Looking for advice - AUSTRIA
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Looking for advice - AUSTRIA
Country of Residence: Austria
International Lifestyle: no plans to move country
Currency: EUR
Emergency funds: yes
Debt: none
Age: 45
Desired Asset allocation: Not sure
Hello,
I am 44, married with 2 kids (8,10).
Knowing, that many similar questions got asked here before, I nevertheless would appreciate your comments on my situation.
Here is my situation:
I have 250K-300K EUR in cash to invest. The majority of it is parked in a GesmbH.
Currently, it is unsure if this GesmbH business will sustain itself. Worst case I consider still keeping the GesmbH just for investing if it gives me a tax benefit(KEST vs KÖST).
I have no debts but also no other investments. I plan to start a monthly ETF savings plan.
In other words, this is all the money I have. I am currently very unsure what to do with it. I initially had the plan to invest in 2-3 small flats.
The more I thought about it (i.e. problems with tenants) and after reading more about ETFs and stocks I tend to prefer the simplicity of stock/ETFs over real estate.
Ideally, I want to start taking out money in 15 years and go part-time or retire.
The earlier the better, but with that sum, I think it is unrealistic.
Another factor is the tax system in Austria. Based on my calculations investing via the GesmbH or directly (first pay out and pay tax, then invest) to my surprise did not really make a lot of difference
(taking all additional costs like tax advisor into account).
All the noise in media about the "upcoming" bear market also does not make it easier for me to invest a this sum now.
I know that timing the market makes no sense...
My questions:
1.) What would you advise to do?
2.) Would you consider any diversification outside of ETFs/Bonds?
International Lifestyle: no plans to move country
Currency: EUR
Emergency funds: yes
Debt: none
Age: 45
Desired Asset allocation: Not sure
Hello,
I am 44, married with 2 kids (8,10).
Knowing, that many similar questions got asked here before, I nevertheless would appreciate your comments on my situation.
Here is my situation:
I have 250K-300K EUR in cash to invest. The majority of it is parked in a GesmbH.
Currently, it is unsure if this GesmbH business will sustain itself. Worst case I consider still keeping the GesmbH just for investing if it gives me a tax benefit(KEST vs KÖST).
I have no debts but also no other investments. I plan to start a monthly ETF savings plan.
In other words, this is all the money I have. I am currently very unsure what to do with it. I initially had the plan to invest in 2-3 small flats.
The more I thought about it (i.e. problems with tenants) and after reading more about ETFs and stocks I tend to prefer the simplicity of stock/ETFs over real estate.
Ideally, I want to start taking out money in 15 years and go part-time or retire.
The earlier the better, but with that sum, I think it is unrealistic.
Another factor is the tax system in Austria. Based on my calculations investing via the GesmbH or directly (first pay out and pay tax, then invest) to my surprise did not really make a lot of difference
(taking all additional costs like tax advisor into account).
All the noise in media about the "upcoming" bear market also does not make it easier for me to invest a this sum now.
I know that timing the market makes no sense...
My questions:
1.) What would you advise to do?
2.) Would you consider any diversification outside of ETFs/Bonds?
Re: Looking for advice - AUSTRIA
Hello fellow investor,
I would dissolve the GmbH. Too complicated, inheritance problems, access is inflexible - so in my view, the implications outweigh the benefits. Ich bin selbst Steuerberater
I would do a simple portfolio with an asset allocation you are comfortable with and then get into the market over 6 months (not more).
I personally would not buy bonds, but maybe up to 10% gold.
Just my personal view Good luck
I would dissolve the GmbH. Too complicated, inheritance problems, access is inflexible - so in my view, the implications outweigh the benefits. Ich bin selbst Steuerberater
I would do a simple portfolio with an asset allocation you are comfortable with and then get into the market over 6 months (not more).
I personally would not buy bonds, but maybe up to 10% gold.
Just my personal view Good luck
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Re: Looking for advice - AUSTRIA
Thank you, after talking to my tax advisor I will go for an ETF investment via the GesmbH as long as the GesmbH exists.
If the business plan does not work out then I will dissolve it.
Still not sure which ETFs to pick, maybe I will simply go for FTSE All-World UCITS ETF (Dist).
If the business plan does not work out then I will dissolve it.
Still not sure which ETFs to pick, maybe I will simply go for FTSE All-World UCITS ETF (Dist).
Re: Looking for advice - AUSTRIA
Hi Stefan
Welcome to the forum. the first post is always to let you know that there is a lot of info on boglewiki.
Lots of stuff on boglewiki, and in particular a lot of info regarding which ETF for a 2 ETF portfolio
The vanguard ETF you suggest is good, but I might suggest that you use the acc version so that dividends are re-invested right away and you save transaction costs
If you feel uncomfortable in investing all right away, give a look to "lump sum vs. dollar cost average". One possible way is invest 50%, divide the rest by 12, and then every month for the next 12 months invest that sum.
Given your age, I think you should consider some bonds (min 20%, max 45%), the ETF AGGH would work for you. I personally do not invest in gold, but if you really want to then general recommendation is to not exceed 5%.
I have no comment regarding the Gmbh because I know nothing about that.
Best
Welcome to the forum. the first post is always to let you know that there is a lot of info on boglewiki.
Lots of stuff on boglewiki, and in particular a lot of info regarding which ETF for a 2 ETF portfolio
The vanguard ETF you suggest is good, but I might suggest that you use the acc version so that dividends are re-invested right away and you save transaction costs
If you feel uncomfortable in investing all right away, give a look to "lump sum vs. dollar cost average". One possible way is invest 50%, divide the rest by 12, and then every month for the next 12 months invest that sum.
Given your age, I think you should consider some bonds (min 20%, max 45%), the ETF AGGH would work for you. I personally do not invest in gold, but if you really want to then general recommendation is to not exceed 5%.
I have no comment regarding the Gmbh because I know nothing about that.
Best
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Re: Looking for advice - AUSTRIA
Thanks
I will go for the dist ETF mainly due to the Austrian KEST. There is already a thread regarding this and yes, there is a small advantage for the ACC.
Nevertheless, the advantage of the dist is that I can pay that tax with the distributed amount.
>>Given your age
Gosh that hurts lol
Jokes apart, yes it might make sense to consider bonds as well.
Initially I already considered it but then questioned it as I read on several websites that bonds might be in trouble too (i.e. https://www.cnbc.com/2021/09/30/stocks- ... onds-.html).
I will go for the dist ETF mainly due to the Austrian KEST. There is already a thread regarding this and yes, there is a small advantage for the ACC.
Nevertheless, the advantage of the dist is that I can pay that tax with the distributed amount.
>>Given your age
Gosh that hurts lol
Jokes apart, yes it might make sense to consider bonds as well.
Initially I already considered it but then questioned it as I read on several websites that bonds might be in trouble too (i.e. https://www.cnbc.com/2021/09/30/stocks- ... onds-.html).
- alpine_boglehead
- Posts: 684
- Joined: Fri Feb 17, 2017 8:51 am
- Location: Austria
Re: Looking for advice - AUSTRIA
Where did you get the information that the distributing version is better due to KESt? From what I know, the distributing version has several downsides which reduce your returnstefan_austria wrote: ↑Mon Oct 25, 2021 7:03 am Thanks
I will go for the dist ETF mainly due to the Austrian KEST. There is already a thread regarding this and yes, there is a small advantage for the ACC.
Nevertheless, the advantage of the dist is that I can pay that tax with the distributed amount.
>>Given your age
Gosh that hurts lol
Jokes apart, yes it might make sense to consider bonds as well.
Initially I already considered it but then questioned it as I read on several websites that bonds might be in trouble too (i.e. https://www.cnbc.com/2021/09/30/stocks- ... onds-.html).
- distributing Vanguard ETFs currently (from what I understand) don't do the tax reporting correctly in Austria, resulting in a partly double taxation of dividends (see a discussion on broker-test.at). This is quite a lot (normally you pay 27.5% KESt, but withholding tax (Quellensteuer) is already paid on dividends received by the fund in the order of 12% of the dividends, thus reducing the KESt on the fund distributions to 15.5%. Which, due to this error, is again 27.5%).
- accumulating funds also have a small tax advantage regarding accumulated capital gains (see this konsument.at article, shouldn't be much because index funds have low turnover and thus don't realize much capital gains internally).
- you get distributions while still in your accumulation phase for the next 15 years, and pay currency exchange fees on the distributions (the fund's currency is USD, even if you purchase it in EUR).
You don't have to use bonds, you can use e.g. a ladder of CDs (Festgeld), be sure to keep below the €100,000 insurance limit per bank.
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Re: Looking for advice - AUSTRIA
This is the thread: viewtopic.php?t=310284
I wrote "here is a small advantage for the ACC".
I did not mean to say DIST is better in regards to KEST amount you pay. I meant that the handling is easier as I do not have to worry about getting the extra money to pay the KEST per year.
Thanks for the link to broker-test, knowing that now I might reconsider
I wrote "here is a small advantage for the ACC".
I did not mean to say DIST is better in regards to KEST amount you pay. I meant that the handling is easier as I do not have to worry about getting the extra money to pay the KEST per year.
Thanks for the link to broker-test, knowing that now I might reconsider
Re: Looking for advice - AUSTRIA
It also depends on which broker you choose. Sadly the only tax-easy broker with okay-ish fees for Austrians is Flatex and they can't handle the problem, that Vanguard doesn't report distributions at the moment (but they may in the future) and you pay to many taxes.
Using a foreign broker can help to mitigate that problem but the taxation is pretty complicated and you should be an tax-affine Excel nerd to do it.
If you want a distributing fund, just choose a distributing MSCI World ETF from iShares, they do the tax reporting correctly. It doesn't have to be Vanguard, iShares is also very good.
Using a foreign broker can help to mitigate that problem but the taxation is pretty complicated and you should be an tax-affine Excel nerd to do it.
If you want a distributing fund, just choose a distributing MSCI World ETF from iShares, they do the tax reporting correctly. It doesn't have to be Vanguard, iShares is also very good.
Re: Looking for advice - AUSTRIA
Granted that I do not know CD rates in Austria and that should be considered when making a decision about bonds... I fully agree on using CDs instead of bonds at the moment.alpine_boglehead wrote: ↑Mon Oct 25, 2021 7:59 amstefan_austria wrote: ↑Mon Oct 25, 2021 7:03 am Thanks
I will go for the dist ETF mainly due to the Austrian KEST. There is already a thread regarding this and yes, there is a small advantage for the ACC.
Nevertheless, the advantage of the dist is that I can pay that tax with the distributed amount.
>>Given your age
Gosh that hurts lol
Jokes apart, yes it might make sense to consider bonds as well.
Initially I already considered it but then questioned it as I read on several websites that bonds might be in trouble too (i.e. https://www.cnbc.com/2021/09/30/stocks- ... onds-.html).
You don't have to use bonds, you can use e.g. a ladder of CDs (Festgeld), be sure to keep below the €100,000 insurance limit per bank.
- alpine_boglehead
- Posts: 684
- Joined: Fri Feb 17, 2017 8:51 am
- Location: Austria
Re: Looking for advice - AUSTRIA
Take care when choosing ETFs - e.g. iShares MSCI World UCITS ETF (Dist) (IE00B0M62Q58) has a TER of 0.5% - with this expense ratio you don't need to worry about the choice of brokerageFlurry wrote: ↑Mon Oct 25, 2021 9:35 am It also depends on which broker you choose. Sadly the only tax-easy broker with okay-ish fees for Austrians is Flatex and they can't handle the problem, that Vanguard doesn't report distributions at the moment (but they may in the future) and you pay to many taxes.
Using a foreign broker can help to mitigate that problem but the taxation is pretty complicated and you should be an tax-affine Excel nerd to do it.
If you want a distributing fund, just choose a distributing MSCI World ETF from iShares, they do the tax reporting correctly. It doesn't have to be Vanguard, iShares is also very good.
There's also HSBC MSCI World UCITS ETF USD (IE00B4X9L533) at a TER of 0.15%, but it also doesn't seem to do the tax reporting right (also no tax reports for the distributions, as opposed to iShares). After looking ... I had no idea there were so many ETFs available that track the MSCI World index.
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Re: Looking for advice - AUSTRIA
Here is a good overview of MSCI world ETFs (8:40 is the overview): https://www.youtube.com/watch?v=ElkELpWP69c
i.e. Lyxor and SPDR only have 0.12% TER
>> but it also doesn't seem to do the tax reporting right
Do I also have to worry about "wrong tax reporting" if I use an ACC ETF or is this only an issue with DIST ETFs in Austria?
i.e. Lyxor and SPDR only have 0.12% TER
>> but it also doesn't seem to do the tax reporting right
Do I also have to worry about "wrong tax reporting" if I use an ACC ETF or is this only an issue with DIST ETFs in Austria?
- alpine_boglehead
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- Location: Austria
Re: Looking for advice - AUSTRIA
Accumulating ETFs don't have this problem.stefan_austria wrote: ↑Tue Oct 26, 2021 2:32 am Here is a good overview of MSCI world ETFs (8:40 is the overview): https://www.youtube.com/watch?v=ElkELpWP69c
i.e. Lyxor and SPDR only have 0.12% TER
>> but it also doesn't seem to do the tax reporting right
Do I also have to worry about "wrong tax reporting" if I use an ACC ETF or is this only an issue with DIST ETFs in Austria?
Vanguard FTSE Developed World (analog to MSCI World, different index provider) also has a TER of 0.12%
If you want to add emerging markets (MSCI World/FTSE Developed World only contains the "developed" world), it's better to use a fund from the same index family to avoid overlap/missing countries due to different index providers categorizing countries differently.