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Valerio
@valeriocomo
3Wk·

VWCE or FWRA?

2
10 Comments
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EnricoM@EnricoM
3Wk
They invest in the same markets. The differences are only the TER and the dimension between these two ETF.
$VWCE is much bigger than $FWRG so there is a minimum risk of de-listing.
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Valerio@valeriocomo
3Wk
Tracking difference is a thing tough but FWRA has just a 1 year history
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EnricoM@EnricoM
3Wk
@valeriocomo tracking difference is minimum so it’s okay.
$VWCE is much better only for the dimension
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Valerio@valeriocomo
3Wk
I hope in a share split, 1 to 10
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fionn@8fionn
3Wk
@EnricoM so in germany there is a fifo principle. first in first out. so if you want to sell anytime in the future you are going to sell the shares that you bought first and you will pay a lot of taxes because the first shares you bought achieved the highest return. so here it makes sense to, for example, start to invest in the exact same index but another etf every 10 years. in your extraction phase it is so much better tax wise to sell the shares of the etf that you bought most recently.
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Prasam@prasam008
1Wk
@8fionn
I am from Germany and recently started my investing journey.

If we sell some shares and if we book a profit then we are taxed on the profit, so how does it matter that the share we sold was old or new?
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fionn@8fionn
1Wk
@prasam008 imagine you buy an etf share now at a price of 100€ and then 5 years later the price doubled and you buy a share for 200€. Another 5 years later price doubled again to 400€ and you have 2 shares. If you want to sell 1 share its going to sell the share you bought first automatically. This share achieved a gain of 300€ so 25% tax on that is 75€. The second share only achieved a gain of 200€ so 50€ tax. Even though you sell 1 share for 400€ one share is taxed higher. As you can see the older the share the higher is the profit and the more tax has to be paid. You cant change that but you can change the etf every 10 years and when you need money you sell shares etf you bought most recently. You get it?
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Prasam@prasam008
1Wk
@8fionn
Thanks for the detailed breakdown.

I had the assumption that number of shares Vs its profit/loss value is averaged out as we keep buying. But now I realized what you meant by the FIFO principle.

So if I understood the broker app like trade republic or scalable capital maintains this history and when we sell any etf, the oldest one is sold first and hence the larger tax, we don't have control over it.

Since I recently started, I have not sold any ETF but reading your comment, I got a different perspective which I never thought about and it grabbed my attention.

Hence the idea to hold different ETFs in the longer run which track the same index. But I also feel taxes are not avoided, just shifted in this case. 🙂
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fionn@8fionn
1Wk
@prasam008 Yes, it makes no change if you plan to sell everything at once in the future. But i plan to gradually sell just the amount that i need so it makes sense to switch etfs every 10 years. You could change the etf on the same broker or start to buy the same etf but on another broker. Makes no difference. You just got to know which is the etf that you bought the most recent and start selling this one
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Prasam@prasam008
1Wk
@8fionn
Got it. 🙂

Thanks for the info and having detailed discussion.
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