account in my own name and transfer all ETFs in there?
-------------------------
WHICH ETFs?
In considering this I would be prepared to invest in a broad spectrum of ETFs to cover my risks. Commodities/Precious Metals/Agriculture/Energy/Exchange trackers etc.
ETFs can be purchased on many stock exchanges in many countries, in many currencies.
So, which exchange should I buy from and what are the risks involved?
I would prefer to buy Euros as I would be spending Euros whenever I cash in.
Question....
The London Stock Exchange has some Euro denominated ETFs, ie base currency is in Euro.
How exactly does this work? I assume that you must use Sterling to buy them and so would be caught with exchange rate fluctuation and fx commissions when converting the Euro to Sterling equivalent of the Euro ETF price. Is this correct?
I guess what I am asking is, what is the difference between GBP and Euro denominated ETFs on the LSE? When you consider that you would have to convert back to Euro, it would seem that they have equivalent risk.
Is buying a Euro denominated ETF on the LSE just a safety net so as not to be caught out if the GBP completely crashed?
Is the best advice to buy Euro based ETFs in Euro stock exchanges?
-------------------------
Selling:
You must pay tax at rate of 27% (I think) on gains.
-------------------------
I know this is a long post, but it could help others, especially if my various questions are answered. Is my analysis overall ok?
into buying ETFs and have been doing some research into this.
Here goes my analysis so far with some questions I hope can be helped with.
----------------------
Buying, WHICH BROKER?
In choosing the best broker to use, I have read a little bit and come down
to either keytrade or NIB. There seem to be a lot of complaints about sharewatch. Using Dolmen, Goodbody's or Davy's seems very expensive
and using a non euro broker eg in USA would mean you are adding a currency fluctuation risk.
Keytrade pros:
Very cheap, easy to setup account, no annual charge
Keytrade cons:
Upon opening a keytrade account, you open 3 accounts, 2cash and 1trading. THis would perhaps bring the Irish tax man too mcuh into the
picture. From a previous post 'If you have money on deposit overseas you
have to complete a Form 12 at year end. This may also entail making full
returns and being issued with a Notice of Assessment. Liable to be taxed
at full tax rate of 41% on any interest earned overseas.'
This 41% should only apply to savings interest, ETFs gains should be taxed
at I think 27%.
Question is, if you sell your shares and the proceeds are transferred to
your savings account in keytrade before transferring back home, could the Irish tax authorities try to screw you over when declaring the money at year end?
Are you caught with any other foreign tax or need to make any foreign
tax returns?
NIB pros:
Irish based. Relatively little tax headaches, no annual charge.
NIB cons:
0.75% rate, which could prove expensive depending on how much invested.
My questions on keytrade and NIB, where are the ETFs stored after they are bought?
If they are in their possession, what insurance do I have if NIB/keytrade go bust?
I read in another post that Sharewatch are insured on up to 1million euro on your holding with them. Is this the case with keytrade and NIB?
Would i be better advised to open a CREST account in my own name and transfer all ETFs in there?
-------------------------
WHICH ETFs?
In considering this I would be prepared to invest in a broad spectrum of ETFs to cover my risks. Commodities/Precious Metals/Agriculture/Energy/Exchange trackers etc.
ETFs can be purchased on many stock exchanges in many countries, in many currencies.
So, which exchange should I buy from and what are the risks involved?
I would prefer to buy Euros as I would be spending Euros whenever I cash in.
Question....
The London Stock Exchange has some Euro denominated ETFs, ie base currency is in Euro.
How exactly does this work? I assume that you must use Sterling to buy them and so would be caught with exchange rate fluctuation and fx commissions when converting the Euro to Sterling equivalent of the Euro ETF price. Is this correct?
I guess what I am asking is, what is the difference between GBP and Euro denominated ETFs on the LSE? When you consider that you would have to convert back to Euro, it would seem that they have equivalent risk.
Is buying a Euro denominated ETF on the LSE just a safety net so as not to be caught out if the GBP completely crashed?
Is the best advice to buy Euro based ETFs in Euro stock exchanges?
-------------------------
Selling:
You must pay tax at rate of 27% (I think) on gains.
-------------------------
I know this is a long post, but it could help others, especially if my various questions are answered. Is my analysis overall ok?