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Investing in ETFs and why Irish-domiciled ETF is better for US Non-Resident Alien

Before one invest in ETFs, it would be good to understand some of the issues  affecting a US non-resident alien. Taxes on Dividends As a...

Thursday, January 16, 2020

Dividends for 2019

In 2019, i received a total of $11,746.10 in dividends. Moving forward, my investment strategy is to invest in Irish-domiciled ETFs and maybe some SG undervalued stocks if opportunities arise. 

Sunday, January 12, 2020

Dividends for Dec 2019

I collected dividends from Ascendas h- trust, Aims Apac Reit, First Reit,  US,  Boustead,  Fuyu and Hafary. 

Total dividends collected :1537.25

Probably one of the best December dividends I gotten thus far. Majority of it came from Ascendas h-trust. 

Friday, January 10, 2020

Profit taking for UMS

Sold UMS at 1.05 today. Bought it at 0.5 couple of years back. Going to wait for opportunities to deploy the profits into the market. :)

Thursday, January 9, 2020

Investing in ETFs and why Irish-domiciled ETF is better for US Non-Resident Alien

Before one invest in ETFs, it would be good to understand some of the issues  affecting a US non-resident alien.

Taxes on Dividends

As a US non resident alien, it is better to invest in ETFs that are domiciled in Ireland, as taxes of 15% (compared to 30% for US listed ETFs) apply to the dividends u get from investing in Irish-domiciled ETFs.

US Estate Tax

The US imposes a 40% estate tax rate on US assets above a $60,000 exemption threshold on assets of the deceased non-residents. It is not advisable to invest directly on US listed ETFs or stocks, especially if the invested amount snowballs to a large amount like 1 million or 0.5 million. Imagine the amount of taxes to be paid to the US after one’s death.
On the other hand, if one is to invest in Irish-domiciled ETFs, you would not be subjected to the US estate tax. Ireland also does not impose estate tax on non-residents.

Liquidity

US listed ETFs tend to have much higher trading volume, compared to Irish-domiciled ETFs. So it is better to look at the average daily trading volume of the UCITS ETFs before u buy them.

Buy those UCITS ETFs with high trading volume.

Bid/Ask Spread

US listed ETFs tend to have a narrower bid/ask spread, as the bid/ask spread is dependent on the liquidity of the ETF. The more liquid the ETF, the smaller the spread.Go for those UCITS Irish-domiciled ETFs with narrow spread.

Expense Ratio

Expense ratio is the amount companies charge investors to manage the ETF. US listed ETFs tend to have a lower expense ratio compared to Irish-domiciled ETFs. In general, it is better to go for the Irish-domiciled ETFs with lower expense ratio.

UCTIS Distributing ETFs (USD) for reference

I've listed some UCITS Distributing ETFs by Vanguard and Blackrock. Some of the ETFs are relatively new and the performance data can only be provided for the past 5 years.


Here are some links that you may find useful.

1) Boglehead - US Non-Resident Alien
2) UCITS ETF listing
3) justETF screener

Disclaimer: Please note that the information provided are intended for education purposes, and do not constitute financial or investment advice. You should conduct your own due diligence prior to investing in ETFs.

Monday, September 2, 2019

How long does it take to reach 400K in SRS account?

I did 2 comparison of how long it takes to reach 400K in SRS account. As of now, SRS withdrawal are penalty free if you make the withdrawals at the statutory retirement age (of 62 for me) prevailing at the time you made your first SRS contribution. There are also tax relief from SRS contributions.


The 1st case  assumes that you don't reinvest the dividends, and at 5% yield rate per year.



The 2nd case assummes that you dont' reinvest the dividends, and at 3% yield rate per year.


If you start to contribute to SRS from age 30, by the time you are 47, you would have already hit the 400K mark. There's still 15 years before you can reach the penalty-free withdrawal age.

At a lower yield of 3%, you would have hit 400K by age 50. Still need 12 years before you can withdraw from SRS.

Maybe a better way to do it is to start contributing at age 42, assuming the withdrawal sum is still 400K. But the statutory retirement age would be different then.

One option is to make a SRS contribution now to lock down your the withdrawal age, and make subsequent contributions from age 42.

Please give me your comments and thoughts about this.