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PaperclipPerfector  2mo ago (text post)   2864 thread views

Small-Scale Question Sunday for February 9, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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I know essentially nothing about investing, but I want to invest in a specific index fund. I understand I need to open an account with a broker to do this, and there are many brokers to choose from. Before selecting a broker, how do I know that I'll be able to invest in that specific index fund via the broker? Secondarily, which broker would you recommend I use?

Degiro is a pretty standard choice if you're based in Europe - low transaction fees, good interface, reputable, and decent KYC (identity verification) process. I'd think they're fine for small retail investing, ie <€1m, beyond that point you might find a better experience elsewhere (not a concern for me lol)

Also, from your username you're based in Ireland right? Bear in mind that the taxation process on shares in Ireland is DREADFUL - it's both much dearer than a normal EU country and more cumbersome. An ETF specifically is taxed differently to ordinary single-share investment - for some ludicrous reason ETFs are taxed identically to ordinary income, not like a normal capital gain. This means if you're already at the highest rate (52% cumulative) all of your gains will be taxed at this rate. You're also hit with deemed disposal every seven years.

To bypass this there are a few UK products (eg Scottish Widows' Trust, can't recall the ticker) that basically mirror an ETF investment basket but are assessed as individual ordinary shares (ie 33% capital gains).

It's worth highlighting that you're unlikely to be audited any individual year, but if you're investing for the long haul the likelihood of you being hit at some point over eg a 20-year investing span is pretty unfavourable.

Bonne chance!

This is funny to read about, given that there's a growing industry of Ireland based ETFs due to its more favorable tax considerations (compared to the US) for non-resident aliens.

Can you suggest some of these Irish ETFs? Would I be charged at the upper tax band if I invested in an Irish ETF, as opposed to an American one?

Can you suggest some of these Irish ETFs?

They are called UCITS funds, the best known ones are CSPX and CSNDX, which are S&P500 and Nasdaq funds, respectively, there is also some which replicate the indexes through total return swaps, which have different tax implications.

It's also worth considering that these funds have higher fees and lower liquidity than the typical ones.

Would I be charged at the upper tax band if I invested in an Irish ETF, as opposed to an American one?

My knowledge of Irish tax law is insufficient for me to help you here, sorry. The biggest implication for me (as a non-american, non-irish) is the lack of inheritance tax (which is brutal in the US for non-citizens).

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