Portfolio covering the world for an Expat

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thimplicity
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Portfolio covering the world for an Expat

Post by thimplicity » Tue Feb 28, 2017 8:52 am

Good morning everybody,
as you can guess, I would like to receive your feedback and input on my portfolio concept. I am a German expat in the US for three years in total (2 more) and I would like to invest our money into different assets.

Please find the required information given below first:

Emergency funds: all good
Debt: we have a mortgage that will be paid of in 2 years
Tax Filing Status: Married Filing Jointly (one kid)
Tax Rate: 19.3% Federal, 4.8% State (based on my W-2 - my first tax is in the works)
State of Residence: NC
Age: 32
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation for bonds: treasury focusing on EURO states and US, corporate on large caps (50/50 split between corporate and treasuries)
Desired International allocation for stocks (covered entirely through ETFs):

    Europe: 24%
    North America: 26%
    Asia: 10%
    Emerging Markets: 26%
    Frontier Markets: 4%
    World Small Caps: 10%

The total portfolio will be in the low six figures. With the portfolio I want to further invest into retirement, but also build up general wealth for the future. As indicated above, we are from Germany and living in the US temporarily. It is not yet clear, whether we will go back on the planned date (beginning of 2019) or whether our stay will be extended. Due to my expat status, retirement activities are still covered by everything that is in Germany. I am trying to figure our, whether I qualify for an IRA or a Roth IRA. Furthermore, I have understood that after five years of return, we will be "connected" to the US for tax purposes. The tax declaration makes a tax consultant for us.

In addition to the initial lump sum, I will be able to contribute approx. 1,500$ every month. I would like to invest and re-balance every 2-3 month.

Questions:
1. I would like to receive your recommendations on which ETFs to pick. I am totally used to ETFs in Germany, which are mostly not available here in the US. I would like to go for commission free ETFs at Schwab and Fidelity to keep costs low, as I will be buying on a regular basis.
2. I do not have any experiences with bonds, so some recommendations are welcome here as well :happy
3. Commodities and Real Estate: I am still undecided whether the portfolio should contain real estate (in the form of REITs) other than shares of real estate companies in the respective ETFs. Since we have a house in German, I am not sure if this would not look as a lump in the portfolio. Also here I am grateful for tips and opinions.
4. I have to deal more closely with the "US tax". So far I have understood that the "Capital Gains Tax" is 15%, as long as I hold the shares longer than one year.
5. Due to the high market level, I am unsure how much I should currently invest, since there can be / will be setbacks. Because of the investment horizons, this should not be too much, but it is a difference, whether one entered 2008 or 2011. Also here I am happy about comments and thoughts.

thimplicity
Posts: 10
Joined: Tue Feb 28, 2017 8:17 am

Re: Portfolio covering the world for an Expat

Post by thimplicity » Wed Mar 01, 2017 12:48 pm

no one?

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in_reality
Posts: 4081
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Re: Portfolio covering the world for an Expat

Post by in_reality » Fri Mar 03, 2017 10:34 pm

thimplicity wrote:Desired International allocation for stocks (covered entirely through ETFs):

    Europe: 24%
    North America: 26%
    Asia: 10%
    Emerging Markets: 26%
    Frontier Markets: 4%
    World Small Caps: 10%


Why this particular allocation?

thimplicity wrote: I am trying to figure our, whether I qualify for an IRA or a Roth IRA. Furthermore, I have understood that after five years of return, we will be "connected" to the US for tax purposes. The tax declaration makes a tax consultant for us.


I'm missing the relevance of being connected.

If you are in the States, you will be taxed on global income. After you leave, you will be taxed on US holdings (unless they are tax sheltered -- did you say Germany wouldn't tax US retirement accounts? Some countries do.

If you have US taxable earned income, then you will be IRA/ROTH eligible. Whether or not that makes sense depends on Germany's taxation I guess. Also, be aware of US estate tax. If your IRA/ROTH is in the US and over $60k, you will pay to transfer that to your spouse or anyone else (if you are a non-resident alien at the time). Germany may have a treaty mitigating that. Make sure to look into it.

thimplicity wrote:In addition to the initial lump sum, I will be able to contribute approx. 1,500$ every month. I would like to invest and re-balance every 2-3 month.

Questions:
1. I would like to receive your recommendations on which ETFs to pick. I am totally used to ETFs in Germany, which are mostly not available here in the US. I would like to go for commission free ETFs at Schwab and Fidelity to keep costs low, as I will be buying on a regular basis.


(US - all have super cheap ERs)
SCHB - US broad market (in theory 1-2500 but in practice about 200 stocks)
SCHX - #1-#749 top companies by market weight
SCHA - #750 -#2500 of companies by market weight

SCHF - Developed International large/mid caps (about 1200 companies)
SCHC - Developed International small caps (about 1800 companies)

SCHE - Emerging Large/Mid caps (835 companies)

thimplicity wrote:2. I do not have any experiences with bonds, so some recommendations are welcome here as well :happy


SCHZ is a fine overall bond fund. If you want to add more corporate bonds, Schwab's one source has a list of commission free ETFs. That includes frontier markets too but that is such a small part of the market, I don't know why you'd need to add them especially since they are frontier due to the investing environment (regulations etc.).

thimplicity wrote:3. Commodities and Real Estate: I am still undecided whether the portfolio should contain real estate (in the form of REITs) other than shares of real estate companies in the respective ETFs. Since we have a house in German, I am not sure if this would not look as a lump in the portfolio. Also here I am grateful for tips and opinions.


Commodities - no idea but I don't fear inflation as much as others.

REITS - will be held in market proportion already. You don't need to add them. Some like to overweight them of course.

thimplicity wrote:4. I have to deal more closely with the "US tax". So far I have understood that the "Capital Gains Tax" is 15%, as long as I hold the shares longer than one year.


Yes. Both now and after you leave. How will Germany tax the holdings? Inheritance tax?

thimplicity wrote:5. Due to the high market level, I am unsure how much I should currently invest, since there can be / will be setbacks. Because of the investment horizons, this should not be too much, but it is a difference, whether one entered 2008 or 2011. Also here I am happy about comments and thoughts.


Invest as much as you can. Even at high valuations, returns over 10 years are expected to be maybe 4-5% which is better than anything else. International stocks are not so high and consequently have higher expected returns -- so perhaps invest more internationally.
[60% US _ 26% DEV _ 14% EM] | (-16% LC _ +8% MC _ +8% SC) | [47% FND/VAL _ 40% MKT _ 7% MOM _ 6% REIT] | (+/- 5% or *25% rebalancing bands)

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in_reality
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Re: Portfolio covering the world for an Expat

Post by in_reality » Fri Mar 03, 2017 10:49 pm

Also, Fidelity is said to be not friendly to people not in the US (requiring them to close the account). [part of that is by law mutual funds aren't for non-US residents but ETFs are ok. Fidelity funds are generally mutual funds but they do have iShares ETFs.]

Schwab has a "international brokerage account" for non-us residents that lets you buy ETFs (like the ones I mentioned). It's very dependent on your country of residence as to whether you can open an account or not. You might want to ask what will happen to your account when you move back. Maybe they will switch you over to the international brokerage account or maybe they will just let you keep yours open.
[60% US _ 26% DEV _ 14% EM] | (-16% LC _ +8% MC _ +8% SC) | [47% FND/VAL _ 40% MKT _ 7% MOM _ 6% REIT] | (+/- 5% or *25% rebalancing bands)

thimplicity
Posts: 10
Joined: Tue Feb 28, 2017 8:17 am

Re: Portfolio covering the world for an Expat

Post by thimplicity » Thu Mar 16, 2017 12:45 pm

Thanks for all the tips and sorry for my later answers:

in_reality wrote:
thimplicity wrote:Desired International allocation for stocks (covered entirely through ETFs):

    Europe: 24%
    North America: 26%
    Asia: 10%
    Emerging Markets: 26%
    Frontier Markets: 4%
    World Small Caps: 10%


Why this particular allocation?


I have based this allocation based on the global GDP allocation. For now I have simplified it a little bit with the following ETFs:

    Vanguard Total Stock Market (30%)
    Vanguard FTSE Europe (28%)
    Vanguard FTSE Pacific (10%)
    Vanguard FTSE Emerging Markets (32%)

I will add Frontier and Small Caps later.


in_reality wrote:
thimplicity wrote: I am trying to figure our, whether I qualify for an IRA or a Roth IRA. Furthermore, I have understood that after five years of return, we will be "connected" to the US for tax purposes. The tax declaration makes a tax consultant for us.


I'm missing the relevance of being connected.

If you are in the States, you will be taxed on global income. After you leave, you will be taxed on US holdings (unless they are tax sheltered -- did you say Germany wouldn't tax US retirement accounts? Some countries do.

If you have US taxable earned income, then you will be IRA/ROTH eligible. Whether or not that makes sense depends on Germany's taxation I guess. Also, be aware of US estate tax. If your IRA/ROTH is in the US and over $60k, you will pay to transfer that to your spouse or anyone else (if you are a non-resident alien at the time). Germany may have a treaty mitigating that. Make sure to look into it.


I have decided to go for a normal brokerage account until it is clear, whether we weill go back to Germany in 2 years or whether we will stay significantly longer.

in_reality wrote:
thimplicity wrote:4. I have to deal more closely with the "US tax". So far I have understood that the "Capital Gains Tax" is 15%, as long as I hold the shares longer than one year.


Yes. Both now and after you leave. How will Germany tax the holdings? Inheritance tax?


I will clarify the German tax during this year. At least there is a double tax agreement between Germany and the US. As I will not be paying tax in Germany for the next two years, as I do not have income there, I can focus on the US tax for now.

in_reality wrote:
thimplicity wrote:5. Due to the high market level, I am unsure how much I should currently invest, since there can be / will be setbacks. Because of the investment horizons, this should not be too much, but it is a difference, whether one entered 2008 or 2011. Also here I am happy about comments and thoughts.


Invest as much as you can. Even at high valuations, returns over 10 years are expected to be maybe 4-5% which is better than anything else. International stocks are not so high and consequently have higher expected returns -- so perhaps invest more internationally.


I think the international tip is sufficiently reflected in my allocation listed above.

in_reality wrote:Also, Fidelity is said to be not friendly to people not in the US (requiring them to close the account). [part of that is by law mutual funds aren't for non-US residents but ETFs are ok. Fidelity funds are generally mutual funds but they do have iShares ETFs.]

Schwab has a "international brokerage account" for non-us residents that lets you buy ETFs (like the ones I mentioned). It's very dependent on your country of residence as to whether you can open an account or not. You might want to ask what will happen to your account when you move back. Maybe they will switch you over to the international brokerage account or maybe they will just let you keep yours open.


I am now wit TD Ameritrade and will switch to the respective best one for non-residents before we leave.

I have some more questions:
1. Most of our money is still in Germany. Do you see any risk (except the costs I have to bring it over) in bringing it all over and invest it? What about currency risks connected to that? I personally do not see the EURO value increasing in the next few years, but who knows.
2. I have bought all mentioned ETFs through an TD Ameritrade account (as most of them are commission free). At the same time I like the Schwab portal (I have an empty account there) better regarding functionality, information and research. Would you switch to Schwab or just keep both?
3. Is bond investing still a valid option with the Fed raising interest rates?
3. Do I have any chance of tax loss harvesting in case my ETFs do not perform? I read about the wash sale rule, which would mean I would need to either wait for 31 days or buy an alternative ETF for the time being. What would be alternative ETFs I would be allowed to legally buy without hitting the wash sale rule?

Thanks again!

thimplicity
Posts: 10
Joined: Tue Feb 28, 2017 8:17 am

Re: Portfolio covering the world for an Expat

Post by thimplicity » Sat Mar 18, 2017 7:24 pm

*push*

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in_reality
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Re: Portfolio covering the world for an Expat

Post by in_reality » Sat Mar 18, 2017 8:55 pm

thimplicity wrote:I am now wit TD Ameritrade and will switch to the respective best one for non-residents before we leave.


Interactive Brokers is another one to consider. I prefer Schwab, but IB is a good place to try if something changes and they not longer can accept residents of Germany.

thimplicity wrote:I have some more questions:
1. Most of our money is still in Germany. Do you see any risk (except the costs I have to bring it over) in bringing it all over and invest it? What about currency risks connected to that? I personally do not see the EURO value increasing in the next few years, but who knows.


No, there's no risk. What are the costs to bring it over? 1% exchange each way? I wouldn't do it if you are staying two years.

As for currency risks, your exposure is based on your underlying holdings. So it doesn't matter if you buy in Euro at a German Broker, or in USD at a US one or in Pounds at a UK one, you're currency exposure will be:

    Vanguard Total Stock Market (30%) - USD
    Vanguard FTSE Europe (28%) - EURO
    Vanguard FTSE Pacific (10%) - YEN, AUD, WON, ETC.
    Vanguard FTSE Emerging Markets (32%)
YUAN, TWD, ETC.

What's the downside to investing in Germany? German taxes? Can't you claim a credit for foreign taxes paid?

thimplicity wrote:2. I have bought all mentioned ETFs through an TD Ameritrade account (as most of them are commission free). At the same time I like the Schwab portal (I have an empty account there) better regarding functionality, information and research. Would you switch to Schwab or just keep both?


I would stay at TD Ameritrade since the funds you have are commission free there.
It's $4.95/trade for Vanguard funds at Schwab. People using Schwab often use Schwab's ETFs (or comparable mutual funds now that the price has dropped).

thimplicity wrote:3. Is bond investing still a valid option with the Fed raising interest rates?


Yes of course it is. The market could tank and you could lose your job and it'd be dandy to have bonds in that case. You have to pay attention to duration and understand that NAV loss from a rate hike will recover it time.

For you though, I am not sure about USD bonds. Expat investors usually keep fixed income in their expected retirement currency. It'd be difficult for you to do that (keeping bonds in Germany) and rebalance (if your money is in the US). So maybe you want to keep bonds and some holdings in Germany to rebalance if needed.

thimplicity wrote:3. Do I have any chance of tax loss harvesting in case my ETFs do not perform? I read about the wash sale rule, which would mean I would need to either wait for 31 days or buy an alternative ETF for the time being. What would be alternative ETFs I would be allowed to legally buy without hitting the wash sale rule?


Vanguard Total Stock Market --> SCHB (Schwab Broad Market) or ITOT (S&P Total Market)

Vanguard FTSE Europe and Vanguard FTSE Pacific --> combine into SCHF (Schwab Developed Markets) or VEA (Vanguard Developed Markets)

Vanguard FTSE Emerging Markets --> Vanguard switched indexed to include Chinese A shares, but no-one else has. It's now increasing it's Chinese holdings slowly and will eventually be 50%. The tax loss partners such as Schwab's SCHE or EEM or IEMG don't have the A shares and are now about 26%. (SCHE and EEM don't have small caps).
[60% US _ 26% DEV _ 14% EM] | (-16% LC _ +8% MC _ +8% SC) | [47% FND/VAL _ 40% MKT _ 7% MOM _ 6% REIT] | (+/- 5% or *25% rebalancing bands)

thimplicity
Posts: 10
Joined: Tue Feb 28, 2017 8:17 am

Re: Portfolio covering the world for an Expat

Post by thimplicity » Sun Mar 19, 2017 12:24 pm

Thanks a lot for your input!

in_reality wrote:
thimplicity wrote:1. Most of our money is still in Germany. Do you see any risk (except the costs I have to bring it over) in bringing it all over and invest it? What about currency risks connected to that? I personally do not see the EURO value increasing in the next few years, but who knows.


No, there's no risk. What are the costs to bring it over? 1% exchange each way? I wouldn't do it if you are staying two years.


The costs are pretty much exactly 1% currency conversion costs, yes. So would you move it or just leave it without having it invested? I got confused by "no risk, but would not do it" :happy

in_reality wrote:
What's the downside to investing in Germany? German taxes? Can't you claim a credit for foreign taxes paid?


German banks do now allow to have a German broker account as soon as you live in the US due to the fact that they will need to report to the US and this is too much of a burden for them, so since some years all German banks ask you to close your account as soon as you are in the US.

in_reality wrote:
thimplicity wrote:3. Is bond investing still a valid option with the Fed raising interest rates?


Yes of course it is. The market could tank and you could lose your job and it'd be dandy to have bonds in that case. You have to pay attention to duration and understand that NAV loss from a rate hike will recover it time.

For you though, I am not sure about USD bonds. Expat investors usually keep fixed income in their expected retirement currency. It'd be difficult for you to do that (keeping bonds in Germany) and rebalance (if your money is in the US). So maybe you want to keep bonds and some holdings in Germany to rebalance if needed.


I would like to only invest in bond ETFs with a global coverage and not in single bonds, so I will not need to pay attention to duration etc that much. Can you recommend any bond ETFs that balance risk and gain? I thought about bond ETFs covering bonds with intermediate duration

in_reality wrote:
thimplicity wrote:3. Do I have any chance of tax loss harvesting in case my ETFs do not perform? I read about the wash sale rule, which would mean I would need to either wait for 31 days or buy an alternative ETF for the time being. What would be alternative ETFs I would be allowed to legally buy without hitting the wash sale rule?


Vanguard Total Stock Market --> SCHB (Schwab Broad Market) or ITOT (S&P Total Market)

Vanguard FTSE Europe and Vanguard FTSE Pacific --> combine into SCHF (Schwab Developed Markets) or VEA (Vanguard Developed Markets)

Vanguard FTSE Emerging Markets --> Vanguard switched indexed to include Chinese A shares, but no-one else has. It's now increasing it's Chinese holdings slowly and will eventually be 50%. The tax loss partners such as Schwab's SCHE or EEM or IEMG don't have the A shares and are now about 26%. (SCHE and EEM don't have small caps).


Thanks! So I if one of my ETFs is reporting losses, I could sell it, directly change to the respective other ETF and do the same backwards without acting against the wash sale rule?

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in_reality
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Re: Portfolio covering the world for an Expat

Post by in_reality » Sun Mar 19, 2017 10:16 pm

thimplicity wrote:Thanks a lot for your input!

in_reality wrote:
thimplicity wrote:1. Most of our money is still in Germany. Do you see any risk (except the costs I have to bring it over) in bringing it all over and invest it? What about currency risks connected to that? I personally do not see the EURO value increasing in the next few years, but who knows.


No, there's no risk. What are the costs to bring it over? 1% exchange each way? I wouldn't do it if you are staying two years.


The costs are pretty much exactly 1% currency conversion costs, yes. So would you move it or just leave it without having it invested? I got confused by "no risk, but would not do it" :happy

in_reality wrote:What's the downside to investing in Germany? German taxes? Can't you claim a credit for foreign taxes paid?


German banks do now allow to have a German broker account as soon as you live in the US due to the fact that they will need to report to the US and this is too much of a burden for them, so since some years all German banks ask you to close your account as soon as you are in the US.


I assumed you could just keep it invested in Germany. So the questions is if you can earn more than the round trip 1% currency conversion cost. I assume you'd earn nothing in Germany (that even a bank deposit would be about zero OR can't you even do that).

Even using low expected future returns of 3% over inflation for US Stocks, it would seem to make sense. International is "expected" to return more too. [OK International is priced cheaply to encourage you to buy it, but that's because it's not a sure thing at the moment].

Yes, I probably would then.

in_reality wrote:
thimplicity wrote:3. Is bond investing still a valid option with the Fed raising interest rates?


Yes of course it is. The market could tank and you could lose your job and it'd be dandy to have bonds in that case. You have to pay attention to duration and understand that NAV loss from a rate hike will recover it time.

For you though, I am not sure about USD bonds. Expat investors usually keep fixed income in their expected retirement currency. It'd be difficult for you to do that (keeping bonds in Germany) and rebalance (if your money is in the US). So maybe you want to keep bonds and some holdings in Germany to rebalance if needed.


thimplicity wrote:I would like to only invest in bond ETFs with a global coverage and not in single bonds, so I will not need to pay attention to duration etc that much. Can you recommend any bond ETFs that balance risk and gain? I thought about bond ETFs covering bonds with intermediate duration


Some International bond funds such as BNDX are hedge to the USD. I am not sure that's what you want.

iShares seems to have a number of international non-hedged funds:
https://www.ishares.com/us/products/etf ... &fac=43515

EMB iShares J.P. Morgan USD Emerging Markets Bond ETF
IGOV iShares International Treasury Bond ETF
LEMB iShares Emerging Markets Local Currency Bond ETF
IAGG iShares Core International Aggregate Bond ETF
EMHY iShares Emerging Markets High Yield Bond ETF
GHYG iShares Global High Yield Corporate Bond ETF
ISHG iShares 1-3 Year International Treasury Bond ETF
CEMB iShares Emerging Markets Corporate Bond ETF
HYXU iShares International High Yield Bond ETF

I don't have good advice here.
Unhedged Global bonds will subject you to currency risk which will probably have a bigger impact on returns than coupon.

I think I would want to take risk in stocks and hold bonds that I can use to rebalance in a downturn - so reserve currencies.
IGOV might do that (doesn't have the US though) but I think you need to watch the duration. It's 7.87 yrs. Japan and Euro using countries are heavily represented so you probably should be prepared to hold it for the duration.

iShares Germany seems to have the same fund in EUN3 (not 100% sure though):
https://www.ishares.com/de/privatanlege ... &fac=43515

So if rates hiked and you lost NAV and you left the US, you could sell and buy back into the German fund to keep the same exposure and let the investment recover though dividend reinvestment like bond funds do.

Just thinking of the top of my head here.


in_reality wrote:
thimplicity wrote:3. Do I have any chance of tax loss harvesting in case my ETFs do not perform? I read about the wash sale rule, which would mean I would need to either wait for 31 days or buy an alternative ETF for the time being. What would be alternative ETFs I would be allowed to legally buy without hitting the wash sale rule?


Vanguard Total Stock Market --> SCHB (Schwab Broad Market) or ITOT (S&P Total Market)

Vanguard FTSE Europe and Vanguard FTSE Pacific --> combine into SCHF (Schwab Developed Markets) or VEA (Vanguard Developed Markets)

Vanguard FTSE Emerging Markets --> Vanguard switched indexed to include Chinese A shares, but no-one else has. It's now increasing it's Chinese holdings slowly and will eventually be 50%. The tax loss partners such as Schwab's SCHE or EEM or IEMG don't have the A shares and are now about 26%. (SCHE and EEM don't have small caps).


Thanks! So I if one of my ETFs is reporting losses, I could sell it, directly change to the respective other ETF and do the same backwards without acting against the wash sale rule?[/quote]

Yes. Do brush up on tax loss harvesting though. The above should be fine. Remember the new fund can't be substantially identical, and if you buy shares in an IRA or some other account, that you can trigger the wash sale, or dividend reinvestment can trigger it...
[60% US _ 26% DEV _ 14% EM] | (-16% LC _ +8% MC _ +8% SC) | [47% FND/VAL _ 40% MKT _ 7% MOM _ 6% REIT] | (+/- 5% or *25% rebalancing bands)

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in_reality
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Re: Portfolio covering the world for an Expat

Post by in_reality » Sun Mar 19, 2017 10:33 pm

And more about bonds...

Really why pay 1% each way to convert money to invest in bonds for two years-- especially Gov. bonds that pay very little if anything in Japan and several Euro nations.

You might just keep that money in EURO (or is there any way to get anything on it in Germany), and use that to rebalance if stocks fall.

You can't but the German version of iGov (which is domiciled in Ireland) while you are in the states (Interactive Brokers would let you do it but ...) because as a US resident you must hold US domiciled funds or face PFIC filing requirements and taxes. All's I have ever heard is just don't ever go that route so can't say how bad it is.

Another option might be to buy individual German Gov. bonds at Interactive Brokers. AFAIK, you can hold more than one currency. You can buy US Vanguard funds for stocks and individual German Gov. bonds (which I assume credit wise are solid but that's my assumption). When you go back to German you could keep your bonds and maybe the stocks even. The thing to watch out for would eventually be estate taxes (there might be a treaty but you have to be careful).

Final thought:
If I knew I was investing in the US for a short time, and would likely sell before going back to Germany, I would keep my FI in long duration German bonds. They will probably suffer NAV as rates rise, and you could harvest that loss to offset your (hopefully stock gains). You face dividends on the bond coupons of course, but then that would add to your basis.

Schwab probably gives you access to the local German market in EURO too. Not sure about bonds or costs. Interactive Brokers is generally cheap if you have more than $100k there or $10/month minimum fee if you don't. Interactive Brokers isn't very helpful and caters to more experienced traders but there are some webinars explaining things I think. Also, as stated once you sell US holding at IB, you could easily then buy Ireland domiciled funds (Vanguard or iShares) when you move back. Not sure if you have to do that though. Depends in inheritance tax issues. Your currency exposure doesn't change -- if you use USD to buy Canadian stocks your exposure is CAD. If you use EURO to buy Canadian stocks your exposure is CAD.
[60% US _ 26% DEV _ 14% EM] | (-16% LC _ +8% MC _ +8% SC) | [47% FND/VAL _ 40% MKT _ 7% MOM _ 6% REIT] | (+/- 5% or *25% rebalancing bands)

thimplicity
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Joined: Tue Feb 28, 2017 8:17 am

Re: Portfolio covering the world for an Expat

Post by thimplicity » Mon Mar 20, 2017 3:16 pm

Thanks again for all the tips and tricks.

I think I will leave the money in Germany that I would have invested in bonds and would have kept as cash (30% of my portfolio). The rest I will move over to the US. Before that I will check whether interactive brokers does allow me to open an account on their German side. That would be optimal. The rest of the money I would rather invest in some fixed deposit until we get back.

One general question to your bonds comment: Why would you recommend to buy hedged bonds? Are international bonds not "hedged", as they cover bonds from international currencies just like ETFs are?

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in_reality
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Re: Portfolio covering the world for an Expat

Post by in_reality » Mon Mar 20, 2017 5:25 pm

thimplicity wrote:Thanks again for all the tips and tricks.

I think I will leave the money in Germany that I would have invested in bonds and would have kept as cash (30% of my portfolio). The rest I will move over to the US. Before that I will check whether interactive brokers does allow me to open an account on their German side. That would be optimal. The rest of the money I would rather invest in some fixed deposit until we get back.

One general question to your bonds comment: Why would you recommend to buy hedged bonds? Are international bonds not "hedged", as they cover bonds from international currencies just like ETFs are?


You are describing unhedged - exposure to a variety of currencies. Hedged is when all the bonds are tied to the USD, so you have only USD exposure (but are holding German, Japanese etc) bonds.

By the, I think you'd open with a US IB or Schwab account. That can they give you exposure to local markets in local currencies. You light try Schwab first.

Just remember any funds (ETFs, mutual funds) must be US domiciled. Individual stocks or bonds don't. Or PFIC headache time.
[60% US _ 26% DEV _ 14% EM] | (-16% LC _ +8% MC _ +8% SC) | [47% FND/VAL _ 40% MKT _ 7% MOM _ 6% REIT] | (+/- 5% or *25% rebalancing bands)

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