Non-USA Domicles: Simplicity More Important

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Non-USA Domicles: Simplicity More Important

Post by galeno » Tue Jun 12, 2018 9:23 am

I feel really well regarding our 12 year quest as non-USA domiciles to invest like our USA-domicile Boglehead counterparts.

As far as portfolio costs go we are closing the gap.

Equities are equities. VT costs about 0.75%/yr. LSE:VWRD costs 0.49%/yr. For a USA-domicle VT costs abour 0.17%. I'd love to see Ireland Vanguard shave 0.15% from LSE:VWRD's ER= 0.25%.

The big savings are with bonds. Before we had access to Ireland domicled PASSIVE indexed bond ETFs. Our bond allocation consisted of USA FDIC brokered CDs and INDIVIDUAL USA treasuries. For some reason I don't understand, bank accounts and CDs in USA FDIC insured banks and INDIVIDUAL USA treasuries do not suffer the crippling 30% non-USA domiciled withholding tax. Our cost for holding BND is 0.65%. Outrageous.

Where we still need to catch up is transaction costs. Namely commissons and bid/ask spreads. But until we close the gap here the key is MINIMAL trading. SIMPLICITY is more important for us.

A USA-domicile using Vanguard, Schwab, or Fidelity can trade "in-house" ETFs commission free. The spreads are razor thin.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

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