Moving to Singapore... how should I invest?

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Topic Author
Magubbi
Posts: 3
Joined: Thu May 13, 2010 10:53 am

Moving to Singapore... how should I invest?

Post by Magubbi »

I'm 32 years old and moving to Singapore in 2 months for a new job and was hoping to get some advice on how I should plan for retirement (or even in general). I'll have no tax-advantaged and/or company-matched options there. Not sure how long I'll be staying there, but it's at least for 2 years, and up to 5.

I currently have a 401K with my old company that will be rolled over to my Vanguard Roth, and I will obviously continue to max this out each year at $5,000.

Everything in my Roth is and will be put into Vanguard's 2045 lifecyle fund.

Without a 401K and with my roth maxed out already, should I put my money in:

a) Taxable account in the US (via Vanguard)
b) Taxable investment account in Singapore
c) Offshore investing
d) Any other ideas?

I'm bummed that I don't have any tax-deferred/advantaged options outside of my Roth. Help!
Last edited by Magubbi on Fri Mar 04, 2011 12:03 pm, edited 1 time in total.
Topic Author
Magubbi
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Joined: Thu May 13, 2010 10:53 am

Post by Magubbi »

...or let me know if you know of any good resources on investment options in Asia.
vtanzi
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Joined: Sun Jan 13, 2008 9:58 am

Foreign income exclusion

Post by vtanzi »

Do not forget that you will not pay taxes on the first 92k of income as long as you meet the bona Fide residence test
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csoren
Posts: 267
Joined: Fri Feb 29, 2008 11:22 am
Location: DC 'burbs

Re: Foreign income exclusion

Post by csoren »

vtanzi wrote:Do not forget that you will not pay taxes on the first 92k of income as long as you meet the bona Fide residence test
You can't fund a Roth if you use the foreign earned income exclusion (FEIE) unless you have earned income above the 92k FEIE exclusion. I don't know about investing in Singapore -- currency exchange might hurt you enough to make this not worthwhile. I've continued to invest in taxable via VG in the U.S. (much of my salary has been paid in dollars).

The only other option I know of is a variable annuity which lets you invest taxable money and let it grow tax-deferred. I considered this but I'm only 10 years from retirement and it seemed barely worth the complexity. But at your age, it might make sense. Search the forum for Mel's Forbes Series on Annuities.

Carolyn
Topic Author
Magubbi
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Joined: Thu May 13, 2010 10:53 am

Post by Magubbi »

So I've been doing some reading...

It sounds like 401K/Roth > variable annuity > taxable investment account... is that right?
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csoren
Posts: 267
Joined: Fri Feb 29, 2008 11:22 am
Location: DC 'burbs

Post by csoren »

If you have an existing 401k, you can roll that into an IRA. Otherwise you can open a deferred annuity (fixed or variable) that will let you invest taxable money in a tax deferred account. Here's a good blurb from Vanguard.

Code: Select all

Points about taxes:

    * The longer your money is invested and the higher your tax bracket, the more you can potentially gain from the annuity's tax deferral.
    * You'll owe taxes on earnings when you take money out, and you're taxed at ordinary income rates, which may be higher than capital gains rates.
    * You could have to pay a 10% federal penalty tax if you take withdrawals before age 59½.
    * You may have to pay a state premium tax on annuity purchases or withdrawals.
The key point is the first bullet. For me, 10 years was not enough of an incentive to mess around with an annuity. You gain a method of tax deferral but you also take on some insurance company risk. But you may have more to gain from an annuity if you choose. Do your research first!! Fidelity has an online annuity calculator that will give you an idea of the benefits of tax deferral over many years. (I would not recommend their annuities though, Vanguard's are the least expensive.)

Alternatively, if you have a substantial 401k/Roth already, you might fill those up with the most tax-inefficient investments (bonds, TIPs, REITs, etc.) and just use ordinary taxable investing to purchase tax efficient equities and muni bonds in a taxable account.

I would think that if you intend to stay abroad for many years, then the annuity might make sense. If you have plans to return within a few years, though, I'd forget about it and stick with tax efficient investing in a taxable account.
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