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PaperclipPerfector  3d ago (text post)   2187 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?

Before selecting a broker, how do I know that I'll be able to invest in that specific index fund via the broker?

You can generally invest in any fund at any broker. However, most brokers will charge a fee to invest in a mutual fund run by another broker. Some don't. You have to read the schedule of fees. You can also buy ETFs for free, and there are often ETF versions of mutual funds. But ETFs are more annoying to trade, since you have to buy and sell shares of the ETF on the market, instead of just buying $X of a mutual fund at NAV.

The bogleheads wiki is a good resource.

Vanguard is one of the more popular in the US. I use Schwab, whose good customer service isn't really making up for everything else these days.

Would enjoy hearing what everyone here uses

I also use Schwab. Out of all the brokerage platforms, I think it has a decent application, good customer service, low fees, and provides access to a cheaper/more feature-rich Amex platinum.

Their checking account is always free with unlimited ATM reimbursement and no foreign transaction fees. It's a gateway drug to the brokerage and it works.

I moved my rollover retirement accounts to Robinhood to make 3% on all of them last year and will move them back once I can.

I'm getting a bit sick of a few things. The end of automatic money market rollover for one, the half-functional phone app, the loss of their old 2% cash back card (I don't understand the point of an Amex plat). The home loan company they partner with (rocket whatever) is notoriously scummy too.

The lack of any exchange fees is nice, but it's not like I buy or sell more than a few times a month anyway.

Their half-ass international system is a huge pain. Had to move a few hundred k over from Europe, and all incoming transfers go through citi, to Schwab's citi account, and you have to write "pay to Steve @schwab acct #694201488" on the bottom and hope the euros know what the fuck they're doing. they didn't, so it took over a month to finally get it sorted out.
A brokerage should be capable of handling international transfers better than that. Not having their own system is amateur hour.

Fuck. I must have missed the end of the auto money market rollover part - that really does suck. I also didn't know about the 2% card (I just use a Citi Doublecash right now).

TY for the heads up.

What’s the “everything else”? I use Schwab ever since they absorbed TD Ameritrade (or at least its app?) and I haven’t noticed much difference. But then, I’m doing pretty boring buy-and-hold.

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!

Wow. Those numbers are blowing my mind as an American currently applying for Irish citizenship. I'd have to do some serious tax planning prior to spending a few years over there, lest I end up paying 42% additional tax on capital gains. This must have been how my great uncle felt when I explained you can just purchase rifles at some Walmarts with no class or license, just a digital background check.

Yeah, you definitely should speak to an Irish tax planner that works with expats if you're interested in living here. The move might not necessarily cost you anything extra if you plan correctly and are only here for a fixed number of years - a relatively large number of Americans move to Ireland, so there certainly are experienced people who can help you arrange your affairs correctly.

A Google returned this article: https://nationalpensionhelpline.ie/taxation/etf-tax-in-ireland-might-be-changing/

I don't know if this is the same information you were reporting to me. It may be of interest.

I actually participated in the department submissions they're talking about!

Yeah it's very much a maybe, maybe proposition. The egregious taxation of ETFs is just not high on the govt's priorities, though it's been talked about for years. Complex question that resonates with very few voters; Irish people with cash to invest tend disproportionately to put in property, precisely because of the complexity and crap taxation of normal investment in equities. Easy for the opposition to spin into "tax cuts for the wealthy", because it kind of would be.

I wouldn't hold my breath, basically

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.

Yeah, I think given Ireland's reputation as a low-tax jurisdiction it's often surprising to those abroad to learn how selectively this low-tax regime applies.

Income tax is genuinely super low for low earners, but the technical "higher band" of income tax (42%) kicks in at just €35k, and increases incrementally up to 52% at €70k - ie every euro over that is taxed at 52% for most workers. Most people working in the tech sector are paying quite high income tax in Ireland, and very high (by European standards) tax on financial products and investments. Even though the corporate tax rate is one of the lowest in Europe, that's just to get companies in the door - we are certainly NOT Dubai on like a personal scale, contrary to what some of our peer countries imagine.

Also the weather is shit and there are too many foreigners (25% approx foreign-born), in a sort of Canadian social-anomie sense.

So is that why Ireland's policies just turned it into an offshore tax haven rather than attracted foreign businesses?

Not quite, we actually do attract a lot of real foreign business to Ireland, but our high personal taxes certainly shape the profile of this unfavourably.

For example - Google is the largest private employer in Dublin, with (from memory) about 6500 direct Google employees here and the same amount again in TVCs. All other large US tech companies bar Amazon also have their EU HQ here, and employ thousands of staff each. Ireland is also a major manufacturing hub for pharma, with genuinely world-class infrastructure and facilities (side note, for about 20 years the entire global supply of Viagra was produced in Cork). In aggregate, about 25% of workers in Ireland are employed directly by a foreign multinational - so the state earns far, far more in income taxes from these multinational employees than it does in corporate taxes on their employers' profits.

However, our steep personal taxes mean that mid- and senior- career employees often look to another jurisdiction after a few years, once they're earning serious money (and have got an Irish passport). We lose a lot of talent this way, and it keeps some activities here lower down the value chain. Not great.

Additionally, the Irish govt did a couple of dodgy deals in the 1990s and 2000s to give extremely favourable tax treatment to a handful of individual companies, which earned us a lot of ire and bad press, and also has muddied the water about where our competitive tax regime (legitimate, and less generous than many EU and US states) ends and where actual uncompetitive and unethical shenanigans begin

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?

There's no distinction in taxation of ETFs based on their location for people currently living in Ireland. There ARE distinctions between Irish, UK, EU and global individual shares which I can't recall off-hand - something about reporting cadences though I might well be wrong on that. In practice it has made very little difference for me. There are no specific incentives to hold Irish shares, for example - though there are some "investment schemes" that amount to an incentive for Irish investment in practice. Not an expert and they get kind of complicated

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).

Thanks for the advice.

I know essentially nothing about investing, but I want to invest in a specific index fund.

Hey, if you want to buy a 3x leveraged Microstrategy ETF please let us know beforehand.

Hey, if you want to buy a 3x leveraged Microstrategy ETF please let us know beforehand.

It's Strategy ₿ now :)

In general it really doesnt matter, you can buy almost any fund from almost any broker these days. Unless you're looking for something weird and exotic? But they should all offer the same broad market funds. You can also reach out to then and ask- the customer service should help you decide which broker you like.

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