Search found 264 matches

by daviddem
Wed Feb 28, 2024 1:59 am
Forum: Non-US Investing
Topic: Interest on cash balance vs. short term bonds
Replies: 7
Views: 3425

Re: Interest on cash balance vs. short term bonds

First, the ETFs you use should be non-US domiciled (preferably Irish-domiciled for the stock ETF). This is to avoid US estate tax and benefit from the Irish income tax treaty with the US.

As was said above, the cash in your IBKR account counts as a US situs asset, so you should always keep the cash balance below $60k to avoid triggering US estate tax.

Also normally, your bond allocation should be in an intermediate term bond ETF, not short term. Short term may have served you well in 2022, but now is a good time to switch to an intermediate term ETF (possibly USD-hedged since you live in UAE). SGLU (sovereign only) and AGGU (aggregate) are solid choices.
by daviddem
Tue Feb 27, 2024 12:57 am
Forum: Non-US Investing
Topic: US shares trading on European exchanges
Replies: 3
Views: 3122

Re: US shares trading on European exchanges

TedSwippet wrote: Fri Feb 16, 2024 3:00 am It's a minefield, isn't it?
Indeed.

But the rule of thumb is simple: if the ISIN starts with US, walk away 🤣
by daviddem
Fri Feb 16, 2024 1:30 am
Forum: Non-US Investing
Topic: US shares trading on European exchanges
Replies: 3
Views: 3122

Re: US shares trading on European exchanges

To answer my own question: the ISIN of these shares starts with US, therefore it stands to reason that they are US situs assets.
by daviddem
Thu Feb 15, 2024 10:33 pm
Forum: Non-US Investing
Topic: US shares trading on European exchanges
Replies: 3
Views: 3122

US shares trading on European exchanges

Are shares of US companies trading on European exchanges considered US situs for US estate tax purposes?

For example Uber shares are trading on European exchanges under the UT8 ticker. Do these have some special status that exempts them from US estate tax? What about US dividend withholding tax?
by daviddem
Mon Feb 12, 2024 3:52 am
Forum: Non-US Investing
Topic: Interest-related dividends of US-domiciled ETFs are exempt of withholding tax
Replies: 2
Views: 1818

Re: Interest-related dividends of US-domiciled ETFs are exempt of withholding tax

DoctorE wrote: Sun Feb 11, 2024 5:33 pm I've also noticed this with IB! They refund the WHT on US bond ETFs in the following calendar year.
Indeed. I am pretty sure Alpaca does it too: see here, "What is an income reallocation?" section.

The question is whether European brokers like Saxo and Swissquote also do it. I sent inquiries, but no reply so far.
by daviddem
Sat Feb 10, 2024 10:28 pm
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

Okay, I finally received a reply, and it basically agrees with what they sent you, daviddem, with some additional details. Below are the three questions I asked, and IBKR's responses (words in CAPS are what I am adding now for clarity, since I can't post their responses in red): "I manage the estate processing team. Please see answers to your questions below in red regarding our *current* policies and procedures. QUESTION 1. If I have Ireland domiciled assets, will you require the heirs to wait until you receive a Transfer Certificate from the IRS, or will you release those assets without having to wait for it? ANSWER 1: We will release them. We do not require a transfer certificate to disburse non-US assets to heirs. QUESTION 2. If I...
by daviddem
Sat Feb 10, 2024 10:23 pm
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

Laurizas wrote: Sat Feb 10, 2024 12:06 pm 60 k at IB Ireland?
No, IB Ireland is different. OP is from Israel, so he is with IB LLC, not IB Ireland.

IB Ireland
  • Cash does NOT count as a US situs asset
  • US stocks and US-domiciled ETFs do count as US situs assets
IB LLC (= IB US)
  • Cash does count as a US situs asset
  • US stocks and US-domiciled ETFs do count as US situs assets
The above was confirmed by IB estate processing.

No matter which branch of IB you are with, keep your US situs assets below $60k
by daviddem
Fri Feb 09, 2024 9:35 pm
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

I asked them a different question on Jan 26 and I only received a reply today. So yes, just wait. If you are already a client, ask your question through the support message center. They have a category for estate processing.
by daviddem
Tue Feb 06, 2024 5:33 am
Forum: Non-US Investing
Topic: Bond ETF's (Belgium)
Replies: 4
Views: 1505

Re: Bond ETF's (Belgium)

Hello Daviddem, First, thank you very much for your answer. I'm new in investing, so don't always understand everything. F.e. what do you mean with second market and par ? What is a zero-cupon bond ? If I'm gonna buy individual bonds, am I not gonna pay too much broker fees ? Thank you Unlike normal bonds, zero-coupon bonds do not pay a coupon during their life. The way they work is that the issuer sells it to you at a discount and gives you back the nominal value (= par value = face value) at maturity. For example, company XYZ sells you the bond for EUR 900. You hold it for 3 years and after 3 years when the bond matures, company XYZ gives you EUR 1000. 900 is the issue value 1000 is the par/nominal value Now you may wish to sell that bon...
by daviddem
Mon Feb 05, 2024 10:33 pm
Forum: Non-US Investing
Topic: Bond ETF's (Belgium)
Replies: 4
Views: 1505

Re: Bond ETF's (Belgium)

One serious problem with Belgium and bond ETFs is the Reynders tax. You end up paying 30% tax on the gains of the ETF upon selling it, even if the gains were partially due to capital gains rather than coupon income. See here . One solution to avoid the tax is to purchase on the secondary market individual zero-coupon bonds which were issued at par or above par when interest rates were zero or negative. Since their price has dropped considerably after the ECB raised the interest rates, there is a tax-free profit to be made holding them to maturity, since the Reynders tax basis for zero-coupon bonds is the difference between the issue value and the par value, no matter the actual price you pay for it on the secondary market. This being said, ...
by daviddem
Mon Feb 05, 2024 1:12 pm
Forum: Non-US Investing
Topic: Huge performance difference between EUR & USD ETFs.
Replies: 5
Views: 1409

Re: Huge performance difference between EUR & USD ETFs.

It doesn't really matter in which currency you purchase the ETF. You are still buying the same underlying assets, just paying for them in a different currency and receiving that same currency when you sell it.

It's just like buying a house with Euros or Dollars. You still end up with the same house. And it's still worth the same price when you sell it, no matter whether the buyer pays you in Euros or in Dollars.
by daviddem
Mon Feb 05, 2024 10:02 am
Forum: Non-US Investing
Topic: Feedback from my private bank
Replies: 4
Views: 1860

Re: Feedback from my private bank

By the way, in this post, I have compiled links to my favourite bond educational resources, from basics to advanced, including a link about these fixed-term bond ETFs.
by daviddem
Mon Feb 05, 2024 9:23 am
Forum: Non-US Investing
Topic: Feedback from my private bank
Replies: 4
Views: 1860

Re: Feedback from my private bank

mrvntge18 wrote: Mon Feb 05, 2024 8:21 am Aren't fixed duration bonds what the banker proposed?
No, an individual bond's duration decreases as it approaches maturity. The same goes for those new(ish) bond ETFs which have a fixed term (which is what your banker proposed).

By contrast, in a traditional bond ETF, the fund manager rolls over the bonds to keep the fund's duration and average maturity more or less constant. For example an intermediate duration bond ETF will always have a 5-10 year duration.

Read the wiki article, it's explained in there.
by daviddem
Mon Feb 05, 2024 6:08 am
Forum: Non-US Investing
Topic: Feedback from my private bank
Replies: 4
Views: 1860

Re: Feedback from my private bank

It's true that you may want to vary your AA as time passes. Using two or more ETFs to do so gives you the flexibility to do so and wouldn't cost much more in commissions. As for the fixed-term bond ETF, I don't really see the point. As this wiki article explains, the only time you would want a fixed maturity is when you have a known liability at a known future date. The argument that the market anticipates rate cuts is a bit flawed imo. First, things can happen such as another war sending prices soaring again, which would prompt central banks not to cut rates or raise them instead. Second, if the anticipated rate cuts happen later than the market thinks, a fixed duration bond ETF stands to gain more than a declining duration one. And finall...
by daviddem
Sun Feb 04, 2024 1:01 am
Forum: Non-US Investing
Topic: Test 50% VWCE and 50% VAGF
Replies: 2
Views: 1376

Re: Test 50% VWCE and 50% VAGF

Curvo Backtesting for the European index investor

However it will only go back to 2019 because VAGF was only started in 2019.

I can't find a similar European aggregate bond ETF going much further.

Alternatively, use equivalent US funds in portfoliovisualizer. But you will most likely have to calculate the effect of the EUR-hedge yourself.

edit: or you could use SPDR Bloomberg Euro Aggregate Bond UCITS ETF, which goes back to 2009 and has similar returns as VAGF.
by daviddem
Sat Feb 03, 2024 11:48 pm
Forum: Non-US Investing
Topic: IBKR help [Dominican Republic]
Replies: 1
Views: 1173

Re: IBKR help [Dominican Republic]

You don't need a US-based bank account. You need to send money to one of the bank accounts of IBKR in the USA (if you want to fund your IBKR account in USD currency).

In your IBKR account, go to "make a deposit" and they will give you instructions. Then use these instructions to set up a wire transfer to the USA from your Dominican bank.

Alternatively I think you may be able to use Wise to fund your IBKR account
by daviddem
Sat Feb 03, 2024 10:49 am
Forum: Non-US Investing
Topic: Interest-related dividends of US-domiciled ETFs are exempt of withholding tax
Replies: 2
Views: 1818

Interest-related dividends of US-domiciled ETFs are exempt of withholding tax

Dividends of US-domiciled ETFs and mutual funds which are directly derived from the coupons of US bonds held by the fund (Treasurys and corporate alike) qualify as interest-related dividends and are therefore exempt of WHT: Permanent U.S. Withholding Tax Relief for Non-U.S. Investors in U.S. Mutual Funds The way this is supposed to work in practice is that your broker will still charge 30% (or treaty rate) WHT over the full dividend when you receive it, but once a year in Jan-Mar they will refund the part of the WHT that was charged on interest-related dividends and backdate it to the date you received the dividends. This is because the broker has to wait for the information from the fund provider to know what percentage of its dividends qu...
by daviddem
Fri Feb 02, 2024 9:15 pm
Forum: United Arab Emirates
Topic: Attention US NRAs: US situs tax on cash balance in excess of USD60,000
Replies: 6
Views: 6267

Re: Attention US NRAs: US situs tax on cash balance in excess of USD60,000

This thread caught my eye with the recent update. Canadians (and some other countries) may benefit from tax treaties with the US. An article published by the Canadian bank TD (Toronto Dominion) https://advisors.td.com/jonathan.grant/mediahandler/media/313720/USFederal_EstateTax-2020.pdf indicates that Canadian residents (US NRA) benefit from the very large exemption provided to resident aliens When are Canadians Subject to U.S. Estate Tax? Generally, Canadians may be subject to U.S. estate tax if, at the time of their death: • The value of their U.S. situs assets exceeds US$60,000; and • The value of their worldwide assets exceeds US$11.58 million (for 2020, adjusted for inflation annually). The second bullet point generally applies only t...
by daviddem
Wed Jan 31, 2024 9:23 pm
Forum: Non-US Investing
Topic: I don't understand why people go with global trackers
Replies: 21
Views: 6366

Re: I don't understand why people go with global trackers

phpwind0 wrote: Wed Jan 31, 2024 7:41 pm I had a similar line of thought as you, so I looked it up:

Vanguard FTSE All-World UCIT's TD is -0.02%

Vanguard FTSE All-World UCIT Accumulating's TD is 0.03 %

So the -0.02% is after paying out dividends.
The point is that the benchmark used to measure the performance of the fund is unfair, because the fund pays less tax in reality than the benchmark assumes. That makes it easy for the fund to beat its benchmark before the TER is taken into account.

Read this post

See also the last paragraph of this article, where the Xtracker fund manager mentions exactly this.
by daviddem
Wed Jan 31, 2024 10:17 am
Forum: Non-US Investing
Topic: I don't understand why people go with global trackers
Replies: 21
Views: 6366

Re: I don't understand why people go with global trackers

I had a similar question about VWRA ( TER of 0.22% ), and "CoffeeCakeAstronaut" on Reddit Bogglehead sub answered me: "The most important metric to assess a fund's cost is not the TER, but the tracking difference. The TD measures how much the fund deviates from its benchmark index after all costs. In the case of the Vanguard FTSE All-World, the average TD since its inception is 0.02%, meaning that the fund underperformed its index by just two basis points after deducting the 0.22% management fees. The fund achieves this through additional sources of income, such as securities lending. In contrast to the TER, the TD is not guaranteed. However, Vanguard's broad market-cap-weighted funds tend to have stable TDs. A cost of 0.22%...
by daviddem
Mon Jan 29, 2024 11:00 pm
Forum: Non-US Investing
Topic: I don't understand why people go with global trackers
Replies: 21
Views: 6366

Re: I don't understand why people go with global trackers

Another benefit of slicing&dicing (beyond plain TER savings) is the possibility to use synthetic replication for the US portion of the portfolio (for example with iShares S&P 500 Swap UCITS ETF, 0.05% TER). This avoids the 15% dividend withholding tax a physical replication Ireland-domiciled ETF pays on US dividends. With a 1.5% S&P500 dividend yield that would mean 0.225% annual savings on the US portion of the portfolio. Be aware that in some countries (for example Belgium), you could be in for a bad tax surprise with synthetic ETFs. Since some of these ETFs use Treasury's as collateral, their capital gains could be taxed at punitive fixed income rate. I don't know whether Belgium is an outlier in this matter or whether that ...
by daviddem
Mon Jan 29, 2024 1:02 pm
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

*Daviddem*, regarding a revocable trust: certainly a possible direction, and beneficial in many ways. But it does not seem to solve the specific issue that I am trying to address: possible delays in Interactive Brokers transferring funds to heirs until it receives a Transfer Certificate from the IRS. Am I correct in that? A revocable trust would most likely not help with that. However, I am confident that, in the current state of things, if you follow the simple usual precautions about Irish ETF and low cash balance, IBKR will not require your heirs to obtain an IRS transfer certificate. This may change, for example if the IRS starts insisting that US brokers obtain a transfer certificate for all NRA accounts, regardless of what's in them....
by daviddem
Sun Jan 28, 2024 5:17 am
Forum: Non-US Investing
Topic: I don't understand why people go with global trackers
Replies: 21
Views: 6366

Re: I don't understand why people go with global trackers

The TER of European index funds is generally higher than the TER of an equivalent US-domiciled index fund. However, unless your country of residence has an income tax treaty with the US, you pay 30% withholding tax on the dividends of US-domiciled funds, whereas Irish domiciled index funds only pay 15% on the dividends of US stocks, thanks to the fact that Ireland has an income tax treaty with the US. First of all, this 15% difference in withholding tax more than makes up for the higher TER of the Irish-domiciled fund. More importantly, if you hold more than $60,000 in US-domiciled ETFs, your estate becomes liable for 26-40% US estate tax upon your death (and an administrative nightmare for your heirs to sort out with the IRS) - that is un...
by daviddem
Sun Jan 28, 2024 4:01 am
Forum: Non-US Investing
Topic: I don't understand why people go with global trackers
Replies: 21
Views: 6366

Re: I don't understand why people go with global trackers

The TER of European index funds is generally higher than the TER of an equivalent US-domiciled index fund. However, unless your country of residence has an income tax treaty with the US, you pay 30% withholding tax on the dividends of US-domiciled funds, whereas Irish domiciled index funds only pay 15% on the dividends of US stocks, thanks to the fact that Ireland has an income tax treaty with the US. First of all, this 15% difference in withholding tax more than makes up for the higher TER of the Irish-domiciled fund. More importantly, if you hold more than $60,000 in US-domiciled ETFs, your estate becomes liable for 26-40% US estate tax upon your death (and an administrative nightmare for your heirs to sort out with the IRS) - that is unl...
by daviddem
Sun Jan 28, 2024 1:09 am
Forum: Non-US Investing
Topic: Danish bonds vs. globale bonds
Replies: 2
Views: 1454

Re: Danish bonds vs. globale bonds

Global bonds EUR-hedged for diversification, because you never know: Denmark could go bankrupt :D

However, taxation matters. In some countries, the income and capital gains from national bonds are not taxed the same as other bonds or bond ETFs. Also in some countries, it is better to use zero coupon bonds to optimise taxation.

Here are some websites dedicated to investing in Denmark, maybe they'll have the answer to taxation there:

https://www.reddit.com/r/dkfinance/
https://www.frinans.dk/
http://rigdom.blogspot.com/
by daviddem
Sat Jan 27, 2024 8:57 pm
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

Have you consider holding your assets through a corporate account? Depending on your jurisdiction it might be easier to change ownership of the company and avoid all the trouble with banks and brokers. It may help but the corporation itself must also go through the probate process of the country of residence of the deceased, since the corporation is an asset that belonged to the deceased. The only real way to remove assets from an estate and avoid probate is via a revocable trust. If the country in question recognises trusts / has trust law, then it's relatively easy and cost-effective (if you do not use a professional trustee). Israel has a trust law, so that may be an avenue for OP to research. Basically, he would create a revocable trus...
by daviddem
Sat Jan 27, 2024 3:17 am
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

Laurizas wrote: Sat Jan 27, 2024 3:01 am
There is - if one sells, there is no need to deal with IB and IRS anymore. Ofcourse, depending on tax regime, it could be a taxable event.
As I said above, dealing with IB upon the death of the account holder is not more complicated than dealing with the local bank or brokerage accounts of the deceased.

And as I also said above (confirmed by IB estate processing), there is no dealing with the IRS as long as the deceased does not have more than $60k of US-situs assets in his estate.
by daviddem
Fri Jan 26, 2024 9:37 pm
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

even with no taxes owing at all, heirs would not be able to gain access to the funds for a year or more! Ways to avoid that: 1) make a joint account; 2) give logins to heirs. After death the equities are sold, money transferred to dead's person bank account and is divided as required. Except the dead person's bank account will also be frozen upon his death, until the succession has been processed. There is no real reason to sell everything. The IB account will receive the same treatment as any other bank account of the deceased person. Having a joint account may help though. Rules differ from country to country for the treatment of a joint account upon the death of one of the holders. I am not sure what IB's procedure is in that case. It m...
by daviddem
Fri Jan 26, 2024 12:56 pm
Forum: Non-US Investing
Topic: ETF retirement index funds - eager to hear advice
Replies: 9
Views: 3602

Re: ETF retirement index funds - eager to hear advice

Here is a piece by bankeronwheels suggesting to limit your gold allocation to 5-15%, if any. Most bogleheads model portfolios do not have a gold allocation.

Here is a video by Ben Felix about gold as an investment or hedge.

VWRA already holds 60% us equities and is already heavy on tech. If you add S&P 500 and/or CNDX, you will be overweighing further towards US and tech. Just be aware that it would basically a country and sector bet, maybe driven by the overperformance of these country and sector in recent decades.

But honestly, try to pay off that mortgage first, or at least half of it. 7% is a lot.
by daviddem
Fri Jan 26, 2024 10:00 am
Forum: Non-US Investing
Topic: Tax advantage Interactive Brokers vs Neobrokers
Replies: 1
Views: 1374

Re: Tax advantage Interactive Brokers vs Neobrokers

Well first it's an advantage to get to keep the cash for 6 extra months: that cash can earn interest for you instead of earning it for the broker.

Second, you need to compare the fees of your neobroker to the IBKR fees. Are they cheaper than IBKR?

If your neobroker fees are not cheaper than IBKR's then I would stay with IBKR. You are already used to file your tax returns yourself, so I suppose it's not too much hassle?
by daviddem
Fri Jan 26, 2024 7:48 am
Forum: Non-US Investing
Topic: Government bonds or Aggregate bonds?
Replies: 13
Views: 2754

Re: Government bonds or Aggregate bonds?

tre3sori wrote: Fri Jan 26, 2024 5:36 am Hard (impossible?) to figure out EUR/USD exchange rate effects from the second chart.
Better? (yes I know, one of them is distributing but the chart shows the return with dividends reinvested). Returns are in USD.

Image
by daviddem
Fri Jan 26, 2024 4:51 am
Forum: Non-US Investing
Topic: Government bonds or Aggregate bonds?
Replies: 13
Views: 2754

Re: Government bonds or Aggregate bonds?

Here are two charts that provide a handy comparison between sovereign bonds ETFs, corporate bonds ETFs and aggregate bonds ETFs in 2008 and 2020

Image

Image
by daviddem
Fri Jan 26, 2024 1:54 am
Forum: Non-US Investing
Topic: ETFs and Index Fund currency question
Replies: 2
Views: 1416

Re: ETFs and Index Fund currency question

Forgive me for what might seem such a basic question but I would like to know why ETFs (e.g. VUSA) on the Vanguard platform are shown on the graphs in dollars and the Index Funds are shown in pounds. Are there any differences that I should know about with regards to currency between them? Few links for OP to better understand ETF currencies. It is important to distinguish ETF trading currency, ETF denomination currency and ETF underlying assets currency exposure. The latter is the only one that matters (except for currency-hedged ETFs). JustETF: ETF currency risk: How to handle it Bogleheads wiki: Currency risk for non-US investors Bogleheads wiki: Non-US investors and ETF currencies Each ETF page on justETF has a "stock exchange"...
by daviddem
Fri Jan 26, 2024 1:46 am
Forum: Non-US Investing
Topic: Government bonds or Aggregate bonds?
Replies: 13
Views: 2754

Re: Government bonds or Aggregate bonds?

Pensionisten2024 wrote: Fri Jan 26, 2024 12:57 am If corporate bonds have equity risk. Why have corporate bonds? Why not just have more stocks?
He meant that in the sense that corporate bonds are more correlated to equities than sovereign bonds are, not in the sense that corporate bonds carry as much risk as equities.
by daviddem
Thu Jan 25, 2024 10:28 pm
Forum: Non-US Investing
Topic: ETF retirement index funds - eager to hear advice
Replies: 9
Views: 3602

Re: ETF retirement index funds - eager to hear advice

Country of residence: Thailand International lifestyle: Hopefully I won't need to change the country Age: 44 this year in May Desired asset allocation: 100% stocks but not sure if some bonds need to be added Currency: USD Emergency funds: 1 year Debt: mortgage 7% annual interest rate next 26 years. The property costed $76000 State pension: around $150 Current retirement assets none Amount for initial investment: $28000 Ready to contribute monthly: $300 - $500 At that rate, I would pay off the mortgage first VWRA pretty much meets your requirement for 60% US equities Bonds are probably not a bad proposition right now (unless inflation picks up again and central banks continue hiking interest rates). You could allocate 20% to bonds, and you ...
by daviddem
Thu Jan 25, 2024 12:34 pm
Forum: Non-US Investing
Topic: Begginer investing 1 share/month Young man Europe
Replies: 7
Views: 1836

Re: Begginer investing 1 share/month Young man Europe

Uvell wrote: Thu Jan 25, 2024 12:24 pm Damn, thank you very much! A lot of people are talking about VWCE but nobody is talking about VWRA is weird. Thank you very much!
VWCE and VWRA are exactly the same thing (exact same underlying assets). Only in the case of VWCE, you pay for that "thing" in Euros and in the case of VWRA, you pay for it in USD. And when you sell them, you receive Euros for VWCE and USD for VWRA.

It's just like buying a house: it doesn't matter if you pay for it in Euros or USD: it's still the same house and still worth the same value.
by daviddem
Thu Jan 25, 2024 11:45 am
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

You have to be residing in Europe to have a IBIE account. You can verify whether your account is with IB LLC by generating a pdf activity statement. If the address at the top of the statement says "Interactive Brokers LLC, Two Pickwick Plaza, Greenwich, CT 06830" then you are with IB LLC.

One handy way to keep your cash balance in your IB LLC account under $60k is to invest the cash in a non US domiciled short-term money market mutual fund or ETF. Not only this will shelter the cash from US estate tax, but it will also yield more interest than IB would give you. That's what I do.
by daviddem
Thu Jan 25, 2024 11:19 am
Forum: Non-US Investing
Topic: Federal estate tax exemption of $13.61M applicable for Trusts wherein trustees are NRA?
Replies: 11
Views: 2431

Re: Federal estate tax exemption of $13.61M applicable for Trusts wherein trustees are NRA?

So both spouse/myself are Indian Citizens. Our daughter is the primary beneficiary and she is a US citizen. India does not have an estate tax treaty with US. The assets in US based financial institutions are more than $60K for each of our RSU's, brokerages and bank savings/certificates. This does not include 401K (Pre tax, After Tax via Mega backdoor) for both of us and each of three sub accounts are also above the NRA exemption limits. We also have HSA though that's under the limit. I understand that $60K limit is not by individual account type but stating it as some accounts may be easier to move out of US compared to others I'm reading upon IBKR and hoping to move my holdings out of US to the Ireland domiciled funds - especially the acc...
by daviddem
Thu Jan 25, 2024 10:50 am
Forum: Non-US Investing
Topic: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?
Replies: 19
Views: 4075

Re: Do US brokerages demand an IRS Transfer Certificate before releasing funds from an estate?

I can't speak for other US brokerages, but for Interactive Brokers, it has been confirmed to myself and others by IB's estate processing department that, as long as they are satisfied that the account does not hold in excess of $60k of US situs assets, they do not require an IRS transfer certificate to release the account to the heirs. See copies of two emails below, including one from the head of IB estate planning department. Note 1: your cash balance in a IB LLC account does count towards the $60k limit. Your cash balance in a IBIE account does not count towards the $60k limit (also confirmed by IB estate processing). US-domiciled ETFs, mutual funds and stocks of US corporations always count as US situs assets. Note 2: IB estate processi...
by daviddem
Thu Jan 25, 2024 3:41 am
Forum: Non-US Investing
Topic: Government bonds or Aggregate bonds?
Replies: 13
Views: 2754

Re: Government bonds or Aggregate bonds?

It's a trade-off. Aggregate bonds (which include about 60% sovereign debt and 40% corporate debt) have a slightly better yield. However, sovereign debt typically holds up better in a crisis than corporate debt does, so in theory, it acts as a better hedge to falling stock prices in difficult times. 2020 is an example of such.

There is a good bond ETF guide on bankeronwheels, and part 2 and 4 cover your question.
by daviddem
Wed Jan 24, 2024 9:03 pm
Forum: Non-US Investing
Topic: Begginer investing 1 share/month Young man Europe
Replies: 7
Views: 1836

Re: Begginer investing 1 share/month Young man Europe

You don't have to do it monthly. If you do it for such small amounts, the transaction costs are going to eat up a lot in your returns. Just save it and do it every 6 months. Also do not buy the two ETFs every 6 months, because that doubles your transaction costs. If you want 80/20, just buy the stock one every 6 months for 2 years, then buy the bond one one time 6 months later.
by daviddem
Wed Jan 24, 2024 10:59 am
Forum: Non-US Investing
Topic: Federal estate tax exemption of $13.61M applicable for Trusts wherein trustees are NRA?
Replies: 11
Views: 2431

Re: Federal estate tax exemption of $13.61M applicable for Trusts wherein trustees are NRA?

You did not specify who the beneficiaries of your trust are. Are they US persons? Are there US-situs assets in it, and which kind? I believe: - once you become NRA's, your US trust will become a foreign trust (you are the trustees so substantial decisions can be made by non US persons) - your revocable trust will not shield the US-situs assets in it from US estate tax if there are in excess of $60k of US situs assets in your entire estate (within and without the trust) and you do not live in a country with a good estate tax treaty with the US. Basically, for US estate tax purposes, it's just as if the trust didn't exist and you directly owned all the assets in it. From this article : "Under US estate tax, the assets of the revocable tr...
by daviddem
Wed Jan 24, 2024 4:23 am
Forum: Non-US Investing
Topic: VUAA and VUSD
Replies: 2
Views: 1360

Re: VUAA and VUSD

Sardarafshar wrote: Wed Jan 24, 2024 3:55 am I would expect the price of VUAA which accumulates dividends to be higher than VUSD which distributes dividends. Is this an incorrect assumption because currently VUSD is more valuable than VUAA.
The price doesn't matter, it's the return over the long term that matters. Why? Because VUSD was launched in 2013 while VUAA was only launched in 2019. Plus VUSD initial share price in 2013 was 25, while VUAA initial share price in 2019 was 50. So you definitely cannot expect the prices to be the same today

To compare the returns, go to VUSD on justetf.com. Set the chart to include the reinvestment of dividends, then add VUAA to the chart for comparison. You will see that the returns are exactly the same since the inception of VUAA.
by daviddem
Wed Jan 24, 2024 4:14 am
Forum: Non-US Investing
Topic: Seeking Guidance on Currency Conversion for Retirement Funding with IBKR
Replies: 7
Views: 2142

Re: Seeking Guidance on Currency Conversion for Retirement Funding with IBKR

The way to remain compliant is to do your investing with IBKR. Win-win since they are by far the cheapest platform to do so.
by daviddem
Tue Jan 23, 2024 6:16 am
Forum: Non-US Investing
Topic: Need advice
Replies: 10
Views: 2303

Re: Need advice

Not sure in which country you found this offer, but for example in UAE, there are companies that solicit the public for funds with bond-like schemes and they promise 18-36% return and return of capital at the term. Examples are AIX and BlueChip . Seems AIX also offer their scheme in some European countries. They take your money and use it for high risk leveraged trades in FX, crypto, real-estate, commodities etc. They do not have a prospectus for their "bond" and when you ask them for their financial statements, they refuse to provide them and they send you examples of their successful trades instead. Not sure whether they are straight up Ponzi schemes or whether they are kinda legit (until their trades turn against them and they ...
by daviddem
Sun Jan 21, 2024 8:53 pm
Forum: Non-US Investing
Topic: Can't decide which ETF to use [Germany]
Replies: 6
Views: 1996

Re: Can't decide which ETF to use [Germany]

Whichever you choose, make sure its tax status says "30% tax rebate" in justetf.com. The Invesco one says "unknown" for German tax status. Maybe you can find this info in the prospectus of fact sheet though.

Be aware of German taxation of stock ETFs.
by daviddem
Thu Jan 18, 2024 9:56 pm
Forum: Non-US Investing
Topic: [Germany] IBKR and tax returns
Replies: 2
Views: 2138

Re: [Germany] IBKR and tax returns

I think it's the same for all other European countries. IBKR does not calculate, withhold and pay your taxes for you. You have to do so yourself. And sometimes it is better, because a) brokers and banks have been known to misapply tax rules (certainly has been the case in Belgium) and b) doing it yourself teaches you a deep understanding of how local taxes work, preventing you to make some mistakes and empowering you to tax-optimize your investments. Have you read the wiki section about investing from Germany ? Germany will kindly tax your dividends AND capital gains at a whooping rate of 26-29%... Also, as the wiki article says, make sure that the ETFs you hold are "German tax reporting", with the 30% "tax rebate", whic...
by daviddem
Thu Jan 18, 2024 9:20 pm
Forum: Non-US Investing
Topic: Accumulation phase vs bonds percentage
Replies: 5
Views: 2002

Re: Accumulation phase vs bonds percentage

2) 80/20 is a reasonable allocation for your age. 100% stocks would also be reasonable with a 30 years investment horizon if you can stomach the volatility, knowing that stocks overperform bonds in the long term. Currently, bonds are likely a better proposition than they were in the few years past. If/when central banks lower interest rates, bond prices will rise. So I'd start with 80/20 and observe for starters. If you want to become more aggressive later, or try and take advantage of a market crash by selling your bonds and buying stocks, then consider it at the time. a) They are very similar but they do not track exactly the same index. The Vanguard one is "float adjusted and scaled". 'Float adjusted' means, the index does not ...
by daviddem
Wed Jan 17, 2024 10:35 am
Forum: Non-US Investing
Topic: Liquidity in VHVE+VFEA vs VWRA
Replies: 4
Views: 1486

Re: Liquidity in VHVE+VFEA vs VWRA

Brokers do not need to find liquidity for thinly traded ETFs, as ETF shares can be created or redeemed on demand by authorized participants (APs). This is unlike traditional shares of a single company. The most important factor affecting an ETF liquidity is the liquidity of the underlying holdings, followed by competition between market makers, followed by the trading volume of the ETF. Instead of looking at volume, compare the bid/ask spread of the ETF of interest to that of a very liquid ETF like VWRA. That is a much better proxy to ETF liquidity than trading volume alone is. ETF liquidity: what you need to know ETF Liquidity: What It Is and Why It Matters This being said it is still true that the bid/ask spread can be somewhat tighter fo...