Accumulating or Distributing ETFs?
I am 32 years old and have started to invest passively in low-fee stock ETFs: one global (VT) and one local Swiss ETF (CHSPI). However I was not sure whether to buy accumulating (dividends auto-reinvested) or distributing (dividends paid out automatically) ETFs. What are things I should consider to help inform my decision?
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Valid dilemma. It would depend on two things, the size of your portfolio/investment as well as whether you are paying taxes on dividends received.
Should your portfolio be of considerable size and the amount of income generated is meaningful, i.e you can use it to pursue other investments or to support your living expenses, then you should opt for a distributing class. Otherwise, you should perhaps consider an accumulating class, particularly if you have to declare any dividends paid as income in your tax declaration and get taxed on them.
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