# Dividend investing - ETF v's Building your own portfolio
**URL:** https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549
**Category:** Investing / Portfolios
**Created:** [December 3, 2018, 9:49pm UTC](https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549 "2018-12-03T21:49:23Z")
**Posts on this page:** 7
**Page:** 2
### Author:  [@nemiroff](https://forum.mustachianpost.com/u/nemiroff)
#### Post date: [March 13, 2019, 8:02pm UTC](https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549/21 "2019-03-13T20:02:49Z")
> [@Mr.Money](#):
>
> er a fund distributes or accumulates dividends is completely irrelevant for taxation purposes in Switzerland. You will get taxed (income tax!) on dividends received by any Fund (accumulating or distributing) regardless of their distribution policy.
> I have to agree with „hedgie“ here… actively looking for high dividends doesn‘t seem like a smart move for people taxed in Switzerland.
Thanks for the clarification. What I’m puzzled about right now is the fact that if I actually FIRE in the future I would prefer to have distributing funds in my portfolio and not accumulating ones. So that I don’t have to sell as much to actually receive the 4% payout to live from. With that in mind it would not make sense to invest in accumulating funds and then change all those funds into distributing ones at the time I retire. That would only cost money. Or do I get something completely wrong?
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### Author:  [@bamboo](https://forum.mustachianpost.com/u/bamboo)
#### Post date: [March 13, 2019, 8:41pm UTC](https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549/22 "2019-03-13T20:41:31Z")
In Switzerland the advantage of a non dividend stock is that you get richer without cash flow and you avoid income tax that way. The ETF that reinvest the dividend offer no fiscal advantage as the reinvested dividend is taxable as income.
One option for not paying dividend is to buy shares back. This scenario is usually not very efficient, companies are bad investors. The shares buy back ends as some buy high (when the cash flow is good) and sell low (when we urgently need new cash) exercise.
In the case of Berkshire Hathaway the case is a bit different. BH is a holding company. BH can reinvest the dividend without buying their own shares. The legal status (a company and not an investment found) makes that the reinvested dividend is not, for the taxman, a dividend and is not taxable.
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### Author:  [@Bojack](https://forum.mustachianpost.com/u/Bojack)
#### Post date: [March 13, 2019, 10:01pm UTC](https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549/23 "2019-03-13T22:01:58Z")
> [@nemiroff](#):
>
> I would prefer to have distributing funds in my portfolio and not accumulating ones
This could make a difference if you’re with a Swiss broker and if you trade on European stock exchange. Because then you need to pay stamp duty 0.15% and European stock exchange fee 0.10% (or potentially more), so a total of 0.25%.
> [@bamboo](#):
>
> This scenario is usually not very efficient, companies are bad investors.
What I’ve read is that many large S&P 500 companies have been buying back their own shares recently. The explanation why is interesting: according to that article, it’s a “pump and dump” scheme. So the top executives of corporations are paid partially in shares. They feel that the numbers are bad and that it will be hard to keep that growth. So they decide for the company to buy its own shares and spike the price, and they’re the ones on the selling side.
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [March 14, 2019, 8:22am UTC](https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549/24 "2019-03-14T08:22:55Z")
> [@Bojack](#):
>
> What I’ve read is that many large S&P 500 companies have been buying back their own shares recently.
This is getting off topic, but imo it’s just a more tax efficient way to return money to shareholders (in most countries capital gain is taxed less than dividend).
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### Author:  [@Bojack](https://forum.mustachianpost.com/u/Bojack)
#### Post date: [March 14, 2019, 9:12am UTC](https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549/25 "2019-03-14T09:12:17Z")
Yes, a bit offtop, but your explanation sounds way less like a conspiracy theory, and I like it.
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### Author:  [@baseldon](https://forum.mustachianpost.com/u/baseldon)
#### Post date: [February 6, 2020, 9:02am UTC](https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549/26 "2020-02-06T09:02:52Z")
It is more neglected than not that the effect of capital loss, at the time of negative market, is much worst in the case of ETF vs dividend paying portfolio.
The discussions go basically around allways bull market.
I guess there is a simple matematics somewhere what people can use to simulate 50% draw back of the market.
I made some very basic calcs and in case of negative market move the recovery of the dividend paying portfolio has a better chance, even taking the swiss with tax in account.
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### Author:  [@Jonbaum](https://forum.mustachianpost.com/u/Jonbaum)
#### Post date: [February 27, 2023, 6:57pm UTC](https://forum.mustachianpost.com/t/dividend-investing-etf-vs-building-your-own-portfolio/1549/27 "2023-02-27T18:57:22Z")
That’s an interesting point @baseldon. Could you share these calculations with us?
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