Results from investing in just the S&P500

Good plan. Scaling into ETFs every 2-4 weeks is the best risk management approach vs dropping in a one off lump sum every year.

The tax is no different whether you're dripping feeding it in or a lump sum, assuming you have actual gains. The benefitting of investing regularly is that you smooth out massive drops in the market by having readily available cash to take advantage of those very drops. You limit your downside exposure.

https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=1943bd1c7c50

right, so you have more admin to take care of, but the tax is burden is no different. You can get a report from your broker account handy enough to save you remembering.

From what I've read, lump sum investing can out perform regular investing but that tends to be over a 20 year period to account for boom/bust cycles.

Hi OP, just curious about fees when investing. Is it better to do one lump sum or invest bits each month? Are you charged monthly transaction fees or how are fees charged on degiro?

Hey OP,

I would not recommend this approach as you are locking in the tax payment, gain and new price, eliminating the opportunity for it to balance out if the value of the ETF drops in the future.

As an example (I'll keep it in dollars to avoid the currency exchange complexity and cost, also ignoring the monthly limit on free trades that Degiro have for the same reason)

Buy 100 ETF shares @$1 => $100

After 8 years you have 100 ETF shares @$5 => $500

This is a $400 Gain = $164 DD Exit Tax (41%)

If you sell and rebuy you now have a cost base of $5 per share, with $336 remaining to invest which allows you to:

Buy 67 ETF shares @$5 => $335 in shares and $1 left over that you can't reinvest.

After 5 years you decide to sell but the shares are only worth @$4 each now you don't owe any tax because you are now making a loss compared to the new cost base but you can't reclaim the tax you overpaid earlier. Which means you end up with $268 (plus the $1 that you couldn't reinvest)

If you can pay the tax due from other cash you have, you would be due a tax rebate if you end up selling for less as you would have overpaid the tax. So you paid $164 in year 8 but now you are selling @$4 you would only have owed $123 so you can claim back $41 which leaves you with: $277 (100 shares instead of the 67 plus the tax rebate less the tax paid previously) => $8 more

The other option if you don't have the cash from other sources, it to only sell what you need to sell to cover taxes. It's messier than not selling anything but allows you to benefit from the tax rebate if you need to sell when the price is lower in the future.

Since you are investing regularly it just means you buy less or don't buy new shares that year to cashflow the tax.

Eh….it’s a bit of a crock ‘o sh1te this last few weeks. I still plan to hang on in for the long term.

g

Interesting thread, fair play!.

Can I ask which VUSA ETF do you purchase, which stock exchange version? I see degiro offer it on EAM / TDG / LSE / SWX / MIL. I'm guessing the EAM Netherlands exchange but just making sure?

Also, will you be doing the tax yourself on it? If only one original initial lump sum was purchased into the ETF would the tax be as simple of 41% of any unrealised gains at yr8 on that 1 purchase and therefore be very simple to calculate. Or am I being too simplistic?

I looked into I.T's a little as an alternative to an ETF or Index fund. The main con's of an IT I could see were it relies on a human fund manager beating the market (or does it? Does it just track the Index?), fund fees and also stamp duty to be paid on each purchase? More risky than an Index fund / ETF.

Pro's (that I see)- simple tax like stocks CGT. Can offset losses against other CGT's, etc.

It's widely stated that passive funds beat actively managed fund every time over a long term, is it different for a trust such as JAM by the way it tracks or tries to act like an Index tracker?

Thanks for the tip, it seems strange that an actively managed fund beat the S+P index over a 5yr period.

What exchange do you purchase it on, it doesn't appear to be listed on Degiro or at least I don't see it?

I buy JAM on Interactive Brokers. I do think IB is a better broker overall compared to DEGIRO. They have generally lowers fees and more access to stocks and funds. They got rid of their monthly inactivity fee last year too, which is another plus.

Many of the more diversified boring investment trusts do have pretty decent long-term records. FCIT is another option if you want more global exposure. It's similar to a global tracker and has been around long before index funds even existed. It will never outperform the market by much, but the management team is sensible and won't do anything crazy either.

https://www.google.com/finance/quote/FCIT:LON?comparison=LON%3AVWRL&window=5Y

The investment trusts that go off the beaten path are higher risk. SMT is one which is growth heavy and has done poorly since November. Very volatile.

Berkshire is a great idea for the coming years, ultimate value stock which tends to do well when internet rates rise.

Just buy BRK.B. Trading around $275 at the moment 🙂

This thread is about results right? We see many posts stating exact gains when markets are booming. My portfolio is down around 20% since the start of the year. Wondering what to do about it. I expect most on here are in a similar boat.