Continuing to invest in VWRL

Ireland *swoon*

Ireland *swoon*

Just bought my 3rd installment of VWRLs – Vanguard FTSE All World ETF.

The prices keep going down!

Which makes me a bit nervous, as I’m still new at this whole investing thing.

But overall I feel very productive, and I’m excited that I’ve finally started investing #for #real.

  • In April I bought 1 big batch of VWRL @ 67.80 EUR
  • In May I used 90% of my April pay to buy VWRL @ 65.04 EUR
  • In June (today) I used 105% of my May pay to buy VWRL @ 64.40 EUR

I’m planning to continue investing 100% of my income now that Mr. German and I have decided to live on one income. Which is pretty much semantics because we’ve been living below one income already, but now are consciously sending my full pay cheque into stocks.

Our VWRL dividends will be disbursed in mid-June. So I’m very excited to see how it feels to finally get some passive income!

Apparently some of the dividend income will be withheld by the Irish authorities since VWRLs are domiciled in Ireland, and there is a dividend tax for non-Irish residents. Maybe one day if we earn enough dividend income from VWRLs, it may make sense to move to Ireland to off-set this tax. πŸ™‚

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13 thoughts on “Continuing to invest in VWRL

  1. Pingback: On track means less fights (hopefully!) | Ms. Canadian Expat

  2. Hi, I have been following your blog for sometime, and it is nice to see some English speaking blogs on this topic in Germany.

    Wanted to comment on an earlier post, but did not have time. But when I read this post I thouhg I should point it out. Will keep this to the brief due as I am short of time, but wanted to give you a quick pointing towards the tax issue in Germany. I would advice you to consider meeting a tax adviser. Taxes are something every expat has to consider. This gets more complicated when you are uncertain where you might retire.

    – I read your earlier post somewhere, where you had mentioned keeping certain investments in Canada for tax reasons. I dont know if that makes sense, since, Germany taxes worldwide income if you are a resident. Yes, it makes sense to invest in funds with the same currency where your money is to avoid hedging losses, but this has nothing to do with taxes.

    – In such cases it makes sense to not get dividends paid out but rather opt for a growth based fund. True, dividends feel like passive income, but it is probably useful when I need the money. I would rather let my money work than get something which I do not need. The additional requirements to keep track of the dividends in different countries and accounts for tax reporting just makes it even less appealing.

    – Your dividends on VWRL are not tax free in Germany, you will have to declare them and pay tax on them, if you go above a limit ~€1600 (for the both of you – since you are married). This limit is on all interests earned from your accounts, profits (realised) from your investments, dividend payouts, etc, worldwide.

    – When I was considering my investments, I read the problem with Vanguard was that their structure, specially for those living in DE. It makes it complicated to file a tax returns. There are tax treaties to worry about, even though it is EU. Ireland has a lower tax than DE does, so you might have to declare the withheld tax and pay the additional tax here if you go above the limit. But since there is a limit, if you are lower than the limit, you might not have to pay taxes, while you already had in Ireland. So I did not opt for Vanguard at that point. Just look into this.

    Will like to hear your comments on this. I will also look further when I get time during the weekend.

    Liked by 1 person

    • Hi Richard,

      Wow, thanks for reading and leaving such a thought-provoking post! Investing in Germany is a sea of confusion for me, complicated by the fact that I’m an expat and not sure where I want to eventually retire (I’m thinking Canada, on paper at least).

      But you’re right, there’s lots to iron out that I’ve overlooked. Thank you again for pointing it out. I tend to get caught up in detail far too often, so this time, I kinda just took the plunge with VWRL as it seemed easy and I was excited to start! But now I can see how it will get tricky with the tax treaties. :/ I don’t want tricky, so I’m now strongly reviewing this and will look for a similar total market fund that is domiciled in Germany. Hmmmmmmmm!

      About growth funds, that’s not the type of investing I want to do. That would definitely keep me up at night! I’m much more comfortable with stocks that give dividends, whether it’s through an index ETF like VWRL, or a blue chip company directly. But the latter even requires a lot of legwork to estimate the value, which is not something I enjoy doing nor have much experience with.

      As I’m interested in retiring early (in 7 years), I really need the passive income streams in order to support my goals. The plan is to get the dividend income high enough to cover our costs, so that we can be more flexible with our jobs. As it stands now, I’m not sure what the best route is with all these tax issues. :/

      Most of my net worth is in Canada, and I’m not entirely sure what to do with it at this point. I hadn’t considered German tax issues surrounding this, I was thinking only about Canadian taxes which I’m more familiar with.

      Eeek! You’re right that I need to talk to a tax advisor. *sigh*

      P.S. Your Banks Germany page is great!! I had a quick poke through and will look at it again. πŸ™‚

      Like

      • Sorry, did not mean to scare you. Relax and just keep reading more on this topic before you meet that advisor. Taxes (anywhere between 25% to 40% something) can quickly eat on the profits. It is similar to that 4% returns and that 8% returns on your investment. So a proper tax planning is important. You are not too far on the path and even if you are, you can always start new investments in a tax planned manner.

        My suggestion will be, since you are looking at Canada and possibly Germany as retirement options, start listing down all the investment opportunity in both countries (e.g. there might even be some tax free investment options for retirement which include index funds). List them down, when and how much taxes you have to pay on each of them if you were living in that country. Next what will the taxes (when is it due) on that investment if you were living in the other country. Look at the tax treaty between Canada and Germany for this.

        Liked by 1 person

      • Nono, you didn’t scare me. It’s good for me to be more aware. Expat finances are so much more complicated, and I know I haven’t thought through things enough. While I’m not aiming for perfection in my portfolio, I do want to be smart about it. Since the point is to make money, not have most of the gains whittled away.

        This German-Canada tax-free investment list is a GREAT suggestion for us. I can tackle the Canada side of things, and my husband can do the German. Boy, he’s gonna be sooo happy about that! hahaha. πŸ˜› It will make for a good blog post – both the process and the final product. πŸ™‚

        Like

  3. Will love to see the blog post. I hope he does not hate me for this πŸ™‚ I did some research on German investment products and the tax implication if you end up retiring in Germany. Maybe to make up, if I get some time in the weekend I will do a small write-up on that to make it easier for him where to look at. He will then have to use his further German skills on it and also work out to see how the treaty might affect the investments if you retire in Canada.

    Liked by 1 person

  4. Pingback: Mistakes I’ve made / things I’ve overlooked when moving to Germany | Ms. Canadian Expat

  5. Pingback: My investment journey so far | Ms. Canadian Expat

  6. Pingback: Earning dividend income + German tax issues | Ms. Canadian Expat

  7. Pingback: Why I’ve stopped buying VWRLs | Ms. Canadian Expat

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