Investment management - Christmas Edition

eskbanker

Thrugelmir said:

eskbanker said:

RobHT said:

Looking here, it makes me think to trash the idea of dividents, too complex: https://transferwise.com/gb/blog/uk-tax-on-foreign-dividends 

Unless I invest only in dividents in UK, but that would be very silly...

Don't look there, it's an old article referring to changes in dividend taxation back in 2009, although a newer date seems to have been attached at the top for some reason.  Foreign Tax Credit Relief is generally available for most countries, via which you can offset your non-UK taxation on foreign dividends against your UK tax liabilities for those, so the net effect should be that foreign dividends aren't penalised as heavily as you seem to think, if at all, and certainly not at a fixed rate of 10% as suggested by that old article from back when there were tax credits applied to UK dividends.

If held within an ISA or a SIPP recovery of "dividend" tax levied on foreign owned shares can be a challenging exercise. 

Indeed, but the context of this particular dialogue is unwrapped investments, hence all the stuff about taxation....

RobHT

eskbanker said:

RobHT said:

Looking here, it makes me think to trash the idea of dividents, too complex: https://transferwise.com/gb/blog/uk-tax-on-foreign-dividends 

Unless I invest only in dividents in UK, but that would be very silly...

Don't look there, it's an old article referring to changes in dividend taxation back in 2009, although a newer date seems to have been attached at the top for some reason.  Foreign Tax Credit Relief is generally available for most countries, via which you can offset your non-UK taxation on foreign dividends against your UK tax liabilities for those, so the net effect should be that foreign dividends aren't penalised as heavily as you seem to think, if at all, and certainly not at a fixed rate of 10% as suggested by that old article from back when there were tax credits applied to UK dividends.

And, by the way, the word is 'dividend', with a D, or rather three of them....

Thanks, but it seems a complex and long procedure to do something easy , I'm glad this year I don't need to do it, at least for dividends, let's see how it goes with options trading and therefore CGT

RobHT

Thrugelmir said:

eskbanker said:

RobHT said:

Looking here, it makes me think to trash the idea of dividents, too complex: https://transferwise.com/gb/blog/uk-tax-on-foreign-dividends 

Unless I invest only in dividents in UK, but that would be very silly...

Don't look there, it's an old article referring to changes in dividend taxation back in 2009, although a newer date seems to have been attached at the top for some reason.  Foreign Tax Credit Relief is generally available for most countries, via which you can offset your non-UK taxation on foreign dividends against your UK tax liabilities for those, so the net effect should be that foreign dividends aren't penalised as heavily as you seem to think, if at all, and certainly not at a fixed rate of 10% as suggested by that old article from back when there were tax credits applied to UK dividends.

If held within an ISA or a SIPP recovery of "dividend" tax levied on foreign owned shares can be a challenging exercise. 

Why an ISA should be in this speech?
Are you talking about in case of moving funds in/out an ISA? (dividends gain involved)

NottinghamKnight

RobHT said:

Thrugelmir said:

eskbanker said:

RobHT said:

Looking here, it makes me think to trash the idea of dividents, too complex: https://transferwise.com/gb/blog/uk-tax-on-foreign-dividends 

Unless I invest only in dividents in UK, but that would be very silly...

Don't look there, it's an old article referring to changes in dividend taxation back in 2009, although a newer date seems to have been attached at the top for some reason.  Foreign Tax Credit Relief is generally available for most countries, via which you can offset your non-UK taxation on foreign dividends against your UK tax liabilities for those, so the net effect should be that foreign dividends aren't penalised as heavily as you seem to think, if at all, and certainly not at a fixed rate of 10% as suggested by that old article from back when there were tax credits applied to UK dividends.

If held within an ISA or a SIPP recovery of "dividend" tax levied on foreign owned shares can be a challenging exercise. 

Why an ISA should be in this speech?
Are you talking about in case of moving funds in/out an ISA? (dividends gain involved)

No, but there is often additional tax to pay or reclaim on dividends on foreign held shares, generally the latter. You should of course be using your ISA allowance every year even if you decide to invest larger sums as well outside in a GIA. 

eskbanker

RobHT said:

eskbanker said:

RobHT said:

Looking here, it makes me think to trash the idea of dividents, too complex: https://transferwise.com/gb/blog/uk-tax-on-foreign-dividends 

Unless I invest only in dividents in UK, but that would be very silly...

Don't look there, it's an old article referring to changes in dividend taxation back in 2009, although a newer date seems to have been attached at the top for some reason.  Foreign Tax Credit Relief is generally available for most countries, via which you can offset your non-UK taxation on foreign dividends against your UK tax liabilities for those, so the net effect should be that foreign dividends aren't penalised as heavily as you seem to think, if at all, and certainly not at a fixed rate of 10% as suggested by that old article from back when there were tax credits applied to UK dividends.

And, by the way, the word is 'dividend', with a D, or rather three of them....

Thanks, but it seems a complex and long procedure to do something easy , I'm glad this year I don't need to do it, at least for dividends, let's see how it goes with options trading and therefore CGT

Your choice, I'm not trying to push you one way or the other - my initial point was simply to observe that if you're weighing up income versus growth alternatives, it obviously makes sense to do so armed with as many pertinent facts as possible, rather than making false assumptions or misunderstanding how taxation works.  As soon as you're outside tax shelters, you have to maintain good records of all your transactions and take responsibility for establishing tax liabilities, whether that's income tax or CGT, so best not be under any illusion that there's minimal work involved in running a sizable unwrapped portfolio!

barnstar2077

RobHT said:

barnstar2077 said:

RobHT said:

barnstar2077 said:

Thrugelmir said:

barnstar2077 said:

Thrugelmir said:

barnstar2077 said:

Prism said:

barnstar2077 said:

csgohan4 said:

barnstar2077 said:

@RobHT You have mentioned AMD.  If you look at their share price over the last 30 years or so you will see that the price has exploded over the last four years.  What do you think has changed to do that?  Yes, they have certainly been doing better at competing against their rivals in recent years, but how likely are they to sustain that? (historically Intel have always made a come back.)  Do they have new management?  Was it Bitcoin that started their good run?  I do not know.  I would be rubbing my hands together if I had bought some shares a few years ago, but buying some now would make me feel very uncomfortable indeed unless I knew exactly why they were doing so much better now, and more importantly why they were set to continue their meteoric rise.  Why do you think they are a good place for your money?  I am very interested to hear how you have carried out your analysis, as I do plan on dabbling a tiny bit in shares at a later date once I have a solid foundation under me that can take care of my expenses.

I would have rather invested in Nvidia or SSD manufacturers , the former has done very well over the last 12 m

I agree that I would feel better owning Nvidia, their products have been very consistent in my opinion (I have bought many of their cards.)  Still though, when you look at their share price, just like AMD they have had an incredible rise in the last three and a half years.  Which is what made me think of Bitcoin as being a possible reason.  But as with AMD I couldn't tell you why they have done so well, or why the price is set to continue.  So again, I wouldn't be very comfortable buying in today.

Probably a bit off tangent for the thread but one of the reasons that Nvidia and AMD have been doing so well is that their cards have been going into the big Amazon, Microsoft and Google cloud datacenters for server based applications. They are great at high speed video rendering (video streaming), 3D rendering (gaming and simulations) and machine learning (AI applications) - all of which have been very popular over the last few years. You can basically rent these things by the second which makes them very accessible to all.

The reason I bring it up is RobHT thinks that individual company shares is the way to go, and I am interested in how he analysis companies. 

How often did you read a company's annnual accounts? 

I am not sure if you are asking me or RobHT.  I haven't as I am not looking to invest in individual shares at the moment.

How do you pick your collective investment funds?  

I looked at what had the best likely hood of achieving my objective for a reasonable cost and for a small amount of effort.  I eventually settled on VLS100 because it ticked those boxes, and because I thought that the uncertainty of brexit was keeping UK shares low and that I would potentially gain a bit of bonus growth from it's heavier weighting to the UK.  I figure that as long as either the UK or the US do okay over the next ten to fifteen years then it would be unlikely to let me down.  Regardless of whether some individual heavy hitters go bust or not.  For the most part, I just thought it was good enough, and though it may not give me incredible results, it should at least not implode.

Do not mistake my questioning of Robs strategy as an attack on anyone who buys individual shares.  As I said before, I fully intend to do so at some point in the distant future myself.  I am interested in what variables to look at when buying shares in a company, like debt levels etc(and also where I might find out that information.)  Or whether it is better simply to select companies that have strong brands with long track records of growth and no obvious upcoming bumps in the road.  I think it is an interesting topic.

The usual reasoning, but hey, not that bad.
What I think about it is that in every fund or ETF, these bis companies are always an heavy weight on it, so it's pretty much the same I do on my portfolio, with the difference that I need to rebalance manually and I need to enter in good times in every stock when I invest, this makes the balancing and timing a boring stressful job, and it's always easy to make mistakes, more than fund managers, btw I always feel I could have done better and that's a kind of psyco !!!!!! .

All above is the basic, but let's look the reality, the majority of companies in NASDAQ are garbage, as well as in these funds, for example, buying the SPY500, not only you know just the 10% of these companies, the others are also garbage...
I don't like to invest blandly and not having things under control knowing that my fund manager is doing bullshits just to mitigate risk, investing in many companies hoping to leverage potential losses of the big asses, without even knowing them or considering them in a real growth estimation.

Looking few numbers, it's really unluckly that the fun doesn't collapse easily if a major player goes busted, the market cap involved is to high.
In fact, do you remember in March? Markets collapsed no matter what, same for 2008 or the dotcom bubble, you can't stop it.

If it has to crash it will, fund or not, and especially for funds, if you look historical data, there are just few good entry points, even looking a long period of 20 years, the only thing that leverages a bit the mistake of people investing every month are the dividents reinvested, but that's just a small nugget.
So, ideally, you should monitor the global economy, your fund, and then buy at the best moment with a lump sum, what no one does.
Potentially, you may need also to cash out on the high and pay taxes, or your investment will be worthless for 2-3x the number of years needed to reach again that high or to start the uptrend again.
Am I wrong?

We are doing two different things.  You hope to be rich and retired by 35, and I am more slow and steady wins the race.  I do not believe in timing the market, or trying to guess which company will outperform another (the latter is certainly possible, but I don't think it is necessary when I know I can retire early with much less risk.)  If my investments were to just match inflation I will still meet my objective by the age of 55 (43 now.)  So anything above that is a bonus for me.

It's not bad how you are doing, the problem is that to all the people that are investing in SPY500 for example, they are investing in the wrong time since years...
Basically, investing every month and forget about it is a strategy that doesn't work at all...
You risk to almost nullify all your investments appreciation, certainly is hard to start to lose even coins so you consider this low risk.

Even if you consider ETFs, index trackers etc, you need to know aprox when to buy in 52 week range, considering the last 10 years, but specifically for the SPY500 as example, 16 years, as it seems that the deviation of all the moving averages ranges in 16 years. Not sure if I explained this topic in the best way, but I think you may understand.

Funds are a bit different, but in bad moments, also a fund doesn't perform well, simply because it can't, historical data are not necessary here, that's a simple concept.

You say that investing every month and forgetting about it doesn't work at all, and yet clearly it does do, it is how most pensions work in fact.

The idea is that over the long run it will go up.  Any big dips along the way just mean you are buying that months amount cheaper.  The longer you leave your money invested, the greater the likelihood of a good outcome, assuming you are just buying a global diversified fund and have some control over when you take the money out.  It has been proven that if you try and guess when it is the right time to buy that on average you just end up losing out compared to someone who has just invested consistently for the long term.

It obviously isn't what you want to do however, and it is your money, so good luck to you.

RobHT

eskbanker said:

RobHT said:

eskbanker said:

RobHT said:

Looking here, it makes me think to trash the idea of dividents, too complex: https://transferwise.com/gb/blog/uk-tax-on-foreign-dividends 

Unless I invest only in dividents in UK, but that would be very silly...

Don't look there, it's an old article referring to changes in dividend taxation back in 2009, although a newer date seems to have been attached at the top for some reason.  Foreign Tax Credit Relief is generally available for most countries, via which you can offset your non-UK taxation on foreign dividends against your UK tax liabilities for those, so the net effect should be that foreign dividends aren't penalised as heavily as you seem to think, if at all, and certainly not at a fixed rate of 10% as suggested by that old article from back when there were tax credits applied to UK dividends.

And, by the way, the word is 'dividend', with a D, or rather three of them....

Thanks, but it seems a complex and long procedure to do something easy , I'm glad this year I don't need to do it, at least for dividends, let's see how it goes with options trading and therefore CGT

Your choice, I'm not trying to push you one way or the other - my initial point was simply to observe that if you're weighing up income versus growth alternatives, it obviously makes sense to do so armed with as many pertinent facts as possible, rather than making false assumptions or misunderstanding how taxation works.  As soon as you're outside tax shelters, you have to maintain good records of all your transactions and take responsibility for establishing tax liabilities, whether that's income tax or CGT, so best not be under any illusion that there's minimal work involved in running a sizable unwrapped portfolio!

Thanks, but I would pay a tax accountant, I can't really find the time to do that task alone, and taking also full responsability on it. It's not really my field and it seems a waste of time, I only hope that the tax accountant won't be greedy  

RobHT

NottinghamKnight said:

RobHT said:

Thrugelmir said:

eskbanker said:

RobHT said:

Looking here, it makes me think to trash the idea of dividents, too complex: https://transferwise.com/gb/blog/uk-tax-on-foreign-dividends 

Unless I invest only in dividents in UK, but that would be very silly...

Don't look there, it's an old article referring to changes in dividend taxation back in 2009, although a newer date seems to have been attached at the top for some reason.  Foreign Tax Credit Relief is generally available for most countries, via which you can offset your non-UK taxation on foreign dividends against your UK tax liabilities for those, so the net effect should be that foreign dividends aren't penalised as heavily as you seem to think, if at all, and certainly not at a fixed rate of 10% as suggested by that old article from back when there were tax credits applied to UK dividends.

If held within an ISA or a SIPP recovery of "dividend" tax levied on foreign owned shares can be a challenging exercise. 

Why an ISA should be in this speech?
Are you talking about in case of moving funds in/out an ISA? (dividends gain involved)

No, but there is often additional tax to pay or reclaim on dividends on foreign held shares, generally the latter. You should of course be using your ISA allowance every year even if you decide to invest larger sums as well outside in a GIA. 

I'll try to use my ISA as much as possible, and at that point I need to make to prevail the dividends investments inside the ISA rather than outside, but this problem will be eventually for the next year.
Currently my ISA is maxed out that's why I wasn't concerned in that sense.
Even if I play with some swing trading inside.

(You should see the HL charges : D)

RobHT

barnstar2077 said:

RobHT said:

barnstar2077 said:

RobHT said:

barnstar2077 said:

Thrugelmir said:

barnstar2077 said:

Thrugelmir said:

barnstar2077 said:

Prism said:

barnstar2077 said:

csgohan4 said:

barnstar2077 said:

@RobHT You have mentioned AMD.  If you look at their share price over the last 30 years or so you will see that the price has exploded over the last four years.  What do you think has changed to do that?  Yes, they have certainly been doing better at competing against their rivals in recent years, but how likely are they to sustain that? (historically Intel have always made a come back.)  Do they have new management?  Was it Bitcoin that started their good run?  I do not know.  I would be rubbing my hands together if I had bought some shares a few years ago, but buying some now would make me feel very uncomfortable indeed unless I knew exactly why they were doing so much better now, and more importantly why they were set to continue their meteoric rise.  Why do you think they are a good place for your money?  I am very interested to hear how you have carried out your analysis, as I do plan on dabbling a tiny bit in shares at a later date once I have a solid foundation under me that can take care of my expenses.

I would have rather invested in Nvidia or SSD manufacturers , the former has done very well over the last 12 m

I agree that I would feel better owning Nvidia, their products have been very consistent in my opinion (I have bought many of their cards.)  Still though, when you look at their share price, just like AMD they have had an incredible rise in the last three and a half years.  Which is what made me think of Bitcoin as being a possible reason.  But as with AMD I couldn't tell you why they have done so well, or why the price is set to continue.  So again, I wouldn't be very comfortable buying in today.

Probably a bit off tangent for the thread but one of the reasons that Nvidia and AMD have been doing so well is that their cards have been going into the big Amazon, Microsoft and Google cloud datacenters for server based applications. They are great at high speed video rendering (video streaming), 3D rendering (gaming and simulations) and machine learning (AI applications) - all of which have been very popular over the last few years. You can basically rent these things by the second which makes them very accessible to all.

The reason I bring it up is RobHT thinks that individual company shares is the way to go, and I am interested in how he analysis companies. 

How often did you read a company's annnual accounts? 

I am not sure if you are asking me or RobHT.  I haven't as I am not looking to invest in individual shares at the moment.

How do you pick your collective investment funds?  

I looked at what had the best likely hood of achieving my objective for a reasonable cost and for a small amount of effort.  I eventually settled on VLS100 because it ticked those boxes, and because I thought that the uncertainty of brexit was keeping UK shares low and that I would potentially gain a bit of bonus growth from it's heavier weighting to the UK.  I figure that as long as either the UK or the US do okay over the next ten to fifteen years then it would be unlikely to let me down.  Regardless of whether some individual heavy hitters go bust or not.  For the most part, I just thought it was good enough, and though it may not give me incredible results, it should at least not implode.

Do not mistake my questioning of Robs strategy as an attack on anyone who buys individual shares.  As I said before, I fully intend to do so at some point in the distant future myself.  I am interested in what variables to look at when buying shares in a company, like debt levels etc(and also where I might find out that information.)  Or whether it is better simply to select companies that have strong brands with long track records of growth and no obvious upcoming bumps in the road.  I think it is an interesting topic.

The usual reasoning, but hey, not that bad.
What I think about it is that in every fund or ETF, these bis companies are always an heavy weight on it, so it's pretty much the same I do on my portfolio, with the difference that I need to rebalance manually and I need to enter in good times in every stock when I invest, this makes the balancing and timing a boring stressful job, and it's always easy to make mistakes, more than fund managers, btw I always feel I could have done better and that's a kind of psyco !!!!!! .

All above is the basic, but let's look the reality, the majority of companies in NASDAQ are garbage, as well as in these funds, for example, buying the SPY500, not only you know just the 10% of these companies, the others are also garbage...
I don't like to invest blandly and not having things under control knowing that my fund manager is doing bullshits just to mitigate risk, investing in many companies hoping to leverage potential losses of the big asses, without even knowing them or considering them in a real growth estimation.

Looking few numbers, it's really unluckly that the fun doesn't collapse easily if a major player goes busted, the market cap involved is to high.
In fact, do you remember in March? Markets collapsed no matter what, same for 2008 or the dotcom bubble, you can't stop it.

If it has to crash it will, fund or not, and especially for funds, if you look historical data, there are just few good entry points, even looking a long period of 20 years, the only thing that leverages a bit the mistake of people investing every month are the dividents reinvested, but that's just a small nugget.
So, ideally, you should monitor the global economy, your fund, and then buy at the best moment with a lump sum, what no one does.
Potentially, you may need also to cash out on the high and pay taxes, or your investment will be worthless for 2-3x the number of years needed to reach again that high or to start the uptrend again.
Am I wrong?

We are doing two different things.  You hope to be rich and retired by 35, and I am more slow and steady wins the race.  I do not believe in timing the market, or trying to guess which company will outperform another (the latter is certainly possible, but I don't think it is necessary when I know I can retire early with much less risk.)  If my investments were to just match inflation I will still meet my objective by the age of 55 (43 now.)  So anything above that is a bonus for me.

It's not bad how you are doing, the problem is that to all the people that are investing in SPY500 for example, they are investing in the wrong time since years...
Basically, investing every month and forget about it is a strategy that doesn't work at all...
You risk to almost nullify all your investments appreciation, certainly is hard to start to lose even coins so you consider this low risk.

Even if you consider ETFs, index trackers etc, you need to know aprox when to buy in 52 week range, considering the last 10 years, but specifically for the SPY500 as example, 16 years, as it seems that the deviation of all the moving averages ranges in 16 years. Not sure if I explained this topic in the best way, but I think you may understand.

Funds are a bit different, but in bad moments, also a fund doesn't perform well, simply because it can't, historical data are not necessary here, that's a simple concept.

You say that investing every month and forgetting about it doesn't work at all, and yet clearly it does do, it is how most pensions work in fact.

The idea is that over the long run it will go up.  Any big dips along the way just mean you are buying that months amount cheaper.  The longer you leave your money invested, the greater the likelihood of a good outcome, assuming you are just buying a global diversified fund and have some control over when you take the money out.  It has been proven that if you try and guess when it is the right time to buy that on average you just end up losing out compared to someone who has just invested consistently for the long term.

It obviously isn't what you want to do however, and it is your money, so good luck to you.

Pension investment is for very long term and they have different goals, that is giving you something back with a sort of fake warranty included.
In this case you are investing on a 30 years minimum lifespan, that's another story.
I need to conclude something in 10 years, with all the risks involved.

I don't invest at all in pension, but if you do, you are not doing wrong, I just want to do it before and with high returns.

NottinghamKnight

RobHT said:

eskbanker said:

RobHT said:

eskbanker said:

RobHT said:

Looking here, it makes me think to trash the idea of dividents, too complex: https://transferwise.com/gb/blog/uk-tax-on-foreign-dividends 

Unless I invest only in dividents in UK, but that would be very silly...

Don't look there, it's an old article referring to changes in dividend taxation back in 2009, although a newer date seems to have been attached at the top for some reason.  Foreign Tax Credit Relief is generally available for most countries, via which you can offset your non-UK taxation on foreign dividends against your UK tax liabilities for those, so the net effect should be that foreign dividends aren't penalised as heavily as you seem to think, if at all, and certainly not at a fixed rate of 10% as suggested by that old article from back when there were tax credits applied to UK dividends.

And, by the way, the word is 'dividend', with a D, or rather three of them....

Thanks, but it seems a complex and long procedure to do something easy , I'm glad this year I don't need to do it, at least for dividends, let's see how it goes with options trading and therefore CGT

Your choice, I'm not trying to push you one way or the other - my initial point was simply to observe that if you're weighing up income versus growth alternatives, it obviously makes sense to do so armed with as many pertinent facts as possible, rather than making false assumptions or misunderstanding how taxation works.  As soon as you're outside tax shelters, you have to maintain good records of all your transactions and take responsibility for establishing tax liabilities, whether that's income tax or CGT, so best not be under any illusion that there's minimal work involved in running a sizable unwrapped portfolio!

Thanks, but I would pay a tax accountant, I can't really find the time to do that task alone, and taking also full responsability on it. It's not really my field and it seems a waste of time, I only hope that the tax accountant won't be greedy  

But the majority of the work is in keeping good records which you'll have to do anyway or the tax accountant won't have anything to work with.