Author Topic: Investing in Ireland  (Read 4730 times)

rodrigojds

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Investing in Ireland
« on: July 06, 2016, 09:21:10 AM »
Hi everybody,
I'm new to this website even though I've followed this line of thought (money saving) for a while now. I am a Portuguese citizen married to a Czech girl and we are both living and working in Ireland.
I would seriously like to start investing my money to make it grow but the information on this website and forum is overwhelming (in a good way) :-) My plan is to retire sometime between 50-55.

I would just like to ask if anybody had any tips for us new guys? What should we look into..if there is anything Ireland based or should we look into something more international?

Really - ANY help would be GREATLY appreciated!! :)

Thank you!
Rodrigo and Hana

GeekyGirl

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Re: Investing in Ireland
« Reply #1 on: July 06, 2016, 10:07:15 AM »
Hey Rodrigo,

I know it is overwhelming. I would start simple and do it step by step.  I am describing below how I understand the path to FIRE. I'm also quite new and It may vary from person to person.
First of all what do you want: Saving? Investing? Being financially independent? Retiring early? Let’s assume you want all this.

1.   Savings: It seems that you are already doing this, but your question is a little vague? In general it helps to provide saving rate (how much of your take-home are you saving), monthly spending and then people can suggest ideas to cut your spending and increase your saving. But yes, the first step is to save, reduce your spending and increase your savings.

2.   Investing: Once you save, you need to make that money working for you. Look for posts on asset allocation and investing on the blog and others. Jcollins has a stock series that is very helpful (http://jlcollinsnh.com/stock-series/ ). You mention that you’re in Ireland and as you go over the blogs you’ll see everyone talking about Vanguard and the total market index, it is quite difficult to do it in Europe as you can see on those threads Investing with Vanguard for Europeans and What if you can’t buy VTSAX? Or even Vanguard? are very helpful.

3.   Being FI: you’ll need to figure out how much money you need to not need to ‘work’ anymore, ie how are you going to save enough so that money can have passive income that’ll sustain you forever. It’ll depend on the amount of your annual spending. There is a blog post on MMM: The simply shocking Math behind retirement. You can start there. If you assume a 4% SWR, you multiply your annual spending by 25 and this is the money you need to save, assuming that this amount will be invested with an interest return of 7% and 3% of inflation. This is based on US market so it might be different in Europe. Then you can make a plan on how you’re going to reduce your spending (though reducing the amount you need to be FI) and increasing your saving (thus reducing the time you need to stash your target amount) while looking for the most optimal way to invest. That’ll probably change as you learn more and become more effective on estimating your FI amount and finding lucrative investments, or increasing your income. It varies a lot.

4.   Retiring early: based on your calculations of how much you need to be FI, you can see if you’ll be ready by 50-55 as you want or earlier. If it is later, you can try to find ways to reduce the amount you need, increase your saving rate, or find side-gigs or increase income. Some also decide to work part time after a certain amount. It’ll all depend on you and it may change overtime.

5.   Resources I share with people to inspire them to follow MMM or be FI or FIRE:
BLOG POSTS
http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
http://earlyretirementextreme.com/about
http://earlyretirementextreme.com/how-i-live-on-7000-per-year.html
http://www.budgetsaresexy.com/2008/02/welcome-my-fellow-pfers_12/
http://jlcollinsnh.com/about/
http://www.gocurrycracker.com/start-here/
http://www.frugalwoods.com/2014/07/16/more-than-you-ever-wanted-to-know-about-the-frugalwoods-family/
http://www.thesimpledollar.com/little-steps-100-great-tips-for-saving-money-for-those-just-getting-started/
BOOKS
The Total Money Makeover
The Richest man in Babylon
Rich dad, Poor dad
The Automatic Millionaire
A Million Bucks by 30
The Millionaire next door
Your Money or Your Life

Good luck and do not hesitate if anything is unclear.

rodrigojds

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Re: Investing in Ireland
« Reply #2 on: July 06, 2016, 12:55:15 PM »
Thanks a lot for your reply GeekyGirl :)
I will try and reply the best I can.

1. Savings - in terms of savings I can easily save around 65%-70% of my salary every month. Rent is a big part of my spending at €825 monthly (which is pretty cheap compared to other places in the city). We spend around €200 every month in food..we could probably spend a little less if we tried but we don't go crazy and spend a lot. I'm always looking for sales in shops and buy things in bulk when they are cheaper. We have internet on our phones and we use it at home so we don't need a normal DSL connection- €35/month for the both of us for phones. We don't have a TV so we don't waste money on cable. We hardly go out to eat since restaurants/bars here are so expensive. We both bought (used) bikes and we are cycling to work during the summer while the weather is ok. Come fall/winter we will need to start using the buses which arent cheap.

In this aspect I think we are doing pretty well :-)

2. Investing - We were previously working in the Czech Republic so I still have money saved there in normal bank accounts. Most of the money is stored in the savings account which is getting around 0.5% interest rate (and steadily going down). I arranged a retirement fund with RL360 (maybe somebody has heard of them?) Every month €500 goes to that fund from my czech account. Which the amount saved in CZ I won't need to worry about paying with my Irish money for the next 2 years.

With all that being said what I really want it to do is invest the money we save here into something that will grow over time. My goals are still a bit unclear..I know I want to invest as much as I can but I also know that I should have money in case something happens. I don't know if its possible to withdraw invested money at any time or not.
 
I am renting at the moment but I would like to buy a house but there's no rush for that though. We don't have any kids but we are working on that so maybe within the year we will have some news :)


I'll certainly read the posts that you mentioned:-)


But if anybody has any other tips for people in Ireland to invest we're all ears!!


thank you!
Rodrigo & Hana

PapaOscarDelta

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Re: Investing in Ireland
« Reply #3 on: August 26, 2016, 04:30:00 PM »
Hi Rodrigo,

I'm in a similar position myself in that the saving aspect & comparatively low cost of living seem to be in hand. The big difference here in Ireland is the options for investing and getting respectable returns.

Vanguard do have operations in the uk but you need £100,000 to buy into a fund. For additional management fees you can buy their products through a platform like Nutmeg or Zen Assets, although you may need a uk bank account to become a client. Barclays will let you open a non-resident account if you keep a balance of £25,000. HSBC will if you have £60,000 with them between deposits and investments, and Monese will grant you one for £4.95 per month and a max balance of £40,000.

There are REITs and peer-to-peer lending operations based here, but I feel that they are a bit too new and novel in or market to justify the risk. Property seems to be bubbling again so I'm cautious on that front too. That said, some contributors on askaboutmoney.com have reported positive experiences in those areas, but they probably know more about this sorts of things than I do.

For stocks and shares there don't seem to be many passive funds available which means you either select a managed fund for extra fees and apparently less reliable returns, or pick your own basket of companies to buy into. Rabobank, DeGiro, and TD keep coming up on AAM as the tools for this approach. This is the next avenue I intend to explore but I've not got there yet.

Finally, you need to keep tabs on whether your shares will post dividends or reinvest in themselves as one will subject you to capital gains tax and the other to income tax, so the level of return broadcast on these forums just doesn't seem possible 'round our way. Also there are limitations on gain-loss offsetting to minimise tax liability, and there's a 'deemed disposal' every 8 years so they can charge CGT regularly too, regardless as to whether you actually sold those assets or not.

I'm still at the homework phase of this aspect (investment returns) myself. I've not used any of the services I mentioned above, just discovered that they exist. Realistically I'll probably throw my spare cash at the mortgage for a couple of years, decide if the pension is worth maxing out or not, and in the meantime learn which companies deserve my love and financing.

Hope this helps, would love to hear what you can also come up with.

celine31

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Re: Investing in Ireland
« Reply #4 on: August 27, 2016, 11:52:38 PM »
Hi! I just moved to ireland a few months ago as well and I'm just trying to figuring out what to do with my money.
You should look into rental investments because the tax credits you get are pretty great when you're a landlord!

Doubleh

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Re: Investing in Ireland
« Reply #5 on: August 28, 2016, 01:36:16 AM »

Vanguard do have operations in the uk but you need £100,000 to buy into a fund. For additional management fees you can buy their products through a platform like Nutmeg or Zen Assets, although you may need a uk bank account to become a client. Barclays will let you open a non-resident account if you keep a balance of £25,000. HSBC will if you have £60,000 with them between deposits and investments, and Monese will grant you one for £4.95 per month and a max balance of £40,000.

For stocks and shares there don't seem to be many passive funds available which means you either select a managed fund for extra fees and apparently less reliable returns, or pick your own basket of companies to buy into.

Just to clarify a couple of points:

- vanguard's £100k minimum in the uk is to hold an account with them directly - they aren't in the business of selling direct to retail investors in the uk. That doesn't mean that you can't invest in their funds though, you just need to use a broker / fund platform to buy through. Nutmeg offers an automated investment service a little like vanguard but at much higher fees. You don't need this; if you know that you want to buy say vanguard life strategy 100% equities you can buy this through a broker such as Halifax Share Dealing or Interactive Investors for a much lower fee. I have an account with Halifax and pay something like £12 per year and £2 to buy a fund as a regular monthly investment.

- This is from a UK perspective so not sure on the specifics in Ireland but I'm sure similar exists. Additionally vanguard make many of their funds available as exchange traded funds (ETFs) which are traded on the stock market like a regular share. Typically you pay no fee to hold hem but do pay a commission to buy or sell - shouldn't be more than £10 - and a bid/offer spread. In fact most ETFs available in the uk are incorporated in Ireland so I can't imagine it is too hard to buy them there

PapaOscarDelta

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Re: Investing in Ireland
« Reply #6 on: August 30, 2016, 03:41:10 PM »
You should look into rental investments because the tax credits you get are pretty great when you're a landlord!

Thanks Celine, I'll put that as a medium-term option but this post http://www.askaboutmoney.com/threads/tax-take-on-rental-income-is-staggering.200198/ recently put me off. If the REITs are viable here then I might go down that route to get involved in property. Although with the average rent on accommodation nationwide now at over €1,000 per month I just feel sketchy about the industry in general. Those sorts of values just aren't sustainable so something's gotta give (what short memories we've got!)

@Doubleh: Thanks for the info. There's a link in the bottom of the Halifax Sharedealing page that says it's for UK Residents only https://www.halifaxsharedealing-online.co.uk/_mem_bin/formslogin.asp?WT.ac=HSDL1

The Interactive Investor site doesn't make non-resident applications obvious, but I'll keep rummaging. Thanks for the links though, the right answer for me is out there somewhere!

There are a couple of online brokers here in Ireland who do sell Vanguard ETFs. Am I right in thinking that an index fund is a purely passive exercise, you just keep adding funds each month instead of dumping them in a bank? Whereas with the ETF I need to find the ticker number(s), request that one (or five) from the broker, and rebalance manually every 6 or 12 months. That they are effectively the same thing, but I need to be more actively involved with the ETF version?

It seems there are many funds which are domiciled in Ireland (probably tax reasons), but I can't always find the ways to access them. I don't think there are any straight index funds available, just ETFs. Of course, I stand to be corrected on that!

PapaOscarDelta

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Re: Investing in Ireland
« Reply #7 on: August 30, 2016, 03:46:05 PM »
The Interactive Investor site doesn't make non-resident applications obvious, but I'll keep rummaging.

Ah, there it is: Section 9 of the General Conditions of the Legalese http://www.iii.co.uk/terms says no non-UK people may buy the useful stuff.

Foiled again.

katthjul

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Re: Investing in Ireland
« Reply #8 on: September 01, 2016, 02:32:47 AM »
I arranged a retirement fund with RL360 (maybe somebody has heard of them?)

Nothing good; that their products are awful and complex with high fees. Every advice I've read is that you should get out of them today. Read http://forum.mrmoneymustache.com/investor-alley/i-dun-goofed/ for the gory details.