This is my first post and I apologise in advance for the fact I am almost totally inexperienced with anything to do with investing and that the post may be a bit long but I feel I need some advice.
A bit of background on me which I hope will be helpful. I am very soon (5 days in fact) to be 34 years old and will be married next year. I am British but live in Hong Kong with my fiancé and for the last 9 years we have very much lived in the now rather than planning for the future. That means we have not been saving and have been happy to use credit cards and income to fund a nice lifestyle for ourselves. I have my own small company which is doing well and provides a good income but I have not been making the most of this from a future planning perspective...until now!
We have reached a point where we have now cleared off our credit cards for the first time in 10 years and will be clearing the balance monthly and using them very sparingly going forward. We have student loan debts which are not large and do not need clearing urgently. We have cleared off another loan recently also. We have a car loan each month and rent a house in Hong Kong – these are our 2 outgoings moving forward. We do not own any property yet or have any investments.
From January 2015 onwards I would like to put money aside to invest. I have just read “How a Second Grader Beats Wall Street” and I really liked the simplicity outlined in the book. As a result I am now reading “The Bogleheads Guide to Investing” which seems to reiterate very similar points. I am pleased to see that I have met the criteria required to start investing.
I am attracted to the simplicity of the 2nd Grader Portfolio – 3 Index Funds or 5 (if you include a REIT fund and Precious Metals Fund) and intend to invest for the longer term 20-30 years.[/list]I am attracted to the simplicity of the 2nd Grader Portfolio – 3 Index Funds or 5 (if you include a REIT fund and Precious Metals Fund) and intend to invest for the longer term 20-30 years.
My budget:
- I would look to invest an initial lump sum of $25,000 USD
- Monthly investments of $1,900-$2,500 USD – I would probably start at the lower end and increase as income stability allows
- A further annual lump sum at the start of each New Year depending on the cash balance in my account which I would split between putting into investments and into savings for property (see next point)
- As an aside I will also be saving aside money monthly to save for property in the future (c. 2-5 years). This will probably be around $2,000-2,500 USD. I will want access to these funds in a shorter time-frame so less inclined to invest this.
And this is my main issue: where to start? I have outlined some of my main questions below:
- What I am reading so far is US centred – I am Hong Kong based. If I invest in say the 2nd grader funds, will I be subject to US taxes/costs or local taxes/costs? A real newbie question I know.
- My early research suggests Hong Kong taxes on investments are low, perhaps even zero. Is this correct? What implications does this really have for me?
- I am extremely conscious of keeping the costs of investing low – I cannot see how to directly invest with Vanguard for example (if in HK it directs you to contact a broker) – are there recommendations on how to invest directly if you are not based in the US?
- If I should go through a broker, where do I start? I see every transaction is charged and if I intend to invest monthly this will eat into the return – is there a way to minimise this?
- Should I structure a basic portfolio around a US market (as per the 2nd grader's) or take into account I am based in a different market and apportion things differently? This was touched on in the book but not in any real detail.
- I mention above I want to save for property but I would like easier access to these savings than for the longer term investment portfolio. Is there a better way I can make this money work for me rather than just set it into a low interest rate (very low in HK) savings accounts?
I would like to get things started but I feel I have hit a real road block in being able to actually pull the trigger effectively. I still intend to continue my research but really like the idea of 3-5 simple ETF's that I don't have to monitor all the time. I am very nervous (with this being expensive Hong Kong) that I will have to pay a lot in order to do so and my returns will be eaten up.
Thank you for reading my epic post and I really appreciate any advice you guys may be able to give!
Many thanks
James