The proposed ISA compared with the Income Tax/CGT regime

[joe sod]

Answer: The first €30k should be put in the new fund as there will be no tax on it.

Where should I invest the balance?
I think that is the question that the spreadsheet should address.

Thats the question, in reality what will people with 100 or 200K to invest do? they will only put 30k into this fund and leave the rest outside in CGT investments i think.
Run the example again with 100K lump sum investment and no more additional lodgements, then CGT i imagine would be alot better.
Also sweden one of the most socialist countries in europe imposes 30% cgt, we are at 33% , how sustainable is it for government to maintain those very high rates?
Also the last 15 years since financial crash have seen great returns, is it overly optimistic to assume 8% growth rates, if 1% is lopped off in big down years like 2008 and 2009 that would result in very bad returns as the 1% is being lopped off already severly hit investments, then you are recovering from a principal 2% lower than under cgt where no flat rate taxes were deducted.

 

[Corola]

Thats the question, in reality what will people with 100 or 200K to invest do? they will only put 30k into this fund and leave the rest outside in CGT investments i think.

That's what someone with 100k already in investments will do.

In reality, the person being targeted with 100k in deposits will put 30k into this fund, and then just leave the other 70k on deposit.

 

[AJAM]

So shouldn't the net figure after 20 years be €2901

Ah, I left out a bracket. OK I think this version irons out all the bugs.

It seems to show that for smaller investors (1000 Euro beyond 30K), that CGT is better than ISK (because the 1270 CGT allowance is material). However, the difference is marginal (a few hundred Euro), albiet larger in % terms.

For larger investors (100,000 Euro beyond 30K), CGT works out better for lower growth rates (up to ~6%) and ISK works out better for higher growth rates, beyond ~6%.

They are comparable, though so there is no clear winner. I would suggest after 30K, you put high risk investments and ETFs in the ISK. And everything else in CGT.

 

[irishfinanceguy]

@AJAM @joe sod

To add to what has been said before, perhaps a strategy could be (assuming dd doesn't go away for ETFS)
To keep your ETFS in the ISK wrapper (up to 30k) and avoid the hassle of dd every 8 years
And then target stocks like Berkshire hathway etc (33%CGT only) outside of it