New investor from Latvia

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Topic Author
Ormavi
Posts: 2
Joined: Wed Feb 12, 2020 3:43 pm
Location: Latvia

New investor from Latvia

Post by Ormavi » Wed Feb 12, 2020 4:00 pm

Hi Bogleheads,

happy to be here and first of all I want to say Thank You to everyone who spend their time for this amazing resource.


Country of Residence: Latvia (US income tax treaty - YES, US estate tax treaty - NO)
International Lifestyle: Will be happy to stay in Latvia
Currency: EUR
Emergency fund: Over 1 year
Debt: No
Age: 30-35
Desired Asset allocation: xx% stocks / xx% bonds (100% outside Latvia)

50,000eur first investment in 2020 with annually contribution of 15,000eur-50,000eur.
I have no investment in a market at this point.

My earnings are from business, plan is to keep working and invest mostly into it. Our(me and wife) annual household salary surplus is ~25,000eur (bonuses and dividends are not included). We own a flat where we live.

In Latvia you can register a brokerage account as tax-shelter, income tax is paid when money from a brokerage account transfers to a bank account, focus to keep everything invested on this account and start using it only after ~2050 as a main income source for us.

2020-2022 - 50,000 buy a land
2022-2025 - 75,000 house down payment
2050-2055 - retirement

Questions:
1. What stock/bond ratio you suggest ?
2. Please look into those three portfolio below would be amazing if you can share your thoughts.
3. Anything important that raise your attention and will be good for me to study/consider etc. ?

Portfolio 1:
Vanguard FTSE Emerging Markets UCITS ETF (VFEM) - 10%
Vanguard S&P 500 UCITS ETF (VUSA) - 50%
Vanguard FTSE 250 UCITS ETF (VMID) - 5%
Vanguard FTSE Developed Europe ex UK UCITS ETF (VERX) - 10%
Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF (VAPX) - 5%
Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Accumulating (VAGF) - 20%

Portfolio 2:
Vanguard FTSE All-World UCITS ETF USD Acc (VWCE) - 80%
Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Accumulating (VAGF) - 20%

Portfolio 3:
iShares Core MSCI EM IMI UCITS ETF (EIMI) - 15%
iShares Core S&P 500 UCITS ETF (CSPX) - 50%
iShares Core MSCI Europe UCITS ETF EUR (Acc) (IMEA) - 15%
iShares Core Global Aggregate Bond UCITS ETF (AGGH)- 20%


Thank you.

DJN
Posts: 554
Joined: Mon Nov 20, 2017 12:30 am

Re: New investor from Latvia

Post by DJN » Wed Feb 12, 2020 5:01 pm

Hi,
have a read of the following sections of Wiki for non-US investors:
https://www.bogleheads.org/wiki/Outline ... _domiciles
Best is to keep investigating and asking questions.
I would be more aligned with your second and third portfolios for what its worth.
DJN
Yah shure

JimBeam
Posts: 12
Joined: Wed Jan 29, 2020 3:06 am

Re: New investor from Latvia

Post by JimBeam » Wed Feb 12, 2020 5:19 pm

Hi Ormavi.
Ormavi wrote:
Wed Feb 12, 2020 4:00 pm
2020-2022 - 50,000 buy a land
2022-2025 - 75,000 house down payment
Why do you want to start investing this year if you're going to spend 125 000 EUR within next 5 years (which is a short term)? Or do you have these 125 k already secured in bank account or latvian government bonds?
As for retirement savings, portfolio no. 2 looks simple and effective.

xxd091
Posts: 128
Joined: Sun Aug 21, 2011 4:41 am
Location: UK

Re: New investor from Latvia

Post by xxd091 » Wed Feb 12, 2020 5:42 pm

Portfolio 2 is enough-cheap,simple and easy to understand -all you would ever need
A rough rule is your age in Bonds-one to bear in mind as you get older,have more money at risk and you are coming nearer retirement
With a portfolio like this in place you can now safely concentrate on matters more under you control-ie your job and making money to then invest
That’s it -stay the course and let the stock market and compound interest do the rest
xxd091

silverex
Posts: 91
Joined: Sun Jan 07, 2018 1:05 pm
Location: Vilnius, Lithuania

Re: New investor from Latvia

Post by silverex » Thu Feb 13, 2020 4:34 am

Portfolios #1 and #3 seem overly complicated. In #1, you can replace positions 2-5 with Vanguard FTSE Developed World UCITS ETF (USD) Accumulating (VGVF). In #3, you can replace 2-3 with iShares Core MSCI World (IWDA), and have a bit more diversification by doing this. Other than that, there is no big difference between the portfolios, except in complexity.

Bond ratio is entirely dependent on your risk appetite, find some risk calculators on the internet to find out your own.

Which broker do you plan to use?

Topic Author
Ormavi
Posts: 2
Joined: Wed Feb 12, 2020 3:43 pm
Location: Latvia

Re: New investor from Latvia

Post by Ormavi » Thu Feb 13, 2020 8:44 am

Thank you for helping out

- Money for a house are secured
- Interactivebrokers

Some questions:

Vanguard FTSE All-World UCITS ETF USD Acc has three options to buy it in USD, GBP or EUR, is there a difference really for me, if my income is in EUR ? My choice will be to buy it in EUR, does it affects me somehow in the future ?

When I move into a house and there is no need of apartment anymore, for my understandings of AA and my own investment plan for a life, I need to sold it and use money to buy stocks and bonds ?

Is there a difference where to open IBKR account USA, Europe or UK for example ? Base currency for account is EUR. I so far decided to open an account in USA, because of a stock/money guarantee up to 500k USD on a brokerage account in USA but in Europe it's up to 100k EUR for my knowledge.

DJN
Posts: 554
Joined: Mon Nov 20, 2017 12:30 am

Re: New investor from Latvia

Post by DJN » Thu Feb 13, 2020 10:31 am

Ormavi wrote:
Thu Feb 13, 2020 8:44 am
Is there a difference where to open IBKR account USA, Europe or UK for example ? Base currency for account is EUR. I so far decided to open an account in USA, because of a stock/money guarantee up to 500k USD on a brokerage account in USA but in Europe it's up to 100k EUR for my knowledge.
Hi,
you are unlikely to be able to open a US IBKR account. You will be asked for your place of residence.
In respect to the account guarantee that I think you are referring to, this is a bank guarantee and the broker / platform will not have this available. Your shares / etfs will be held by a third party and should be safe enough. If you hold cash with the platform you will get a much reduced guarantee.
DJN
Yah shure

silverex
Posts: 91
Joined: Sun Jan 07, 2018 1:05 pm
Location: Vilnius, Lithuania

Re: New investor from Latvia

Post by silverex » Thu Feb 13, 2020 4:20 pm

Ormavi wrote:
Thu Feb 13, 2020 8:44 am

Vanguard FTSE All-World UCITS ETF USD Acc has three options to buy it in USD, GBP or EUR, is there a difference really for me, if my income is in EUR ? My choice will be to buy it in EUR, does it affects me somehow in the future ?

When I move into a house and there is no need of apartment anymore, for my understandings of AA and my own investment plan for a life, I need to sold it and use money to buy stocks and bonds ?

Is there a difference where to open IBKR account USA, Europe or UK for example ? Base currency for account is EUR. I so far decided to open an account in USA, because of a stock/money guarantee up to 500k USD on a brokerage account in USA but in Europe it's up to 100k EUR for my knowledge.
You should buy ETF in EUR, because otherwise you'll be losing money to additional currency conversion when you buy (and also later again when you sell). The fund itself will have assets in various currencies, but that doesn't matter for you.

You cannot choose which IB entity you can open account with - as EU client you'll be using IB UK which currently acts as an introducing broker to IB US.

You can keep the apartment, or you can sell and invest the proceeds, it's entirely up to you and to your investment plan.

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