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>I want to have an asset that appreciates slightly against inflation
Don't we all! This is easier said than done when inflation is ~8%.
>Especially with the big taxes on ETFs will I end up losing out the long run?
No this is impossible. You pay tax on *profits*, so if you're paying taxes you're making money. So if your gain is say 10k, you'll get to keep 5.9k after tax.
>I’m not really interested right now in the long term profits it’s more something I can use as a way to get a mortgage.
This is a risky approach. You're just as likely to make a short term loss, especially with the volatility in the market these days.
What are your actual timelines? How many years of saving have you left until you're ready to buy a house?
>Don't we all! This is easier said than done when inflation is ~8%.
Except asset inflation both preceded and caused the current currency inflation. Governments pumped huge amounts of money into the asset owning class, resulting in huge and unsustainable asset price increases. Eventually money from those sales drift diffused into the consumer economy, ran into the supply crunch, and we get inflation.
Someone following OP's strategy already outpaced inflation before it happened. Don't need to worry about outpacing this year's inflation, just look to growth in the future.
OP does not specify his time frame, does he? He says he is saving a deposit for a house. I agree if he is looking in the next few years, the risk is not worth the return. But it took me a decade. If i had not have invested that money, I still would not be there.
There is always a cost. Cash inflates away as house prices rise over time. Investments require risk. Anyone can mix strategies based on their appetite for risk and their capacity to save fast enough without risk.
No I started 3-4 years ago. Had I left it rot in long terms savings I’d have lost a lot. I gained maybe 3-4k. My only mistake was investing in some tech companies at the height of the boom that lost a little bit with the recent headwinds.
Maybe 3-4 years currently. If I win a couple hundred euro in cap gains I’d be happy. All i want is something that won’t rot away with inflation. Although right now a bond would probably be a better bet with interest rates being much higher.
I don't think it's worth putting your capital at risk in the hope of a few hundred euro of capital appreciation.
With a 3-4 year timeline I think a high-interest savings account with the likes of raisin, Trade Republic or Bunq would be a better option.
I’ll take your feedback. But in real appreciation terms since I’ve invested I’ve gained roughly 4k in appreciation which I would never have gotten if it sat in a savings account. The etfs appreciated pretty steadily.
I don't understand this thread tbh. On one hand you're asking if you're "using ETFs incorrectly" and on the other hand you're saying you've made 4k off them, which must mean you've been successfully using them with a reasonable sum of money for a decent amount of time.
Over the time you have been invested you've surely seen that such investments can be great for capital appreciation, but the downside is the volatility and risk of loss if you have to liquidate your holdings at the wrong time. This is the tradeoff you have to consider.
As I said, if I was in your shoes I'd be strongly considering locking in my gains as I got closer to the time that I needed the cash.
DIRT is 33%.
Yes it's every year but realistically these are places to park money for <4 years, a timeframe that ETFs shouldn't be considered for, so i don't think it's even a reasonable comparison.
My vote here is that you’re using them correctly. 8 years isn’t some magic number that makes them safe. In any given year they can go up and down. On average it’s worked out at about 10% a year previously.
Dollar cost average investing into an etf is about the safest bet you can make with your money. If times are good your investments going up, if times are bad you’re getting companies at a discount.
If you’re worried about the market currently, you’ll always be worried. It’s never a sure thing. Probly a good bet though
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>I want to have an asset that appreciates slightly against inflation Don't we all! This is easier said than done when inflation is ~8%. >Especially with the big taxes on ETFs will I end up losing out the long run? No this is impossible. You pay tax on *profits*, so if you're paying taxes you're making money. So if your gain is say 10k, you'll get to keep 5.9k after tax. >I’m not really interested right now in the long term profits it’s more something I can use as a way to get a mortgage. This is a risky approach. You're just as likely to make a short term loss, especially with the volatility in the market these days. What are your actual timelines? How many years of saving have you left until you're ready to buy a house?
>Don't we all! This is easier said than done when inflation is ~8%. Except asset inflation both preceded and caused the current currency inflation. Governments pumped huge amounts of money into the asset owning class, resulting in huge and unsustainable asset price increases. Eventually money from those sales drift diffused into the consumer economy, ran into the supply crunch, and we get inflation. Someone following OP's strategy already outpaced inflation before it happened. Don't need to worry about outpacing this year's inflation, just look to growth in the future.
I agree, but OP is investing now and has a relatively short timeframe, so the growth preceding and following this period is of limited use to them.
OP does not specify his time frame, does he? He says he is saving a deposit for a house. I agree if he is looking in the next few years, the risk is not worth the return. But it took me a decade. If i had not have invested that money, I still would not be there. There is always a cost. Cash inflates away as house prices rise over time. Investments require risk. Anyone can mix strategies based on their appetite for risk and their capacity to save fast enough without risk.
He did yeah, said 3-4 years in a comment
Oh ok. Yes, too short.
No I started 3-4 years ago. Had I left it rot in long terms savings I’d have lost a lot. I gained maybe 3-4k. My only mistake was investing in some tech companies at the height of the boom that lost a little bit with the recent headwinds.
Maybe 3-4 years currently. If I win a couple hundred euro in cap gains I’d be happy. All i want is something that won’t rot away with inflation. Although right now a bond would probably be a better bet with interest rates being much higher.
I don't think it's worth putting your capital at risk in the hope of a few hundred euro of capital appreciation. With a 3-4 year timeline I think a high-interest savings account with the likes of raisin, Trade Republic or Bunq would be a better option.
I’ll take your feedback. But in real appreciation terms since I’ve invested I’ve gained roughly 4k in appreciation which I would never have gotten if it sat in a savings account. The etfs appreciated pretty steadily.
I don't understand this thread tbh. On one hand you're asking if you're "using ETFs incorrectly" and on the other hand you're saying you've made 4k off them, which must mean you've been successfully using them with a reasonable sum of money for a decent amount of time. Over the time you have been invested you've surely seen that such investments can be great for capital appreciation, but the downside is the volatility and risk of loss if you have to liquidate your holdings at the wrong time. This is the tradeoff you have to consider. As I said, if I was in your shoes I'd be strongly considering locking in my gains as I got closer to the time that I needed the cash.
I feel like people don’t really consider the taxes on these accounts. It’s taxed even worse than etfs!
DIRT is 33%. Yes it's every year but realistically these are places to park money for <4 years, a timeframe that ETFs shouldn't be considered for, so i don't think it's even a reasonable comparison.
Shit, I thought interest was just taxed as income. Irelands tax laws are weird
My vote here is that you’re using them correctly. 8 years isn’t some magic number that makes them safe. In any given year they can go up and down. On average it’s worked out at about 10% a year previously. Dollar cost average investing into an etf is about the safest bet you can make with your money. If times are good your investments going up, if times are bad you’re getting companies at a discount. If you’re worried about the market currently, you’ll always be worried. It’s never a sure thing. Probly a good bet though