Investing in UK shares

[Neeranam]

I bought UK shares starting 6 years ago using Maybank. In the last year, I've bought some through etoro. 

[partington]

5 hours ago, AlexRich said:

Sorry, you’re guessing that is true, but you are wrong. Rio Tinto is listed in London, as is Gem Diamonds, and both generate profits outside the UK, as do many others. My original point, and advice to the guy who asked, is correct. If you are a British citizen permanently resident in Thailand and purchase UK shares through an offshore brokerage, neither the dividends nor the capital gains will be subject to UK tax. It is only subject to Thai tax under limited circumstances, which can be avoided by holding the gains/dividends offshore and only transferring to Thailand in the next or future tax year. 
 

You are free to doubt that this is true, but you’d be wrong to.

Ok, without getting obsessed by this, and this will be my last post as it's not that big a deal, where a stock is listed has nothing to do with where it is domiciled, and therefore where the earnings are deemed to arise.

 

Almost all Vanguard ETFs are listed in London on the LSE, and can be purchased through UK stockbrokers, but their earnings are called "foreign" on all tax statements from UK stockbrokers, because they are all domiciled in Ireland.

 

This means if you are resident in the UK you have to pay tax on them, but if you are not resident in the UK you don't, because they are foreign earnings.

 

Rio Tinto Zinc is a multinational which is domiciled in both Australia and the UK simultaneously. I freely admit I have no idea what the tax treatment of these shares involves!

 

 

 

[AlexRich]

53 minutes ago, partington said:

Ok, without getting obsessed by this, and this will be my last post as it's not that big a deal, where a stock is listed has nothing to do with where it is domiciled, and therefore where the earnings are deemed to arise.

 

Almost all Vanguard ETFs are listed in London on the LSE, and can be purchased through UK stockbrokers, but their earnings are called "foreign" on all tax statements from UK stockbrokers, because they are all domiciled in Ireland.

 

This means if you are resident in the UK you have to pay tax on them, but if you are not resident in the UK you don't, because they are foreign earnings.

 

Rio Tinto Zinc is a multinational which is domiciled in both Australia and the UK simultaneously. I freely admit I have no idea what the tax treatment of these shares involves!

 

 

 

it’s pretty simple. If you are based in the UK, a tax resident, you pay UK tax on all dividends and gains, irrespective of what stock exchange you are buying from, US, UK, Hong Kong, Germany. And irrespective of whether your brokerage is in the UK or outside. Most major countries have double taxation agreements to ensure you don’t end up paying twice. For example, if there is a withholding tax on dividends, which is common in many countries (but not the UK, Singapore, Hong Kong).

 

The guy who asked the question is based in Thailand, and can no longer add to a UK ISA. I’m not in Thailand currently (2022 as long as Covid over) but am in the same situation, offshore. If your investment assets are offshore (or protected inside a UK ISA wrapper) you can trade shares and avoid capital gains and dividend taxes. I can do this because the country that I am staying in and am therefore a tax resident of does not tax these income and gains. If you are in Singapore, Monaco, Hong Kong and a few other countries this is possible. If you are in Germany then you are subjected to German taxes. In Thailand, you are only subject to these taxes if you bring the income and gains into Thailand during the same tax year they were earned. So the trick if you are in Thailand is to delay any transfers to the next tax year. 
 

That was the point I was making to the guy who asked, to keep him right. 
 

it’s a complex subject so anyone who moves around needs to do extensive homework.

 

 

[dginoob]

So I opened up an account with Interactive Brokers. Their Trader Workstation PC app isn't super user friendly for beginners, but I'm sure I'll figure it all out.

Most disappointing however, is that there doesn't seem to be any GBP denominated index fund or ETF's (I have found a small number but none of them are what I'm looking for). There are plenty of USD funds available, but I am l loading with GBP and I'd 1. prefer not to have to convert to USD every time, and 2. to reduce my FOREX risk.

Not sure if I should just bite the bullet and go with USD ETF's or try to find another solution. Has anyone been in the same predicament?

 

Thanks

 

[AlexRich]

2 minutes ago, dginoob said:

So I opened up an account with Interactive Brokers. Their Trader Workstation PC app isn't super user friendly for beginners, but I'm sure I'll figure it all out.

Most disappointing however, is that there doesn't seem to be any GBP denominated index fund or ETF's (I have found a small number but none of them are what I'm looking for). There are plenty of USD funds available, but I am l loading with GBP and I'd 1. prefer not to have to convert to USD every time, and 2. to reduce my FOREX risk.

Not sure if I should just bite the bullet and go with USD ETF's or try to find another solution. Has anyone been in the same predicament?

 

Thanks

 

I don’t use ETF’s, I prefer individual shares, so I can’t help you with that one.

[dginoob]

24 minutes ago, AlexRich said:

I don’t use ETF’s, I prefer individual shares, so I can’t help you with that one.

My plan is to put the majority of my available income into index funds or ETF's and just forget about them for around 20 years (or hopefully less). A smaller amount I intend of using on individual stocks - though as I know so little at the moment this is tantamount to gambling for me. It seems like there is so much to learn, and the amount of information available is quite overwhelming. 

[AlexRich]

3 hours ago, dginoob said:

My plan is to put the majority of my available income into index funds or ETF's and just forget about them for around 20 years (or hopefully less). A smaller amount I intend of using on individual stocks - though as I know so little at the moment this is tantamount to gambling for me. It seems like there is so much to learn, and the amount of information available is quite overwhelming. 

I think that is sensible, a fund that tracks the market will outperform 75% of fund managers. If you look at the graphs over 20 years you’ll see downward spikes with various crisis, but the trajectory is upwards over the long term. 
 

If you want a British book that is very good for beginners I would recommend “The Naked Trader” by Robbie Burns. It is simple to read and takes you through the basics, and explains how to buy and sell shares through brokerages. My approach is different from his but his approach is very sensible. So if you dip your toe into share buying you at least follow a sensible path.

[Oxx]

18 hours ago, dginoob said:

So I opened up an account with Interactive Brokers. Their Trader Workstation PC app isn't super user friendly for beginners

 

You're right.  However, if you use their web based application, it's a lot more straightforward.  From the home page it's at Login/Portal Login.*

 

18 hours ago, dginoob said:

Most disappointing however, is that there doesn't seem to be any GBP denominated index fund or ETF's

 

There are all the ETFs listed on the London Stock Exchange available, most of which are denominated in GBP and cover almost every conceivable market.  You're probably not looking in the right way.

 

18 hours ago, dginoob said:

Not sure if I should just bite the bullet and go with USD ETF's

 

I presume the USD denominated ETFs you're seeing are listed in the US of A.  If so, there are significant tax repercussions.  Generally speaking, non-Americans should not invest directly in US ETFs.  Plus, there's the whole issue of FX costs, assuming your cash is in GBP.

 

 

* One of my gripes about the IBKR platform is that it doesn't have the European-style "put in an order", "get a quote", "accept within 10 seconds" of trading.  You're pretty much stuck with market and limit orders.  All the fancy features that make the American-style of trading safer and more profitable don't work for non-US exchanges.

 

Edit:  Just to add, when you're searching for ETFs entering the ETF name is pretty much useless.  You need to use the EPIC code for the ETF (i.e. the typically 4 character code, for example, SEMB for iShares J.P. Morgan USD EM Bond UCITS ETF).

Edited April 1, 2021 by Oxx

[dginoob]

16 hours ago, AlexRich said:

I think that is sensible, a fund that tracks the market will outperform 75% of fund managers. If you look at the graphs over 20 years you’ll see downward spikes with various crisis, but the trajectory is upwards over the long term. 
 

If you want a British book that is very good for beginners I would recommend “The Naked Trader” by Robbie Burns. It is simple to read and takes you through the basics, and explains how to buy and sell shares through brokerages. My approach is different from his but his approach is very sensible. So if you dip your toe into share buying you at least follow a sensible path.

Thanks for the book recommendation. I've just ordered a copy from Amazon.

[dginoob]

2 hours ago, Oxx said:

 

You're right.  However, if you use their web based application, it's a lot more straightforward.  From the home page it's at Login/Portal Login.*

 

 

There are all the ETFs listed on the London Stock Exchange available, most of which are denominated in GBP and cover almost every conceivable market.  You're probably not looking in the right way.

 

 

I presume the USD denominated ETFs you're seeing are listed in the US of A.  If so, there are significant tax repercussions.  Generally speaking, non-Americans should not invest directly in US ETFs.  Plus, there's the whole issue of FX costs, assuming your cash is in GBP.

 

 

* One of my gripes about the IBKR platform is that it doesn't have the European-style "put in an order", "get a quote", "accept within 10 seconds" of trading.  You're pretty much stuck with market and limit orders.  All the fancy features that make the American-style of trading safer and more profitable don't work for non-US exchanges.

 

Edit:  Just to add, when you're searching for ETFs entering the ETF name is pretty much useless.  You need to use the EPIC code for the ETF (i.e. the typically 4 character code, for example, SEMB for iShares J.P. Morgan USD EM Bond UCITS ETF).

I was looking at all the LSE ETF's, but you're could be right that I'm not looking in the right way. Basically I am looking for something similar to the Vanguard LifeStrategy 100% equity accumulation funds. Before my last post I hadn't found any GBP ones that looked as diverse as I'd like.

However, this morning I have found a new Vanguard ETF, which is listed on the LSE - V3AB: Vanguard ESG Global All Cap UCITS ETF (USD/GBP/EUR)

https://www.vanguard.co.uk/professional/product/etf/equity/9470/esg-global-all-cap-ucits-etf-usd-accumulating
 

It's brand new, but it looks interesting. I am considering buying this later today. 

[Oxx]

5 minutes ago, dginoob said:

I am looking for something similar to the Vanguard LifeStrategy 100% equity accumulation funds

 

That has a UK-bias.  You can achieve something similar by combining a UK Equity ETF with a Global ETF.

 

5 minutes ago, dginoob said:

However, this morning I have found a new Vanguard ETF, which is listed on the LSE - V3AB: Vanguard ESG Global All Cap UCITS ETF

 

If ESG is important to you, then why not? However, you are deliberately hobbling performance by excluding sectors which have done well such as alcohol and tobacco.  You're also paying extra for the screening process, which will detract from performance.

 

Of course, this is just Vanguard trying to cash in on the current ESG fad.  If ESG falls out of favour, then there's a fair chance this EFT will be canned in the future.

 

[dginoob]

2 minutes ago, Oxx said:

 

That has a UK-bias.  You can achieve something similar by combining a UK Equity ETF with a Global ETF.

 

 

If ESG is important to you, then why not? However, you are deliberately hobbling performance by excluding sectors which have done well such as alcohol and tobacco.  You're also paying extra for the screening process, which will detract from performance.

 

Of course, this is just Vanguard trying to cash in on the current ESG fad.  If ESG falls out of favour, then there's a fair chance this EFT will be canned in the future.

 

ESG is actually not at all important for me. The only thing I care about is growing my money so I'm not scrimping when I retire (or so I can retire a little earlier). I also don't want something that's too UK-biased. These are good points which I hadn't considered. I'm going to think a bit more and keep looking for something more suitable. Are there any that you would recommend.

[Oxx]

12 minutes ago, dginoob said:

ESG is actually not at all important for me ... Are there any that you would recommend.

 

Not a recommendation, but suggest you have a look at iShares Edge MSCI World Minimum Volatility UCITS ETF USD (Acc) GBP [MINV].  It's a reduced volatility version of the global index fund iShares Core MSCI World UCITS ETF USD (Acc) GBP  [SWDA].

 

I prefer it over the latter because it reduces exposure to certain technology companies that I believe to be massively overvalued and are due for a rerating.  You can quickly compare the top 10 holdings on Bloomberg:

 

https://www.bloomberg.com/quote/MINV:LN

https://www.bloomberg.com/quote/SWDA:LN

[dginoob]

1 minute ago, Oxx said:

 

Not a recommendation, but suggest you have a look at iShares Edge MSCI World Minimum Volatility UCITS ETF USD (Acc) GBP [MINV].  It's a reduced volatility version of the global index fund iShares Core MSCI World UCITS ETF USD (Acc) GBP  [SWDA].

 

I prefer it over the latter because it reduces exposure to certain technology companies that I believe to be massively overvalued and are due for a rerating.  You can quickly compare the top 10 holdings on Bloomberg:

 

https://www.bloomberg.com/quote/MINV:LN

https://www.bloomberg.com/quote/SWDA:LN

Thanks. I'll take a look.