{"id":10177,"date":"2025-06-28T17:36:16","date_gmt":"2025-06-28T09:36:16","guid":{"rendered":"http:\/\/doolounge.com\/etf-truth\/"},"modified":"2025-06-28T17:42:12","modified_gmt":"2025-06-28T09:42:12","slug":"etf-truth","status":"publish","type":"post","link":"https:\/\/doolounge.com\/en\/etf-truth\/","title":{"rendered":"Can ETFs really make money? Is it worth it for me to use leverage?"},"content":{"rendered":"

The Taiwan stock market has been very bullish in recent years, causing many novices to invest in the ETF market. If you only look at the accounts, they have really made a lot of money.

Those who see the profits from every transaction but are not satisfied with the current situation begin to think about leveraging and want to increase the unit base to invest in stable profits!

Investors always say: "The average annual return of ETFs is about 6%!"

This is the long-term average based on historical data and is a relatively stable reference for investors.

But do all the benefits of 6% really go into your pocket?<\/p>\n\n\n\n

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Don\u2019t forget that there are several often overlooked \u201cprofit-eating\u201d traps:

1. Transaction fee: Don\u2019t underestimate this 0.3%!

As long as you are in Taiwan and buy "Taiwan stocks", even if you hold ETFs for a long time, costs will still be incurred for each transaction.

We will take a conservative average value, which is about 0.2% to 0.3% in transaction fees per year. If operations are frequent, the fee may be higher.

Unless you have large inflows and outflows all the time, you can negotiate with your trader to lower the fees. However, how can the newbies in the stock market who usually only buy ETFs have the performance of day traders who can make tens of millions of yuan in a day? Therefore, it is basically difficult to reduce this fee.

In other words, your annual salary of 6% will actually be compressed to about 5.7%.


2. Dividend tax burden: 6% remuneration is not equal to tax-free income

There are two main sources of income for ETFs:

1. Price increase (capital gains) \u2192 Currently tax-free in Taiwan

2. Cash dividends \u2192 If the annual amount exceeds 97,000, comprehensive income tax will be levied


For example, if the total amount you invest in the stock market is 3 million yuan, and the annual profit is 6%, and most of it is dividend income, which is 180,000 yuan, it has already exceeded the tax-free threshold and will be included in your income tax. The tax rate depends on your total income, and it ranges from 5% to 40%.

If your total income is higher, the actual income you receive will be further eaten up by taxes, and it is very likely that only around 5% will be left.

3. Inflation factor: It seems like you are making money, but you are actually losing money

Next is the most easily overlooked and deadly hidden killer in the investment novice village: "inflation!"

Many people's rates of return look very good on paper in recent years, but they do not have the ability to actively select stocks, yet they begin to have the unrealistic idea of using leverage to manipulate ETF investments. It is really dangerous!

Suppose you use a "loan", for example, your own conditions are very good, allowing you to get a super low interest rate of 4%, and use it to invest in ETFs. The book return is 5.5%, but after deducting the interest, you only make 1.5%.

But if the annual growth rate of Taiwan's CPI (Consumer Price Index) is 2% in the same year, then you actually have a "negative return" of -0.5%!

To put it more bluntly, you earn nominal money, but your actual purchasing power is declining.

Just like 500 yuan ten years ago, you could buy your whole family a full meal at the night market and even have some money left over; but 500 yuan now should only be enough for your family to eat half full, and this is the power of inflation!

Credit loan interest rates in Taiwan generally vary depending on factors such as the applicant's occupation, income, and credit status.

The interest rate for super prime customers may be between 2% and 5%, for general corporate employees it may be between 2.5% and 11%, and for those who work part-time or have unstable income, the interest rate will be between 6% and 16%.

ETFs are indeed a high-quality long-term financial tool for the current Taiwan stock market, but if you really want to see the "real return", when you look at the 6% return, don't forget to deduct the following three items:

1. Handling Fees
2. Tax burden (especially dividends)
3. Impact of inflation

If you use leveraged investment, such as external credit, car loan, mortgage, etc., you must also add interest costs and market risks.

If you are just a novice and invest in the stock market only to accumulate assets steadily, it is recommended that you invest the extra cash on hand, hold for the long term, choose ETFs with stable dividends, and review the asset allocation annually, which is a more reassuring operating strategy.

Stock market novices should stop dreaming of using leverage to "gamble" and risk their fortunes.

The key point is that before you make any profit, any random calculation will determine that the investment is doomed to fail.<\/p>","protected":false},"excerpt":{"rendered":"

When you see that the ETF has a stable annual return rate of 6%, don\u2019t rush to use leverage and rush into the market!<\/p>\n

After deducting the handling fees, dividend tax and inflation, the actual amount in your pocket may be less than 5%.<\/p>\n

If you still use credit investment, the interest rate spread will be very thin and the risk will be doubled, which will make you become a leek swallowed by inflation.<\/p>\n

It is recommended for beginners to use spare money and make long-term and stable plans.<\/p>","protected":false},"author":2,"featured_media":10179,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"activitypub_content_warning":"","activitypub_content_visibility":"","activitypub_max_image_attachments":4,"activitypub_interaction_policy_quote":"anyone","activitypub_status":"federated","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false,"beyondwords_generate_audio":"","beyondwords_project_id":"","beyondwords_content_id":"","beyondwords_player_style":"","beyondwords_language_id":"","beyondwords_title_voice_id":"","beyondwords_body_voice_id":"","beyondwords_summary_voice_id":"","beyondwords_error_message":"","beyondwords_disabled":"","beyondwords_delete_content":"","beyondwords_podcast_id":"","beyondwords_hash":"","publish_post_to_speechkit":"","speechkit_hash":"","speechkit_generate_audio":"","speechkit_project_id":"","speechkit_podcast_id":"","speechkit_error_message":"","speechkit_disabled":"","speechkit_access_key":"","speechkit_error":"","speechkit_info":"","speechkit_response":"","speechkit_retries":"","speechkit_updated_at":"","_speechkit_link":"","_speechkit_text":""},"categories":[1263,817],"tags":[1111,1294,849,1293,1292,1291,820,1295],"class_list":["post-10177","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-secret","category-money","tag-etf","tag-1294","tag-849","tag-1293","tag-1292","tag-1291","tag-820","tag-1295"],"blocksy_meta":[],"featured_image_urls":{"full":["https:\/\/doolounge.com\/wp-content\/uploads\/2025\/06\/fb_img_17511036833576948057578965436640.jpg",1125,2000,false],"thumbnail":["https:\/\/doolounge.com\/wp-content\/uploads\/2025\/06\/fb_img_17511036833576948057578965436640-150x150.jpg",150,150,true],"medium":["https:\/\/doolounge.com\/wp-content\/uploads\/2025\/06\/fb_img_17511036833576948057578965436640-169x300.jpg",169,300,true],"medium_large":["https:\/\/doolounge.com\/wp-content\/uploads\/2025\/06\/fb_img_17511036833576948057578965436640-768x1365.jpg",768,1365,true],"large":["https:\/\/doolounge.com\/wp-content\/uploads\/2025\/06\/fb_img_17511036833576948057578965436640-576x1024.jpg",576,1024,true],"1536x1536":["https:\/\/doolounge.com\/wp-content\/uploads\/2025\/06\/fb_img_17511036833576948057578965436640-864x1536.jpg",864,1536,true],"2048x2048":["https:\/\/doolounge.com\/wp-content\/uploads\/2025\/06\/fb_img_17511036833576948057578965436640.jpg",1125,2000,false],"trp-custom-language-flag":["https:\/\/doolounge.com\/wp-content\/uploads\/2025\/06\/fb_img_17511036833576948057578965436640-7x12.jpg",7,12,true]},"post_excerpt_stackable":"

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