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Post by chang on Jul 12, 2021 9:38:54 GMT
My stepson in Spain has saved some money and wants to start investing. From experience I know that the availability of brokerages, as well as funds/ETF/Unit Trusts etc. varies from country to country. I have some experiences in other countries, but not Spain. Yes, I know that costs and commissions will be higher, availability will be narrower, information will be poorer, etc. (compared to the U.S.) but I would to see if he can invest a little money into a low-cost Total World stock market fund. I dug this up concerning Spanish nationals investing in Vanguard Ireland: global.vanguard.com/portal/site/kiids/es/en/about-vanguard They have funds like this: Vanguard Global Stock Index Fund EUR Acc global.vanguard.com/portal/site/loadPDF?country=es&docId=26452However, I think he might be better off with a truly local brokerage, i.e., through a local Spanish bank, so that he won't have to get involved with any international wire transfers, etc. I found these sites, but they're all "international" online brokers, and they all look a little fishy to me. This site mentions actual Spain-based brokerages: www.bogleheads.org/wiki/Investing_from_Spain
Self Bank appears to carry Vanguard index funds: www.selfbank.es/busqueda/fondos?sort_by=rating&items_per_page=10&f%5B0%5D=tipo%3Arenta%20variable&f%5B1%5D=gestora%3Avanguard%20group%20%28ireland%29%20limitedIf anyone has experience investing as a European national, I'd like to hear about it.
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Post by chang on Jul 12, 2021 12:03:35 GMT
Just a thought: could I set up a new account at Fidelity under my name, with him as a JOINT owner, so that he could sign up online and use his own User ID/password to see the account (but not my accounts, obviously)? The thing is, he is not a US citizen. (He is however the secondary beneficiary on all my accounts.)
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Post by Norbert on Jul 12, 2021 12:30:33 GMT
The fact that your stepson is not a "US person" is clearly the challenge here. Investing in the US offers big advantages, as you know.
Would Fido allow you to open a joint account with your stepson? Somehow I doubt it, but it's worth checking.
Another option is to open a new account at Fido or elsewhere in your name, making your stepson the full beneficiary. Yet, even that could raise an issue, as the Fido beneficiary page requires a SS#, if memory serves.
Why not research these two options and then post again?
The advantages of being a US person are so large, that could be worth encouraging him to apply for citizenship. But, without the intent to live in the US, that probably won't fly.
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Post by Chahta on Jul 12, 2021 12:36:22 GMT
...........The advantages of being a US person are so large, that could be worth encouraging him to apply for citizenship. But, without the intent to live in the US, that probably won't fly. And yet those that curse the US from within are so ignorant. Sorry for the off-topic post. Very insightful N.
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Post by yogibearbull on Jul 12, 2021 12:54:12 GMT
galeno in Costa Rica has experience with accessing funds through Ireland. May be he can chime in with some specifics. Be very careful with sharing login.
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Post by anitya on Jul 12, 2021 18:48:47 GMT
I agree galeno would be the right person to guide. I would not worry about transfers or doing business cross border between Spain and Ireland (both within Euro). I would think Ireland is a lot safer to do business in than Spain. I do not hear as many instances of fraud from Ireland as I do from Spain.
P.S.: I would consider tax consequences (incl estate and gift taxes) before deciding to become a US permanent resident and then a US citizen. It may be advantageous or disadvantageous depending on individual circumstances.
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Post by anitya on Jul 12, 2021 19:27:29 GMT
chang , Political commentary threw me off and I missed your second post in the first pass. If he is a secondary beneficiary on all your accounts, you may want to look into estate and gift tax issues. Norbert may be onto something. Estate and gift tax exemptions may not be available when beneficiaries are non-US citizens. If you would like me to read for you any material you collect on this and give my two cents, pl send me through private message. All brokerages allow foreigners (no SS#) as secondary beneficiaries, including on IRAs, but that leeway may not apply to making them joint account holders.
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Post by chang on Jul 13, 2021 0:19:18 GMT
The fact that your stepson is not a "US person" is clearly the challenge here. Investing in the US offers big advantages, as you know. Would Fido allow you to open a joint account with your stepson? Somehow I doubt it, but it's worth checking. Another option is to open a new account at Fido or elsewhere in your name, making your stepson the full beneficiary. Yet, even that could raise an issue, as the Fido beneficiary page requires a SS#, if memory serves. Why not research these two options and then post again? The advantages of being a US person are so large, that could be worth encouraging him to apply for citizenship. But, without the intent to live in the US, that probably won't fly. Thanks Norbert . I just got a reply back from Fido, and he can be a joint account owner. They ask about citizenship/residency as well as country of tax residency, which leads me to think that they might withhold taxes, which is something I don't want. I am prepared to accept all tax responsibility for the account (which should be negligible, since the amount is not that great and will be invested in passive index/ETF funds). So I need to check with Fido on this. No problem with non-US persons being beneficiaries. Edit: I am looking at the paperwork Fudo sent me. I have a suspicion that they will withhold taxes. (They ask for details of country(ies) is tax residency, IRS Form W-8BEN, etc.) I have gone back to Fido on this question, so let's see what they say. However, even if the account generates miniscule dividends or distributions, I really don't like this idea of automatic tax withholding (which presumably would work its way into my tax return).
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Post by chang on Jul 13, 2021 0:21:23 GMT
galeno in Costa Rica has experience with accessing funds through Ireland. May be he can chime in with some specifics. Be very careful with sharing login. I just saw that the Vanguard Ireland option has a minimum $100,000 Euro investment. He isn't close to that. I never share login or password information with anyone. I usually can't remember it myself. A joint account holder can set up their own online access (User ID and password) and access only those accounts on which they have ownership or authority.
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Post by chang on Jul 13, 2021 0:27:41 GMT
If he is a secondary beneficiary on all your accounts, you may want to look into estate and gift tax issues. Norbert may be onto something. Estate and gift tax exemptions may not be available when beneficiaries are non-US citizens. If you would like me to read for you any material you collect on this and give my two cents, pl send me through private message. All brokerages allow foreigners (no SS#) as secondary beneficiaries, including on IRAs, but that leeway may not apply to making them joint account holders. This is an interesting point. Estate tax kicks in at around $11-12 million, so most people don't have to worry about it. (Me included, although I can only hope to surpass that figure when it comes time to make the final journey.) It did not occur to me that my beneficiaries (non-US persons) might be liable for estate tax, whereas a US citizen/resident would not be. I see no reason why that should be the case, but of course looking for reason or rationality in tax laws is ridiculous. This is a separate question, and I will post it separately here and on M*. (If I recall, Intruder has a lot of tax and estate planning knowledge.)
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Post by chang on Jul 13, 2021 0:29:37 GMT
P.S.: I would consider tax consequences (incl estate and gift taxes) before deciding to become a US permanent resident and then a US citizen. It may be advantageous or disadvantageous depending on individual circumstances. There is no way he will pursue US residency or citizenship. He would not qualify, nor would it be advantageous for him to be taxed on his worldwide income for the rest of his life!
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Post by chang on Jul 15, 2021 1:38:58 GMT
Well, it turns out that it's possible to set up a Joint WROS account with him as co-owner. If he sends a W-8BEN certifying his tax residency as Spain, there will be no tax issues. (I believe any distributions will show up on my 1099s.) He can access the account online and have fun watching it (assuming it grows).
As an side, we're talking about a very small amount of money to start with - $10,000. He's 29 years old (yeah, I know, off to a very poor start in terms of saving and investing ..... but conditions in Spain are tough). I am thinking to invest it 100% in VT. Anybody disagree?
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Post by FD1000 on Jul 15, 2021 3:51:50 GMT
I'm just wondering chang, do you have any simple questions?
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Post by paulr888 on Jul 15, 2021 5:08:44 GMT
Hi Chang ... I don't disagree with you but I will suggest an alternative that I am borrowing from a Paul Merriman webcast.
He likes Target Date Funds for young people. He had a presentation that compared VILVX with LIZKX for a 21 yr old. He doesn't like Vanguard putting some bonds in for young people and Black Rock does not do that. The beauty is the descending glidepath as one ages. So I would suggest the Blackrock LifePath Index 2060. I can't find the cheaper ER at Fidelity but you can get LIZAX for .34 ER. If you want to get fancy you could find a good Small Cap Value fund and put a piece of that in too under the thinking that asset class has outperformed over long period. Good luck Chang.
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Post by chang on Jul 15, 2021 6:04:01 GMT
Hi Chang ... I don't disagree with you but I will suggest an alternative that I am borrowing from a Paul Merriman webcast. He likes Target Date Funds for young people. He had a presentation that compared VILVX with LIZKX for a 21 yr old. He doesn't like Vanguard putting some bonds in for young people and Black Rock does not do that. The beauty is the descending glidepath as one ages. So I would suggest the Blackrock LifePath Index 2060. I can't find the cheaper ER at Fidelity but you can get LIZAX for .34 ER. If you want to get fancy you could find a good Small Cap Value fund and put a piece of that in too under the thinking that asset class has outperformed over long period. Good luck Chang. Thanks Paul. Good food for thought. I agree bonds would be ridiculous for a 29 years old, especially at current yields. Interesting thought about small caps, since VT despite being "total market" is still on average very large cap. A SC boost might make a sense. (Is there a "World" SC ETF?) LIZAX with almost no bonds looks interesting, but I don't see it being worth the expense ratio; and it also appears to be SC-light. A think a simple VT+SC(?) portfolio would serve him very well for a long time.
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Post by paulr888 on Jul 15, 2021 9:11:48 GMT
Chang ... I will try to summarize succinctly and spare you time to review Merriman webcasts. Here is latest thinking of Chris Peterson that works in Merriman nonprofit doing research. They like the second fund but it adds risk so they decrease it over time. They use a factor of 1.5 times your age at that would go in to your VT. So 30 yr old times 1.5 = 45 ... so 45% goes into VT. At 40 yr old, 60% goes into VT etc etc. The balance goes into 2nd fund. Based on their charts you could use 2 other funds so have a total 3 fund portfolio.
They like AVUV. (Alt. you could use VIOV, SLYV or IJS)
They like AVDV. (Alt. you could use DLS)
You could go 50:50 of balance into above 2 funds.
Check it all out which I am sure you will. Mainly food for thought. No guarantees.
Ciao ciao ....
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Post by racqueteer on Jul 15, 2021 10:56:37 GMT
Following up on Paul's response, I owned AVUV for awhile, and you need to be aware of the volatility. Good when things are going your way; not so much when they aren't. My experience anyway. Smoother seemed to be IWM/IWN. For someone 'young'? Maybe doesn't matter...
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Post by Chahta on Jul 15, 2021 11:40:16 GMT
Well, it turns out that it's possible to set up a Joint WROS account with him as co-owner. If he sends a W-8BEN certifying his tax residency as Spain, there will be no tax issues. (I believe any distributions will show up on my 1099s.) He can access the account online and have fun watching it (assuming it grows). As an side, we're talking about a very small amount of money to start with - $10,000. He's 29 years old (yeah, I know, off to a very poor start in terms of saving and investing ..... but conditions in Spain are tough). I am thinking to invest it 100% in VT. Anybody disagree? At 29 I probably only had $10k. Who cares about bonds or AA. Go equities at that age. Over the life of VT, VTI has beaten it regularly. If you/he wants an exposure to the World add 10% VEU. VT looks to be a blend of VTI and VEU. JMHO
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Post by paulr888 on Jul 15, 2021 14:38:24 GMT
Good comments from others Chang. OK, I will spare you from the webcasts but will provide below for you to peruse. I am sure you will come up with good strategy for your stepson. We will be gone by the time we really know so no pressure, right? paulmerriman.com/best-in-class-etf-recommendations/PS.. ... OT but my favorite, Jeffrey Gundlach, will be interviewed by Scott Wapner today on CNBC (Half Time Report) between 9am and 10am Calif time. I actually moved out my tee time today just to watch the whole thing. This is good week to hear what is on Jeffrey's mind. PPS... I was late bloomer too. Actually your stepson is probably ahead of me at that age. Hope he does not despair. Investing is a marathon, not a sprint.
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Post by chang on Jul 15, 2021 22:01:54 GMT
Thanks Paul. I will catch up on some of these webcasts this weekend, although I'm not usually a big consumer of media and punditry. Interesting that there appears to be no worldwide smallcap equivalent* to VT, but clearly there are many ways to create one out of US & Intl ETFs (just as VT itself looks like VTI + VEU).
Maybe he isn't that far behind the curve, starting at 29 (it's just that I started much earlier). He's certainly not despairing, that was me. And how right you are about it being a marathon, not a sprint. Or to repeat another hoary old chestnut (but a good one): "what matters isn't timing the market, it's time in the market."
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sam
Lieutenant
Posts: 122
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Post by sam on Aug 1, 2021 1:34:11 GMT
This is an interesting point. Estate tax kicks in at around $11-12 million, so most people don't have to worry about it. (Me included, although I can only hope to surpass that figure when it comes time to make the final journey.) It did not occur to me that my beneficiaries (non-US persons) might be liable for estate tax, whereas a US citizen/resident would not be. I see no reason why that should be the case, but of course looking for reason or rationality in tax laws is ridiculous. This is a separate question, and I will post it separately here and on M*. (If I recall, Intruder has a lot of tax and estate planning knowledge.) If I remember correctly there are NO estate taxes to US citizen spouse of a diseased US citizen BUT estate tax liability for a NON US citizen spouse was like 50%. As Uncle Sam does NOT want US earned money going to NON US citizen tax free who can leave USA (he/she does have every right to live where ever they want) and take money tax free with them. That was LONG time ago I read and estate taxes have changed over years and NOT sure what are current laws. NOLO press does a good job and some recent book on estate taxes will help too.
Many USA based brokerages have offices all over world. If someone (who is NOT US citizen) lives in Europe then he/she should consider opening an account there and buy US securities (stocks/ETFs/Mutual funds) as international investing. It is very similar analogy to access to International investing (NOT ADRs) to US investor to apply for international investing privileges to their US brokerages (such as Fidelity does HAS this feature) and buy directly at a Foreign Exchange. Remember in this case you need to know exchange rate and any currency exchange conversion fees and exchange symbols and trading hours.
Non US citizen and Non US based investor need to just reverse this. US will be foreign/international investing for them. I don't have personal experience to that. These days so many Canadian, Indian and Asians (NOT living is USA) are buying and selling US stocks. I highly dought they all opened US brokerages accounts in USA. Mostly likely they opened accounts in their home country or region and now invest in US this way.
There was Brokerage company founder interview (not RobinHood!) and he was emphasizing democratization of investing/trading (of course he was promoting his business) and he was mentioning after USA most questions he gets are from India and Canada.
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Post by fishingrod on Aug 1, 2021 1:58:13 GMT
"democratization of investing/trading"
Everything has it's own time and own season.
Probably not happening in my time. It is all a gamble.
Fishingrod
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galeno
Commander
KISS & STC
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Post by galeno on Aug 9, 2021 21:40:21 GMT
chang ,@chang Your stepson should go to www.bogleheads.com to the Non-USA investor area. This is where I and a LOT of non-US investors hang out. There is even a special section for investors from SPAIN. His port is EASY. X% VWRL (world stocks) + Y% AGGG (unhedged world bonds) or AGGH (Euro-hedged world bonds) + Z% CASH. The BEST broker for non-USA investors is USA domiciled IBKR (Interactive Brokers). But you SHOULD have $100K. For those with LESS THAN $100K there is DiGiro, Saxo Bank, and perhaps Schwab International. Schwab International has VERY limited access to non-USA stock exchanges with expensive, crappy, active mutual funds. So with Schwab International he wants to invest like an American to save money. Thus X% VTI + Y% laddered CDs OR directly purchased US treasuries. DO NOT USE bond funds or ETFs! With IB, DiGiro, and Saxo Bank. Do NOT keep more than $60K in the MMA! If you don't want to get hit with the HORRIBLE inheritance taxes the USA puts on Non-USA investors. Any more questions please fire away.
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Post by chang on Aug 9, 2021 21:57:12 GMT
Thanks galeno. At the moment we are pursuing another option: I'm opening up a joint account at Fido with him. Once it gets > $100K we'll switch to IBKR, since I won't live forever. But for now, this is convenient, and he can see everything. The initial amount is small, so I can't think of anything more sensible than 100% VT.
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galeno
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Post by galeno on Aug 9, 2021 22:08:38 GMT
Thanks galeno . At the moment we are pursuing another option: I'm opening up a joint account at Fido with him. Once it gets > $100K we'll switch to IBKR, since I won't live forever. But for now, this is convenient, and he can see everything. The initial amount is small, so I can't think of anything more sensible than 100% VT. He should use VTI (TSM). Not VT (TWSM). VT is 63% USA + 47% non-USA. The non-US developed part (26%) will slap you with a 8.5% HIDDEN dividend tax. The EM part (11%) will slap you with a HIDDEN 11.2% dividend tax. When he switches to IBKR he can use VWRL and AGGG from non-USA bourses. chang,
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Post by chang on Aug 9, 2021 22:17:46 GMT
Thanks galeno . At the moment we are pursuing another option: I'm opening up a joint account at Fido with him. Once it gets > $100K we'll switch to IBKR, since I won't live forever. But for now, this is convenient, and he can see everything. The initial amount is small, so I can't think of anything more sensible than 100% VT. He should use VTI (TSM). Not VT (TWSM). VT is 63% USA + 47% non-USA. The non-US developed part (26%) will slap you with a 8.5% HIDDEN dividend tax. The EM part (11%) will slap you with a HIDDEN 11.2% dividend tax. When he switches to IBKR he can use VWRL and AGGG from non-USA bourses. chang , Can you elaborate? He's filing a W8-BEN, so the account (remember I am the principal owner) should not receive any different tax treatment than any other account owned by a US citizen/resident. Are you saying that everyone who owns VT is subject to these tax withholdings?
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Post by fishingrod on Aug 9, 2021 22:56:23 GMT
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galeno
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Post by galeno on Aug 10, 2021 13:57:27 GMT
chang, "Are you saying that everyone who owns VT is subject to these tax withholdings?" Yes.
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galeno
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Post by galeno on Aug 23, 2021 11:56:15 GMT
Exactly. IIRC, if in a USA tax deductible / tax deffered retirement account, these "hidden" taxes are just lost money. As they are to us. If in a fully taxible USA domiciled account by a USA person you MAY get all/some back.
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Post by chang on Aug 23, 2021 12:06:51 GMT
I try to keep any foreign asset that throws off a dividend in my taxable account.
EM growth does not pay any dividends, so I don't mind keeping some of that in my IRA.
The only exception is FICDX, because there is a US-Canada agreement not to withhold any Canadian taxes if the assets are held in a US retirement account.
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