Are the Investment Companies, REITs?
I hadn't thought that the ETF tax situation was as clear as you make it out to be.
After reading Gillens book 3 steps to investment success twice! I am more familiar with the terminology now. As I understand it....
The 2 main types of funds quoted on the stock exchange are
ETFs exchange traded funds and investment company's or closed ended funds.
A listed investment company owns a portfolio of investments and you buy them as you would shares on the stock exchange.
An ETF exchange traded fund is a listed low cost passively managed index tracker, which tracks for example the FTSE 100.
A REIT is a company that owns and manages property on behalf of shareholders.
The ETF tax issue has now been clarified.
Also these guidance notes from revenue from April 2015
Thanks Landlord, much apprieciated the tax analysis.
So in the case of ETFs (Irish Domiciled) which attraches a tax on gain(disposal) of 41% which is bad! vs share CGT (33% + PRSI +USC), a difference of 8%. but you don't have to pay PRSI (4%) and USC (7%, althought there is a scale) on the gain. I'm I correct in thinking the tax differences almost cancel out for ETFs, or does gross rollup really result in a bad tax deal? I must confess I can't get my head around the tax impact (good or bad) on gross rollup.
My preference is to invest in ETFs for the low cost and divesification factors, but just not sure how bad the tax part really is??
Perhaps someone can help with this analysis.
If if one was to invest 1,000 Euro in one of each the following :
An Irish share
A UK share
A U.S. share
A listed investment trust
A EU ETF
A US ETF
If each were to rise in value by 10% in the year and considering average management costs for the cheap tracker ETFs of say .3% and .7% for the investment trust. After all taxes considering no dividends, which one would you be better off with?
Another very important thing to consider is currency exchange rates, the continued strengthening of sterling has eroded some gains in my UK shares
I doubt this is correct. Your gain (or loss) is the change in value of the share plus the change in the exchange rates. If you paid for your shares in euro, the increase in value of sterling vs the euro will increase your returns in euro terms.Another very important thing to consider is currency exchange rates, the recent strengthening of euro/sterling has eroded some gains in my UK shares
Its not in that small writing come on now! ETFs at E2 + .02% means you can buy E1000 worth of ETF at E2 + .02% = E2.20, which is .22% overall. That would actually make euro cost averaging viable....
Article in times about it: http://www.irishtimes.com/business/...irish-stocks-for-little-more-than-2-1.2242776
I looked at the site.
2 euro a transaction, execution only to buy and sell shares or ETF's.....looks very cheap !!!
But there's always a catch !!
On the homepage where it quotes those fees look underneath the 2 Euro in very very small writing. It says "+.04%". As in an extra 40 Euro for example a 10,000 Euro share purchase.
And 0.04% works out at €4 on 10 grand