Hi, Shrewd!        Login  
Shrewd'm.com 
A merry & shrewd investing community
Best Of RIBest OfAll BoardsThe Shrewd’m WeeklyLearn to InvestHow to Become Shrewd
Search
Shrewd'm.com Merry shrewd investors
Search
Best Of RIBest OfAll BoardsThe Shrewd’m WeeklyLearn to InvestHow to Become Shrewd


The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
Answer this questionContinue to Shrewd'mThis note won't appear again
Personal Finance / Retirement Investing
Unthreaded | Threaded | Whole Thread (18) |
Author: mungofitch 🐝🐝🐝 GOLD
SHREWD
  😊 😞

Number: of 1281 
Subject: Re: Fund, MEWD
Date: 08/17/26 11:04 AM
Post New | Post Reply | Report Post | Recommend It!
No. of Recommendations: 3
I can't really think of a way in which it's not functionally a DRIP
...
I already explained to you that several countries apply tax to Accumulating ETFs very differently to what they'd apply to an individual doing DRIP reinvestment with a Distributing ETF.
In some cases, amount of tax, in some cases, deferment of tax to a time of the investors choosing.


You didn't quote my whole sentence, changing the meaning utterly : )

"I can't really think of a way in which it's not functionally a DRIP, other than the personal tax differences mentioned up thread. "

It's the same purpose, accomplished in almost the same way, with a very similar source-country withholding tax penalty. Functionally it's a DRIP, as I stated. Different holders have differing personal tax situations, as with almost all investment types.


Reinvested dividends *within an accumulating ETF that never leave the ETF accounts* are not subject to dividend tax in the way DRIP investment from a Distributing ETF would be.

Again, that's dependent on and varies only with one's individual tax situation.
But dividends which never leave the fund ARE still subject to source country withholding tax, affecting all holders of the fund. There are varying rates depending on the country of each company, but on average across the investments in the fund, each coupon received takes a cash hit before being reinvested in the fund, causing a dead loss. Nobody gets a tax credit for this withheld tax, either: not the fund, not the individual holder, unlike the situation for most people if they held the shares directly. In many cases this loss may be larger than what they would have paid (after tax credits) themselves if the shares were held directly, since a few countries have very high dividend withholding tax rates, even for Ireland. For example, I think a dividend from Finland loses 35% permanently before the remainder is reinvested.

In a sense, an Irish fund is a lot like my personal situation. Since it has no local income tax return, there is no tax credit that can be used, so the withheld amount is the tax amount. It has a certain simplicity I suppose, especially in terms of paperwork.

Jim
Post New | Post Reply | Report Post | Recommend It!
Print the post
Members reply directly to mungofitch here — and replies get answered. Reading is free; so is joining the conversation. Join Shrewd'm »
This community has written 562 posts about Non-US Stocks. The article-length ones it recommended most:
Greggs PLC (GRG.L) · 20 recs · 2025
Topicus: Not Constellation · 16 recs · 2026
Unite Group (UTG), UK, falling knife. · 13 recs · 2025
SKAN · 11 recs · 2025
MELI - Brazilian darling · 10 recs · 2025
Unthreaded | Threaded | Whole Thread (18) |


Announcements
Retirement Investing FAQ
Contact Shrewd'm
Contact the developer of these message boards.

Best Of RI | Best Of | Favourites & Replies | All Boards | Followed Shrewds | Open Questions | Moving a community