2Settimana
Although I am not yet retired, I would tend to do the following:
- Build up a cash position to have a cushion in the event of downward fluctuations
- For subsequent purchases, focus on distributing equity ETFs, as taxation is lower there ~18.5 vs. 26.375
I would probably choose a cash cushion of around 12*30% of your planned monthly distributions. This would allow you to compensate for a 30% drop in dividends for a year. The cushion doesn't have to be there from the start, but could also be built up slowly.
- Build up a cash position to have a cushion in the event of downward fluctuations
- For subsequent purchases, focus on distributing equity ETFs, as taxation is lower there ~18.5 vs. 26.375
I would probably choose a cash cushion of around 12*30% of your planned monthly distributions. This would allow you to compensate for a 30% drop in dividends for a year. The cushion doesn't have to be there from the start, but could also be built up slowly.
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2Settimana
@Eggplant
Thank you for your thoughts. My savings plan amount is currently 1600 euros per month. The rest goes into the cushion, as well as fixed-term deposits and crowdfunding investments that have returned this year. The idea of different taxation is interesting. So far, I've been dazzled by the apparently higher dividends from shares.
Thank you for your thoughts. My savings plan amount is currently 1600 euros per month. The rest goes into the cushion, as well as fixed-term deposits and crowdfunding investments that have returned this year. The idea of different taxation is interesting. So far, I've been dazzled by the apparently higher dividends from shares.
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2Settimana
@Lawikhan Ultimately, it's the total return that counts, so I wouldn't just base it on the tax rate. But I would definitely include it in the consideration. Note that, in my opinion, swap-based ETFs are also taxed at 26.375%.
Another point that may be of interest to you could be the following: your (share) inheritance will be taxable in America if you have a certain value of American shares. The exemption amount is quite low and heirs only have 2 months to file an alternative calculation. This does not apply to European-domiciled equity ETFs, as you hold the ETF and not the individual shares.
There are now also providers who offer savings plans, but I think the costs there are relatively high. In my opinion, this also makes the most sense if you only have a handful of stocks with a high overall value.
Another point that may be of interest to you could be the following: your (share) inheritance will be taxable in America if you have a certain value of American shares. The exemption amount is quite low and heirs only have 2 months to file an alternative calculation. This does not apply to European-domiciled equity ETFs, as you hold the ETF and not the individual shares.
There are now also providers who offer savings plans, but I think the costs there are relatively high. In my opinion, this also makes the most sense if you only have a handful of stocks with a high overall value.
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2Settimana
@Eggplant
Inheritance is a point that I should still work on. I was not aware of this aspect. Thank you for that.
Inheritance is a point that I should still work on. I was not aware of this aspect. Thank you for that.
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