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That’s indeed not true.

I think it came from misinterpretation on something similar from the graph below.
It implies that investing in stocks yields a higher change for a positive outcome the longer you hold, but some people also take away that most stocks in an index must go up for this to be true, which isn’t necessarily the case.
image

To back you up on your claims (found the corporate longevity a really interesting read) I could site you a study which found that only a small percentage of stocks drive most returns (entire gain in US stock market since 1926 is attributable to only 4% of stocks). It states that investments in the majority (57.8%) of stocks led to reduced rather than increased shareholder wealth.

But keep in mind that emotions, tax treatment, investor liquidity and among other things have really large impacts on investor returns aside from what they actually invest in.

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I personally really like SPDR® MSCI World UCITS ETF (SPPW), it’s basically developed world ETF with a 0.12% expense ratio.

FTSE All-World UCITS ETF (VWRL) has an expense ratio of 0.22% which is high in comparison while owning similar stuff (VWRL does have emerging in it so that’s mainly the diffrence). S&P500 etfs mainly have 0.07% expense ratios. VUSA, CSPX are examples.

I personally own SPPW (large part of my porfolio) and SDUS (iShares MSCI usa esg screened at 0.07% expense ratio), the latter one being very similar to SP500 but with some added mid cap. I mainly chose it because it had the same expense ratio as SP500 while also being a tiny bit more diversified (it contains some stuff as well that’s not in sp500).

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That is really helpful. Thanks for sharing. Where could I see the dividend % they pay? On trade 212 app doesn’t show anything

sppw is accumulating (so no dividend distributions), I had taken a quick look at Spain and it said there was capital gains tax and I think (am not sure about it though) you would get taxed again on dividend received (income tax-wise aside from the withholding, but again I could have gotten this wrong), that’s why I put an accumulating fund there as I thought it would be more efficient to have less taxable events (but again could be completely wrong there, I only know my local tax stuff). But if you don’t get taxed again on dividends aside from the withholding in the countries of origin then go ahead and get distributing ETFs (they also get charged withholding but in the latter case you don’t so all distribution from funds are 0% taxed after withholding taxes)

To see distribution in general just go to the providers page, iShares has a nice table and trailing yield, vangaurd has the distributions page etc.

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Yes you get taxed like 14%. But then what is your strategy with that ETFs sell it when you retired?

Justetf.com is good source for ETFs in general.

As @Etypsyno said, good thing to find out pre choosing ETF, your country taxing.

Some countries don’t tax dividend for Accumulating ETFs. So it makes much more sense to invest in accumulating version. Also there was talk about synthetic swaps ETFS being more efficient tax vehicles.

I believe there is Invesco S&P 500 which is synthetic so might check on that available in T212 already.

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Well if you cut emotions of this “passive income” dogma. (especially if your country doesn’t tax accumulating dividend.)

What is most important in long run is CAGR, or compounded annualised growth rate, how much does your investment grow/return yearly.

So with retirement in mind, one option is to sell to buy income oriented securities, or just partial monthly sells required for expenses of living.

Obviously you can also have 2 or 3 bags . 1 ETF, 1 income ETF , 1 stock picking. Or any combo.

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very well said and happy cake day!

@Trader121 I understand why you want dividends (I myself also really like them) as they really provide an emotional bump, but in the end, it’s all about total return and if dividends aren’t really tax favoured it theoretically is better to go through a route of not receiving them yourself (or letting the fund receive them and reinvest them).

Although to counter this one could say that a person might invest more and more consistently when they see they are receiving increasing dividends which might even counter some of the negative effects from the strategy as more motivation is there to invest in general. I would once again here refer to the analogy with the loan interest stuff.

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I would say yes unless you need the income from your portfolio then high dividend not that useful, high dividend growth however are a good choice I think, like I would sooner put £100 in Starbucks/MSFT/MA than in a 6/7% dividend yield with low div growth and low share price growth.

unlike stocks, even distributing ETFs do not pay a fixed amount or percentage of dividends. It depends on the underlying shares and their distributions at any given time.

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So in your opinion ETFs or stocks?

@Trader121 I am a random guy on internet, you should neither trust nor listen to any specific investment advise I might give. :slight_smile:

If you are 1 month into your investing, you definitely do not have the knowledge to pick individual stocks. (My sincerest apologies, if this sounded condescending) Best advice I can give you is to first invest in yourself. 2-3 books costing may be £50 about fundamentals should not be considered much if you think about using these skills over many years.

If you have money now and want to start investing right away, pick a few generalised ETFs and branch into your choices over time as you learn more.

There is a thread about book recommendations for beginners in this forum, and I have my recommendations over there as well.

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Thanks for your answer. I got a question tho. I know one month into investing is not much. But, let’s say I have read 100 blogs during this month, researched lots of info and read a couple of books. It is right to say that you can’t compare my situation with the experience of one guy with 5 years into investing… But in 1 month you may have time enough to start picking some important low risk stocks which are worth to hold and keep applying DCA to them. And even others more volatile as well. Don’t you agree?

I’d certainly start with ETFs, I’m 4 months in or so and I didn’t get ETFs till a bit later on and wish I did earlier in conjunction with a very small position in individual stocks.

If you wish to go for individual stocks I would go very small initially on them to get used to the emotional side.

Think of it this way:-
-You’ve done a detailed assessment of a company that you believe in for the long term and done all the research etc etc
-The company has a few red days, you’re down 5% say
-How will you react? You probably won’t know how you’ll react yet
-Hence, small positions to start with to get used to the emotional side as that is one of the hardest things for a lot of people. Including myself at the start

Best of luck with it all and I’m sure if you put in the effort and be active in the forum etc it’ll work out for you; if the emotions stay away

EDIT:- I also recommend the Moneyweek videos on YouTube. It’s just a geezer standing in front a white board with no fancy graphics but extremely informative

Thanks for your response. I totally agree with you. Could you share what ETFs are you holding in your portfolio at the moment? Regards.

I don’t do a lot of ETFs myself but to best of my knowledge Morningstar is a good website for ETFs that tend to always have recommendations but do your due diligence don’t just copy paste their list/recommendations.

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@Trader121 Here’s my take as a newbie to the online platform type of investing in stocks, although I have in the past invested stock outside the UK while living abroad and lost it all including money that I borrowed. 17 years later am now back in the stock market after repaying all my debt to give it another try.

I currently hold 67 (my own designed ETF without the charges) individual companies mostly UK stocks some with oversees exposure – UK country of my residence where am able to see and understand what’s going on. Although am now exploring ETF’s that will diversify me to the wider markets.

Majority of my stocks are from Industries that I have worked for/ currently working for – whereby am able to understand what is going on outside the carefully crafted balance sheet, P&L and income statements and all the analyst bullshit.

Please do not take anything that I have written as an advice, my only advice is to only invest per stock or per ETF money that you can afford to loose- I learnt the hard way!!

There are other types of investments like buying properties (not REITS) whereby even if the value drops, you can still hand it over to your kids or charity

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For this stock, If I prefer to just buy S&P 500 ETF. Less hasles and the fee is very small. Also you do not need to spend time to balance and rebalance it.

Time in the market not timing the market.

If u can sustain a - 50% of your 3k for 6-1year
and DO NOT SELL!
Keep on buying then u can make it.

There is also the option to go into mutual funds and have some in individual stocks.

If not all of the above suggestions are really good!


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