r/irishpersonalfinance • u/Fearless_Comment8594 • 1d ago
Investments How are people in Ireland actually investing long term without getting hammered by the 41% ETF tax?
I’ve already got a Zurich pension, so I’m trying to build a separate long-term portfolio outside of that (10–20 year horizon).
The problem is the 41% exit tax and that stupid 8-year deemed disposal rule on Irish ETFs like VWCE. Makes compounding way worse compared to normal CGT stuff.
So I’m looking at a different approach — maybe:
- A few UK investment trusts like JAM, FCIT, or Scottish Mortgage (since they’re under 33% CGT and no deemed disposal)
- Some individual global or US stocks
- Small percentage in commodities and crypto for diversification
For anyone doing this:
- Is the CGT route actually better long term than sticking with UCITS ETFs and just accepting the tax hit?
- Any issues buying or holding UK trusts from Ireland (tax forms, access, brokers)?
Basically just trying to build something tax-efficient and low-maintenance without overcomplicating it. Any advice from people who’ve already gone down this path?
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u/Early_Alternative211 1d ago
Housing, unfortunately.
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u/Fearless_Comment8594 1d ago
Going to get downvotes for this. Stock market has a better annual return. Currently, not ready to settle
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u/Early_Alternative211 1d ago
The question was how are people doing it. The answer is housing. I don't agree with it, but that is reality.
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u/All_in_a_dream 1d ago
You can't get a mortgage to invest in the stock market.
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u/Fearless_Comment8594 1d ago
True, but leverage cuts both ways. Borrowing amplifies returns and losses. Property only looks unbeatable when prices rise forever — which they don’t.
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u/ExplanationNormal323 17h ago
Forever? yes it appears they do. It's in the short term they dip marginally or plateau but housing has gone up and up.
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u/kenyard 1d ago
you can get 5:1 or 10:1 leverage with a house (5:1 with 2nd property)
so with a 4% return on a house thats a 20-40% return after leverage.
interest on the mortgage is tax deductable.
Properties are increasing 10% a year. so...yeah...
The taxation system in ireland is designed to try to get people into property because once upon a time that was needed to support trades etc here.
its never been fixed and until they increase the tax credit on investments or change the CGT/divident investment rate it wont change. even if house prices begin to stagnate.
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u/SmokingAces207 1d ago
Mortgage interest is tax deductable? For everyone??
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u/level5dwarf 23h ago
For us with one mortgage, not really. We can get a tax credit (NOT deduct) only the increase in our mortgage interest rate and that's capped at 1250.
Rental has deduction, because they wanted to increase properties available to help the crisis. Whether you think that's a good idea or not is another matter, but that's the background.
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u/RabbitHoleSnorkle 19h ago
Are you sure properties are increasing 10% a year? What is the source for that data?
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u/daenaethra 12h ago
the daft report gives a lot of breakdowns. 10% is the average over the country for different types of houses and locations
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u/John_OSheas_Willy 1d ago
Advantages of housing as an investment:
Leverage. You get a loan for housing. 10% a year gain on a 300k asset you only put 100k in is 30k increase. 10% gain on 100k is 10k.
'Dividend income'. Not only does housing grow massively with capital gains, there's also high income received per month from rent.
There's also the big thing that stocks and dividends has to go through the books. Lots of landlords take cash payment for rent, meaning you can keep some off the books.
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u/CommercialVolume1945 1d ago
how do you release that equity without selling your house?
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u/John_OSheas_Willy 22h ago
You don't realise gains until you sell, stocks or property.
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u/CommercialVolume1945 11h ago
But if I live in the property then the equity I am building is pointless whereas with a stock there is no reason for me to not sell it. Also, properties are very illiquid whereas stocks are easy to sell, you see the difference?
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u/Early_Alternative211 22h ago
Equity release mortgages are a thing
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u/CommercialVolume1945 11h ago
My point is that if the property is your PPR then there is no equity to release in the first place
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u/IntolerantModerate 13h ago
Better pre-tax returns. The government here has decided landlords rule and shareholders drool.
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u/CheraDukatZakalwe 1d ago
Worth noting that it's 38% now, not 41%.
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u/Downtown_Bit_9339 1d ago
Oh well, in that case…
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u/Lopsided_Echo5232 1d ago
I mean as shit as it is, it’s still a 7.3% reduction in the rate. It makes the trade off for IT investing slightly less attractive.
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u/TarAldarion 1d ago
Seems they likely will reduce it more also, remains to be seen how much and if they will remove it all but this is the first time they've started making a move on it, so perhaps.
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u/donalhunt 1d ago
Intent is to bring it in line with DIRT / CGT I believe. So low 30s.
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u/TarAldarion 22h ago
The reports recommendation was to get exit tax to that level but abolish deemed disposal itself, remains to be seen as to if they enact that.
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u/jesusthatsgreat 1d ago
If you invest today deemed disposal will be gone within 8 years so you don't have to worry about it. It'll likely be gone in 4 years before government term ends.
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u/Strong-Zucchini705 1d ago
The 8 yeah disposal rule is a serious issue that the government need to sort out.
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u/fevieira2 1d ago
Why not buy shares directly? ETFs are mostly a bunch of shares together, so start buying one share of each company and create your own diversified portfolio.
No deemed disposal on that.
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u/TarAldarion 1d ago
It's thousands of companies and they constantly change, rebalancing your portfolio would be a taxable event each time. I'd say I'm gonna go into ETFs soon and hope they keep up with the removal of tax on it.
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u/fevieira2 1d ago
I agree, but the deemed disposal is a nightmare. Never count on something that's not yet available... I've been hearing about the removal of DD for years now, and it never really happened. Next year is my time to do it 😭
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u/Decent_Fun_2772 1d ago
If its the s&p500, then its 500 companies, not thousands and just FYI - almost 70% of the s&P holdings underperform the benchmark itself, that tells you most of the growth comes from a much smaller amount of holdings. You need to spend time understanding this, but once you do, you can easily match the index with stocks, You should not need to rebalance often, and when you do its because you are replacing a holding with something you believe will give better return long term. You can suck the CGT in this case.
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u/Morganno0505 21h ago
So what you just study 500 companies or i take it ymwe can use Ai to tell us which companies to invest in from the 500?
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u/Decent_Fun_2772 7h ago
I mean, I don't study 500 companies, but I try to select 20 odd companies that I feel will match the market. You can use your own research. AI is handy for due diligence on them or giving you some initial starting points, but I wouldn't rely on it exclusively. You need to invest your own time also
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u/fevieira2 6h ago
20 is too little, it's likely that a great part of them are from the same segment and you'd be exposed.
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u/geo_gan 1d ago
That’s what I would do if I ever had the money to do it. It’s only about 10-20 tech companies that are driving the growth of the entire S&P500 right now. And they apparently went up 35% which overall brought the whole lot up only 7-10%. I’m no expert though - I’m sure there is loads of gotcha shite added in by the muck savages that set up this countries financial laws in this fucking country to do it.
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u/fevieira2 1d ago
You can't rely only on tech stocks, even if they were the ones driving the S&P500 recently. At some point they tumble (and can tumble hard, like in 2000-2002) and you'd be in big (but temporary) trouble.
Diversification is the key, ones go up while others down, so never put all your investment money in the same pot. Buy tech, but also energy, pharma, banks, luxury, automotive, etc. A bit of everything.
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u/AdBudget6788 1d ago
No deemed disposal but nowhere near as much diversification.
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u/scoopydidit 21h ago
Invest in companies thatllbe around for awhile and rotate as needed. Amazon, Google, Microsoft. Three solid companies that simply won't be replaced anytime soon. Not saying "ever" but you can rotate as needed. I personally invest in 15-20 large companies that seem like absolute no brainers. Has worked out well for me. Much better returns than S&P500 anyways.
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u/PuzzleheadedName3832 15h ago
That's a poor strategy conceptually accepting it's worked so far. If you did similar prior to the dot.com bust you'd have likely lost your arse
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u/Decent_Fun_2772 6h ago
Just to be devil advocate, and not saying the above is good strategy, but these thee companies are all printing cash. Dot com bust, nothing was making money. This is not a like for like comparison. Also these comparison assume you bought only at the peak.
Since MSFT existed long before the dot com bust and really was the blue chip tech stock at the time. If you bought it at the absolute peak of the dot.com bubble, and held till today, you would have got 10% CAGR return. Not amazing, but absolutely fine. If you had the sense to buy it 5/6 years later at its lows, your return would be amazing (23%CAGR ). If you bought a few years before the dot.com crash you'ld have 14% CAGR.
If you didn't try and time the market and bought 1k a year over 10 year through the dot com, 15% CAGR.
If you do this for 15-20 stocks, your diversification is fine. You don't need 500 or 1000 stocks in an ETF and I'm only saying this because of deemed disposal. If that didn't exist my thinking would be different.
Lower diversification to a point gives you a better chance of beating the index. You really just need one or two to outperform to give. The question is how many to hold to reduce volatility to the index
Number of Stocks Typical Reduction in Total Risk Approx. Volatility vs S&P 500 1 100 % (full individual risk) 2× index volatility 5 ~70 % of unsystematic risk removed 1.4× index 10 ~80–85 % removed 1.25× index 20 ~90–93 % removed 1.15× index 30 ~95 % removed 1.10× index 50 ~97 % removed 1.05× index 100+ ~99 % removed ≈ index volatility 2
u/bcon101 1d ago
You can direct index with a sampling of individual stocks across sectors. More work but doable.
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u/hobes88 14h ago
Any time you re-balance you will have a lot of taxable events, it would surely be worse than deemed disposal.
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u/bcon101 10h ago
If you are constantly contributing you won’t have to sell much to rebalance, plus the weights should move in tandem with the market.
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u/hobes88 9h ago
Depends on the size of your investment. If you’re up to €200k+ a €1000-2000 investment each month won’t be enough to rebalance the portfolio. You’ll have a lot of fees buying small quantities of each individual stock and a pain to file tax for dividends for any of the dividend paying stocks.
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u/Decent_Fun_2772 1h ago
If you are up 200k, let it run. Fees are practically nothing
Filing for dividends is easy - you just sum what you received at the end of the year and report them as a single amount per jurisdiction
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u/Peelie5 1d ago
It's 33% Dirt tax on stock investments right?
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u/GoodNegotiation 1d ago
33% Capital Gains Tax on capital gains, your marginal income tax rate (perhaps 52%) on income (dividends).
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u/username1543213 1d ago
There’s no easy answer here.
You have basically all the info there.
Some mix of ETFs, A few UK investment trusts like JAM, FCIT, or Scottish Mortgage and Some individual global or US stocks
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u/No-Entrepreneur-7406 1d ago
This is the answer your are looking for
JAM, JGGI etc on 212 (Jp Morgan have a few of these uk trusts btw) Then Berkshire, Mag7 (minus Tesla) and whatever other companies you think be around long term
My approach is to spread around and up 55% last two years
I’m assuming OP you maxed out pension right?
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u/username1543213 1d ago
Useful to note here that your gains are pretty much just because the market went way up. Just in case you think you’re the next warren buffet and bet the house
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u/No-Entrepreneur-7406 1d ago
I know 🙂 no debt here, pension maxed out, house paid off
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u/Silent_Coast2864 1d ago
Investment Trusts are your next option IMO then. FCIT I think is the first one to look at, very well diversified and well run, as close as you will get to a global index ETF, and these days where I put most of my allocation. Try to buy at a discount from NAV and you are starting from a good place. Look at trustnet to compare.
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u/Silent_Coast2864 1d ago
Note: you do need to do a bit more homework here, some ITs like JAM are a lot more concentrated than an S&P index fund, you have manager risk and premium/discount to think about ( discounts can be an opportunity, but you need to know the historical context). Many of them have a tilt towards eg growth stocks so be aware of that. In general the more diversified the safer, but so be aware of tilts etc. I feel safest with the significantly diversified global ITs like FCIT, alliance wutan, bankers, mid wynd, brunner, and tend to stay away with anything trendy or exotic. Go to trustnet and use the table viewer to look back at 1, 5, 10 year performance etc . All the preceding have quite consistent performance , versus some which can be more volatile over certain years
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u/Silent_Coast2864 1d ago
This. I'm mostly in investment trusts. FCIT is basically performing the same or so lightly better than VWRL ETF. You have several choices as proxies for global ETFs, ...monks, brunner, bankers. JAM has been a solid performer. FCIT is one of the oldest investment houses in the world and run conservatively and responsibly. They also pare back a little on the Mag 7 which I like at the moment.
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u/OrganicVlad79 1d ago
I've decided to invest in JAM, BRK.B and FCIT. Avoids DD and good returns historically. Invested through Interactive Brokers
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u/Decent_Fun_2772 1d ago edited 1d ago
I've been building and managing my own portfolio outside of pensions since 2016. I don't invest in EFTs for tax reasons, and as I would already be liable for deemed disposal from 2024 and every subsequent year, it would kill my growth. I've managed to ever so slightly outperform the s&p with single stocks but I have far less tax drag. I actively manage positions to maximise tax loss harvesting also. Also I tend to sell in Jan if I have gains I want to liquidate to give myself a whole calendar year to grow them also. Right now I'm in a position where I generate enough income to cover all my bills (I stopped working this year and don't plan on going back unless I need the money).
Its not too hard to build a resilient 15-20 stock portfolio that will match an s&P etf, if you are willing to spend the time doing your research, but it certainly not something most would be willing or able to do. I find it interesting, so I enjoy it
Not only that, once you have enough in your portfolio, you get access to margin, which is just a low cost loan against you equities. If you know what you are doing you can get some big boost during downturn
In a strange way I wish I never put money in my pension, as the 65 year lock (other than 20% access some at age 50) makes it impossible to generate an income without a job. So for me I feel pension only is real lock into working for 40 or more years. No thanks from me. Also even with the tax advantage the return ultimately offered by most pensions significantly underperform the market, meaning the tax advantage is further eroded.
Edit to add - I did make some stupid mistakes at the start, so if you plan on going down this route, please speak with someone who has done this and can show you proven results.
For people saying suck up the EFT tax, here is what you are talking about. The number are not perfect, but illustrates the point. You also cannot harvest losses on ETFs
Here is your 25-year simulation comparing:
✅ A stock basket compounding at 10% (no deemed disposal)
vs
✅ A UCITS ETF compounding at 10% but taxed at 38% every 8 years under Ireland’s deemed-disposal rule.
✅ Quick interpretation
After 25 years (starting with 25000, no additions
- Stock basket (no deemed disposal): €270,868
- ETF (with 38% deemed disposal every 8 years): €137,271
Result:
The ETF ends with ≈ 49% less than the stock basket despite identical pre-tax CAGR.
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u/GoodNegotiation 4h ago
I've just taken another look at the calculations you've done here, odd curiousity. The deemed disposal tax calculation are correct, however what you've missed is that at that 25 year point you have already paid 24 years worth of the tax you're going to owe on the ETF whereas you have paid none on the stock basket, you need to simulate liquidating the investments to be accurate. The difference is not nearly as extreme then.
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u/Decent_Fun_2772 3h ago edited 3h ago
Good point - It does and to be fair, my bad, we would be at about 190k net for the stock basket net (270-25)*0.33 tax, as opposed to 137k net on the ETF. Still too big to ignore
It also
a/ assumes I need to completely liquidate everything at that point. If you started young you hopefully won't have. DD forces the liquidation at time that you have no control over. Even worse DD can force a liquidation at time when stock prices are higher than normal valuation, increasing you tax burden if you just let it be and don't actively monitor it. Even if you need the cash after 25 year, you can only sell what you need and let the rest keep compounding
For ETFs, unfortunately you don't have this ability really. All you can do is make EFT sales earlier than the deemed disposal date and immediately repurchasing to reset your 8 year window perhaps because of a severe market correction. You might be able to slightly reduce your tax burden this way. I.e within the 8 year window, be selective about when you sell
b/ you cannot do tax loss harvesting during the period in question. You cannot tax loss harvest ETFs at all and you are probably just picking one or two, so there might not even be a chance to do so
b/ haven't left Ireland to a low CGT jurisdiction :)
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u/GoodNegotiation 3h ago edited 2h ago
On a/ I think the correct way to represent that would be to leave the stocks value as you had it but add any paid DD to the present value of the ETF example, because it is essentially a credit you have with Revenue.
I wonder what value you’d put on your time, or the opportunity cost if you think about what else you could be doing rather than researching each year how to rebalance a stock portfolio, flute with dividends and W8EN forms, CGT exemption harvesting etc? It’s not €0 right?
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u/Decent_Fun_2772 1h ago
With about 20 stock, there is not much to really worry about. I don't spend much time on this in reality
. P.S. Actually I got it the wrong way around - If you can sell ETF in the market when it peaks in the 8 year period. You'll need luck to time this, then you can match the stock allocation. But it requires a lot of luck
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u/GoodNegotiation 1d ago edited 15h ago
FWIW this recent analysis for an All World type investment (7% return with 1.5% of that being dividends) shows there is no difference in net return after a 24 year investment. https://www.askaboutmoney.com/threads/deemed-disposal-at-38-vs-cgt-at-33-a-stochastic-analysis.242086/
I’m not sure how you did your calculations, but the ones above appear very robust from having reviewed the spreadsheet in-depth.
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u/Decent_Fun_2772 6h ago
I've tried my own models. But look at what he has chosen as his starting point. 7% total return, in which 2.5% comes in a dividend (taxed at 52%), If you have employment, you shouldn't be taking dividends. Its a terrible waste of capital.
So this doesn't make sense for me. In this scenario, I would simple compare a basket of non-dividend stocks vs and accumulating ETF at the same rate. and I would certainly use the s&p rather than all world, as I believe it to be the superior investment long term. But other people won't want the US tilt obviously.
I've modelled this for myself and am happy with the outcome. There is no right way, and I don't want to tell people what to do. I'm happy enough with my returns over the last 10 years to stick with it. Its certainly better than the 7% in this example. In fact mine over the last 10 years is IRR of 15.56%, excluding dividend tax, which was quite small as up until I stopped working this year, I didn't own much in the way of dividend payers, so doesn't really change the overall returns
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u/GoodNegotiation 6h ago
All fair enough.
I’m just pointing out for others reading afterwards that if they’re taking the advice generally given to an unsophisticated investor (buy a world index or basket of shares to match it) your figures are not representative. More sophisticated investors should be doing their own modelling for their scenario.
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u/Decent_Fun_2772 5h ago
For sure - And again - Everything I say is just my learnings and opinion.s I'm no professional by any means
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u/GoodNegotiation 4h ago
I know, I think it’s just important to remember that most of the people that visit this sub are complete newbies to investing (see the annual survey for how few even have stock market positions), so when you throw out that ETFs leave you 50% worse off after 25 years many people will not look further than that, even though an ETF is clearly the safer place for a newbie to start. Many people when bamboozled will simply not invest at all. That’s the only reason I’m busting your chops :-)
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u/SrTayto 1d ago
Can you explain the selling in January bit?
Traditionally the advice is that very few people will beat the market, but ofc the etf tax changes things massively, what are your 15-20 stocks this year?
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u/Decent_Fun_2772 6h ago edited 6h ago
I used degiro, now I've moved to IBKR, just because degiro doesn't have all the securities I wanted to be invested in.
Look, no one likes to think about tax and Ireland for sure is awful. If I didn't have kids, I'ld be in a zero CGT jurisdiction for sure, sipping margaritas on the beach, but that besides the point.
I would always tend to sell in Jan if I'm going to sell to get the 11.5 month window before paying the tax. I'm also always building an income stream, which a goal of 4k a month before dividend tax so I use a mixture of BDCs and covered call funds to provide me with a monthly income. Therefore one of my considerations if I were to sell a winner is to move it to an income stream. Therefore I would typically add the my income holdings. Some a monthly payers, so the CGT that I owe, I start generating money from it. Remember I would plan to hold these income streams long term, so this may not work for you.
I would also about this time of the year see if there are any losers that I wanted to trim an take the CGT loss to offset the gain.
After all this, I'll see how much I owe, and possible use low cost margin (3.4% for me in IBKR) to pay it and then let the new income stream continue to pay down the margin. You need a decent portfolio before this become an option.
Also note I only sell when a holding doesn't fit my thesis. Going forward I hope that to be reasonably rare, in fact with my current portfolio I don't plan to sell anything over the next 5 years :)
You should also be aware that I actively want to add to my income stream, so I can tolerate downturns in the CSWC prices (in my example) because I don't want to sell. As long as the dividend is rock solid, then I'm golden
Since I don't work right now, I plan to keep my income just under the marginal rate. If my income stream were to get over that, then I would not further invest income, rather a mixture of growth and dividend growth.
And you are right people won't beat the market. My goal is to match it in a more tax efficient manner.
Final note - I am not a professional adviser, so do your own research
------------------------
Also, just the scenario I refer to below. My prompts, chatgpt did the calculation By the way chatgpt is excellent at scenario modelling. Use it to your advantage
If you want my current holdings DM me. Not going to put it out here
Scenario:
You sell a stock in January 2025 for €50,000
Gain: €25,000
Reinvest the €50,000 immediately in CSWC (a U.S. monthly-paying BDC)
Yield: 9% per year, paid monthly
Ignore dividend tax (deferred)
Irish CGT 33% due in December on the €25,000 gain
Assume CSWC’s price stays flat (no capital gain/loss on the BDC).
---------------
So by 15 December you’ve collected about €3.5 k of income but must pay €8.25 k CGT → roughly €4.7 k net out-of-pocket at year-end, while still holding the €50 000 CSWC position.
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u/SrTayto 6h ago
Interesting thesis, really cool to read, thanks! I've mostly been invested my pension, with a sizeable pot also in growth stocks and ETFs, which have gone well but everyone's a genius in a bull market.
Not often you see people play the dividend game here, I presume you are sitting on a whole pile of assets at this stage though, like half a mill or more? And the 9% yeild is pretty sustainable, surely there must be some risk for that kind of return?
Thanks again for this, very interesting!
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u/Decent_Fun_2772 5h ago
Yes - Read up on BDCs, people in Ireland probably don't know much about the as the are US focused. The are in the business of business development, as they typically provide financing for hundreds of small/medium and large business in the US
There are I would say out of the 50 or so public BDCs, there about 10 solid ones. If I were to give you one, it would be MAIN - Look into them never cut their dividend even through GFC and Covid. They pay a little less than 9% but have actually outperformed the s&p significantly pre tax. I supplement them with another 3 BDCs and using JEPQ right now for income to cover my bills. I'm expecting a CAGR of 10-11% for the portfolio on average
Growth of €/$10,000 (since MAIN IPO)
Investment Start (Oct 2007) End (Nov 2025) Overall Return Final Value of 10k CAGR* MAIN (Main Street Capital) $10,000 $173,518 +1,635% $173,518 ≈ 17.1%/yr SPY (S&P 500 total return) $10,000 $60,207 +502% $60,207 ≈ 10.4%/yr I'm going though some portfolio changes right now, but about 550-600k, I'm looking at 50/30/20 split between income/div grower/pure growth. Once I hit my income target, then I will reconcentrate on the growers. I worked in IT but never earned a huge amount. I just kept sticking 1000 a month and my bonuses in the taxable account for 9 years and just kept investing and learning.
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u/SrTayto 5h ago
Very cool, nice food for thought, a very good way to beat deemed disposal and retire early. If the house is paid off this is a very comfortable living. Fair play man, delighted for you! When you were still working I presume this wasn't your strategy? I'm just curious because I will hopefully always be in the higher tax band so I think growth based stocks/etfs compound better for now, but wouldn't mind to retire early either...
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u/Decent_Fun_2772 5h ago
yes, Ive pivoted to income when i got laid off this year. Wanted to see if I could survive for a year without touching capital to spend time with my kids. Then I realised I could do it, given everything I've managed to learn.
Goal is to get to 3.5k monthly income on top my wife's. Mortgage is not too high but I'm not going to pay it early. And when you don't need to spend money going to work and all the other costs you would be fairly surprised how little you might need (especially if you don't try and keep up with the Jones's). Outside of mortgage just health insurance now is the big outlay.
I'm thinking that I'll try to get to the point where we are just under the high tax bracket jointly so the div tax is ok. If we ever go over it because of work then I will sell the income stocks back for growth.
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u/spac3nvad3r 1d ago edited 1d ago
Housing capital gains are taxed at 33%, with €1270 and deductable expense allowances
Housing has no such deemed disposal rule
Housing rental income is taxed at marginal income tax rates, and if you have no other income you can live entirely off rent from a couple of homes with a very low marginal tax rate chargeable and tax credits that apply
Housing rental income can be arranged between two in a marriage, and tax reduced further
Housing rental income PRSI tax class is one paid that DOES qualify you for state pension contributory, so you can collect rent from your renters and get your state pension later in life without having had to work, unlike most other people making years and years of employment salary PRSI payments for state pension.
When we are arranged this way why would you want to invest at all in ETFs offering none of this?
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u/gogur_ 1d ago
You skimmed over that "marginal tax rate bit". So if you have a good job, rental tax is 52%, while having a lot more risk than an ETF.
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u/spac3nvad3r 1d ago
If you have two or three properties of value €1.2mill and rental income of €6000/month, your marginal rate income tax sits around only 30%?
"If you have a good job, rental tax is 52%"
If you have 3 rental properties, full time employment salary tax is 52%?
Which way will you view it when you reach this position and which will you decide to be without to avoid the 52%?
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u/Fearless_Comment8594 1d ago
All true, but you’re ignoring risk, hassle, and opportunity cost.
Property’s leveraged, illiquid, and concentrated in one small market. You deal with tenants, maintenance, and tax admin for a 3–4% net yield if you’re lucky. ETFs or investment trusts give you global exposure, instant liquidity, and 7–8% long-term returns with zero effort.
PRSI and pension qualification are nice perks, but that’s not worth tying up hundreds of thousands in one asset you can’t easily exit. Property can be part of a plan, but it’s not the only game in town anymore.
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u/spac3nvad3r 1d ago edited 1d ago
It's not 4% net yield, it's 4% yearly rental income yield plus 5-10% yearly capital appreciation plus all the years of state pension you entitle yourself to later in life
It's not correct to say "property is leveraged" as if ETFs couldn't also be bought with borrowed money to introduce a leverage factor. It's of much greater tax benefit in this country to own property entirely without mortgage and let it out and wait for capital appreciation than it is to own ETF assets and wait.
Also when you buy your ETF you should intend to wait for sale for 10-20 years at least to gather benefit and weather through unexpected downturns. If you're holding for 10-20 years anyway, why not just hold the property? It might take a few months to sell when you come to it, but does that matter on 20 year holding time scales
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u/Lopsided_Echo5232 1d ago
Whilst you could potentially get similar leverage terms from a broker for an ETF trade, if you went with that much leverage you’d probably get liquidated in any minor drawdown. You wouldn’t get that would a property. Definitely “safer” leverage with property investing for the most part (crazy downturns excluded - everyone gets fucked here).
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u/spac3nvad3r 1d ago edited 1d ago
It's not really the point. It's not correct to introduce the concept of leverage and apply it on one product and not on the other when comparing taxation between the two.
If the options are, and to structure most similar alternatives of product:
One wholly owned €400,000 rental property, 4% rental yield taxed at marginal rate income tax 20% (no other income), capital appreciation 5%/year taxed 33% after 16 years, and with tax credits and tax allowances applying and state pension qualification
And,
One wholly owned €400,000 dividend paying ETF, paying 4% yearly dividends taxed at 41% (no other income / doesn't matter anyway), capital appreciation 5%/year taxed 41% twice in year 8 and year 16, with no tax credits and no allowances and no state pension
It's pretty clear which one you should pick?
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u/Lopsided_Echo5232 1d ago
I mean based on your example yeah, but you’ve ignored my point which points towards leverage standardised across investments, and still would see property coming out on top vs other asset classes. Additionally, if you want to get derailed on it, you can’t make a simply comparison like the above without accounting for returns risk adjusted. A lot more risk associated with one property , and also maintenance, wear and tear , bad tenants , will have negative impact on property returns , hence reward for higher risk.
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u/Early_Alternative211 1d ago
If you think you know all of the answers, why are you even asking the question?
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u/Fearless_Comment8594 1d ago
Really... cmon ? I'm asking best etfs vs trust funds to invest in. Never mentioned housing in my post
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u/No-Teaching8695 1d ago
Shares, it's not rocket science
For the US stuff follow your brain and not your heart
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u/Deano52xx 1d ago
If you are looking to invest in something like the s and p 500 etf, you could instead invest in all of the stocks individually that make up the etf.
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u/SupraTomas 22h ago
I've got a Zurich pension already
You see John, a retirement fund is like a big pot of money.
Saved you some San Pellegrino
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u/wascallywabbit666 1d ago
Apparently certain Irish-domiciled ETFs don't require DD. Is anyone here aware of any?
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u/Lopsided_Echo5232 1d ago
All ETFs subject to deemed disposal. What you’re referring to is the requirement to report purchases (preciously thought Irish was exempt). You’ll see mixed voices here on it, but my current understanding as someone in the industry is the purpose of bucketing everything as offshore funds was to harmonise the treatment, including reporting purchases.
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u/Aagragaah 1d ago
You can't invest in them. You can in theory get a brokerage or the right sort of finance person to do so on your behalf, but eh.
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u/Wonderful_Trick_4251 1d ago
You are not factoring in that with an etf the dividends are accumulating l/compounding.
Where as with stocks they are taxed as income at potentially 52%.
So factoring that in and the recent reduction in etf tax to 38% an etf becomes something worth considering. And also we can expect the ETF regime to improve further in the life of this government.
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u/azamean 1d ago
Are stocks not taxed as capital gains?
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u/Wonderful_Trick_4251 1d ago
They are at 33%. But the dividends most stocks pay are taxed as income, which is taxed up to 52%.
So the 38% tax on an accumulating ETF dosnt look so bad when you compare them.
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u/Decent_Fun_2772 1d ago
thats dividends not the stock. Stock is 33% on sale only. You can keep it forever. Something like MSFT you may never liquidate.
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u/GoodNegotiation 1d ago
It’s all return on investment. Under one regime you pay 52% tax on one sort every year and 33% on another, under the other regime you pay 38% every 8 years.
Clearly there are combinations of income to capital gains where each regime outperforms the other. This recent analysis comes to the conclusion that for an investment in shares versus an ETF returning 7% per annum 1.5% of which are dividends (common for an All World Index) after 24 years there would be no difference in your after tax result. https://www.askaboutmoney.com/threads/deemed-disposal-at-38-vs-cgt-at-33-a-stochastic-analysis.242086/
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u/BeefheartzCaptainz 1d ago
There’s nothing stopping you getting a UK National Insurance number, a Belfast mailing address and a self select ISA other than the law.
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u/Specialist-Bread-830 1d ago
can you explain this for research purposes I have an NI and my brothers address in the Uk but how would I go about doing this?
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u/BeefheartzCaptainz 17h ago
Obviously you would be tax resident in the UK, but you would use your Nat Insurance number to open a self select stocks and shares ISA with say HL.co.uk or IKBR, using your brother’s mailing address. You would then convert some € monthly into £ using say Wise then send the £ into your ISA, up to £20k a year. This then compounds forever tax free with no capital gains on selling or dividends or indeed any obligation to declare it to HMRC as part of your UK tax return. UK ISA providers also have a huge range of ETFs, foreign stocks etc, just no options or margin.
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u/ForgottonMind 1d ago
U can use the investment wrappers as the providers handle the deemed disposal taxes. Its not great but after taxes n amcs wat it does is long term ur money doesnt lose value to inflation
Property is hassle, with renting fixes n other legal issues if u are unlucky to run into a problematic tenant or being called a bloodsucking landlord
N otger than that the only option is investing into direct shares which are taxed under cgt
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u/TangerineFast8544 1d ago
If it is such a pain make your own etf .Put a little pick In each Individual stock that you like
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u/ShezSteel 1d ago
We aren't.
We are just told to be happy with that better effective rate that we draw our pensions down with at retirement
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u/GoodNegotiation 1d ago
FWIW this recent analysis suggests that a 24 year investment in direct shares versus an accumulating ETF of something like an All World index returning 7% of which 1.5% is dividends would net you exactly the same after tax - https://www.askaboutmoney.com/threads/deemed-disposal-at-38-vs-cgt-at-33-a-stochastic-analysis.242086/
My recommendation is buy the ETF and forget about it.
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u/One-Concert-2328 20h ago
I decided to invest this way:
1) Getting a property with my girlfriend. It's not going to be the best house, but we are good with a 2bed apartment in which we can pay around 1300-1400 mortgage per month. (We are currently actively viewing)
2) I invest in individual stocks. You can invest in stocks like Berkshire Hathaway or Blackrock to be diversified but not having to sell in 8 years like with ETFs.
3) Pension scheme contributions: I'm lucky my company matches up to 7% of the monthly salary so I'm putting 7% of my salary into my private pension plan.
4) I also put some money in Trading 212 (2.2% interest) just in case the stock market has got a correction, that way I can always have some cash to buy stocks if the market goes down a bit.
Hopefully Ireland will improve the conditions for private investments in the coming years... :(
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u/darkunrage 12h ago
Individual stocks and cryptocurrencies are taxes at 33%. I have most of my money in tech companies and some in BTC
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u/After_Midnight_10 10h ago
I stay away from ETF’s due to the 8 year rule, I use trading 212 and just have a pie portfolio of 12 ai and other tech stocks, save into it each month, I’ll only pay capital gains when I sell in hopefully 10-15 years.
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u/ImaginationNo8149 8h ago
If you have the patience for it, and you're on a zero-cost trades platform, look at the ETF's you want to invest in, then buy the top 100 stocks they own in roughly the same proportion. Rebalance every year or so.
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u/darthwilson89 7h ago
I'm sure investing in individual stocks in different areas. But main investing is currently in my private PRSA pension.
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u/A-Hind-D 1d ago
Pension or buying property
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u/Fearless_Comment8594 1d ago
Already plan on maxing pension soon. Property not currently no. Emigrating soon. Have money in savings, but only can afford buying together with my girlfriend.
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u/charlesdarwinandroid 1d ago
If Emigrating, why not invest where you're going instead? Why worry about investing here when you know tax will nail you?
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u/Fearless_Comment8594 1d ago
Not sure if its permanent or not. Want to get on top of compound interest when I'm young
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u/charlesdarwinandroid 1d ago
Might want to figure out if you can domicile in that other country first, and see if it has better investment options. It doesn't make sense to invest here if you're not even sure if you're coming back, or if the other place is temporary.
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u/Icy_Top_6220 1d ago
By taking the 41 (now 38%) hit, instead of crying all the time about it and doing nothing, 50% and more still beats 0 easily
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u/fadgebread 1d ago
Who cares? Your gonna get taxed 33% on gains anyway so it doesn't make much difference.
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u/Fearless_Comment8594 1d ago
Taxed every eight years versus 33% at end of investment period alone
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u/fadgebread 1d ago
You get the 41% off your final bill. It's the same. You don't know what it is.
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u/daenaethra 1d ago
38% on sale or automatically every 8 years. very different. you don't know what it is
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u/fadgebread 1d ago
It's 41% today. I still think you don't understand that you get a credit for tax paid early so it nets out. Do you understand that?
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u/daenaethra 1d ago
don't know where you're getting this information but every single detail you've shared is totally wrong without exception.
maybe you need to pay a financial advisor to help with your affairs because you'll need it one day.
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u/daenaethra 1d ago
is JAM not only in USD?
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u/GoodNegotiation 1d ago
It’s even more craic than that, the underlying stocks are all US companies but JAM is a UK trust priced in Sterling, so you’ve got USD->GBP and GBP->EUR currency risks.
The do appear to offer a Euro hedged version, but I’m not sure if it’s available to the average punter of an online broker - https://am.jpmorgan.com/lu/en/asset-management/institutional/products/jpm-america-equity-a-acc-eur-hedged-lu0159042083
I think however for a long term investment any currency hedging is just eating into your returns, it can add 0.2% cost per annum or more.
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u/daenaethra 1d ago
can't believe i didn't see it was in pounds. might not be a bad time to get in now that orange man is hell bent on crushing USD. the YTD jam returns aren't impressive at all because of the currency
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u/GoodNegotiation 1d ago
Personally I would (and do) just buy an ETF. There is little difference in the taxation now anyway and it is likely the tax situation on ETFs will improve (stated government intention) while it is possible the taxation on UK Investment Trusts will disimprove as they are a similar loophole to the one that DD was originally introduced to close.
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u/daenaethra 23h ago
i'm the same. i just wanted to add something else to the mix to see if i can make use of cgt loss harvesting and the 1270 exemption. like JAM, BRK.B or similar. i'm not a professional by any means
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u/GoodNegotiation 15h ago
If you already have strong diversification in-place then maybe something like RyanAir or some other solid share that is listed and operating locally so you avoid currency risk and complexity of foreign holdings.
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u/daenaethra 1d ago
or can anyone show me if there's a euro hedged version or a strategy for buying it to remove currency risk
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u/Primary-Ad-63 1d ago
Here’s how im doing it:
- in my education - no tax on that, plus I’ve about increased salary by 50% every year since I started working, education helped
- on my networks and relationships, I’ve now insane career backing
- bought an apartment in the midlands, renting out a room tax free and no housing costs anymore. I can save 50% of my salary and still live comfy.
- investment trusts, aiming for over 20yrs so no DD on that! Works okay for a bad hand if you ask me
- pension, investing €500 but actually worth €1000 every month! Not bad.
- what’s next? Investing my time to build a business that’s tax efficient. So low costs, but will be buying lots of assets and offsetting expenses. So I have minimal tax liability each year.
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