Does it make sense to invest in index funds like Vanguard with the 30% tax and Dividend handling charges? - Seedly
 

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Asked by Anonymous

Asked on 24 Oct 2019

Does it make sense to invest in index funds like Vanguard with the 30% tax and Dividend handling charges?

I'm diversifying my portfolio and would like to invest in index funds like Vanguard.

But given that we will be taxed 30% and Dividend handling charges, does it still make sense to go into it?

Going through platform Fundsupermart. The reason for this is that it goes into S&P500 and I don't have to hold individual stocks of companies.

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Asheesh Chanda
Asheesh Chanda, Founder at Kristal.AI
Level 6. Master
Updated on 30 Oct 2019

Equity ETFs (like SPY, QQQ) or Index Funds are typically suitable for a Growth goal and the dividends are relatively small, hence the withholding tax impact should be tiny. A lot of investors do prefer UCITS ETFs, especially when going into Bond ETFs. Feel free to reach out to our advisory desk for more info. Given US-domiciled ETF investments via Kristal.AI are free, it may be worthwhile for you to consider us and test us out. Happy to hear more feedback.

Learn more from us here: http://bit.ly/36ci0yF

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Hi anon, are you referring to the VOO ETF?

The dividend yield on that is around 1.9% and relatively low, so I would not really think that the 30% hit on your dividend will make too much of an impact. If you were to invest in it, it would be largely for the capital gains. So consider your purpose of investing in it, if you wanted dividends, there are other asset classes/markets which may suit you better.

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