Seeking advice for expat: Investment plan and asset allocation

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Topic Author
Dion
Posts: 3
Joined: Mon Mar 23, 2020 8:21 pm

Seeking advice for expat: Investment plan and asset allocation

Post by Dion » Tue Mar 24, 2020 6:56 pm

Dear Bogleheads,

I’m just new on the forum and looking to learn a lot the coming period :happy . I’m looking for some advice and recommendations on my investment plan. I do not have a specific goal in mind, but I'm thinking for retirement. I just want to put money to work for me.

Here some details:
Country of residence: Colombia
International Lifestyle: At the moment I’m thinking to stay in this paradise all my life, however it can change….
Currency: I don’t know. I earn in EUR. My monthly contributions will also be in EUR. However I can convert it to USD. I’m open to that. I did not yet pick a broker, but due to my international lifestyle I’m thinking of Interactive Brokers.
Emergency funds: At the moment 55 months. However I’m going to reduce this to 12 months. The surplus will be going to the investment portfolio.
Debt: None yet. I’m in the process to get a mid-high five figures loan on a 1,48% interest per year. This and some of my savings is the basis for my investment portfolio.
Age: 27. My horizon is around 40/45 years.
Desired Asset allocation: I’m not sure. That’s why I’m seeking advice. I’m leaning towards precious metals ETFs and stocks ETFs. I want to go ‘aggressive’ as I have quite some years ahead of me. I think that is the way to go in this crash. Over the years when I turn 35/45/55 etc. I’m going to invest more conservative. I am open to invest in any country, I'm not restricted to a country whatsoever.
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Current portfolio: I’m already in crypto (low-five figures) (I’m not looking to invest more).
New portfolio: High five-figures to invest.
Monthly attribution: depends as I want to emphasize on the growth of my business. At least I’m thinking of a monthly contribution of 400,- EUR. If I don’t see good investments for my business than everything minus personal expenses will go to the new portfolio.
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Questions:
1. Does anybody know about tax benefits/accounts I can apply for, as a Dutch expat living in Colombia?

2. As we need to keep the portfolio simple and cost low, I’m looking to invest in 3 or perhaps 4 ETFs. I believe in the American economy so I would like to follow the S&P500, or perhaps Russel or one of those others (recommendations are welcome :happy ). Besides that I want to go for precious metals as they did quite well after the 2008 crash and it is a hedge against stocks. I do not like bonds (yet) as the return is quite low in my opinion. So using metals, I can be diversified as well. Does this reasoning make sense? I'm thinking of the following asset classes/ ETFs:
- iShares Core S&P 500 UCITS ETF (0.07%) (Accumulating) (Irish, so only 15% WHT)
- Precious Metals (any recommendations)? Maybe one in Gold and one in Silver? Or a basket ETF?
- All world ETF? Or maybe a REIT?

I’m looking for a high performing diversified aggressive portfolio. I can take some losses now, as I think in 5 or 10 years we are higher than where we are now. What are your recommendations and ideas? Does anybody have ideas on percentages for the asset allocation?

3. I think we have not found the bottom in the stock market yet. So I’m leaning more towards precious metals now, and gradually do some profit taking along the way and invest more in the S&P500. What do you think of such a strategy? This would have been quite profitable after the 2008 crash right?

4. Besides this, I’m thinking to do some Dollar-cost-averaging along the way. I’m thinking of a period of 6 months or so. What are your ideas on that?

5. I’m thinking to choose Interactive Brokers as brokerage firm. They have a wide range of ETFs, low fees and are expat-friendly. What are your opinions on IB for someone like me?

Thank you so much! Every response will be greatly appreciated! Any questions, please let me know :sharebeer

glorat
Posts: 466
Joined: Thu Apr 18, 2019 2:17 am

Re: Seeking advice for expat: Investment plan and asset allocation

Post by glorat » Tue Mar 24, 2020 11:13 pm

Welcome to the forum! There will be some harsh thoughts coming! Don't shoot me :sharebeer
Dion wrote:
Tue Mar 24, 2020 6:56 pm

Debt: None yet. I’m in the process to get a mid-high five figures loan on a 1,48% interest per year. This and some of my savings is the basis for my investment portfolio.
Do you mean to borrow to invest? a 1.48% loan is an extremely high drag to your earnings, not to mention the risk of being leveraged.
Dion wrote:
Tue Mar 24, 2020 6:56 pm
2. As we need to keep the portfolio simple and cost low, I’m looking to invest in 3 or perhaps 4 ETFs. I believe in the American economy so I would like to follow the S&P500, or perhaps Russel or one of those others (recommendations are welcome :happy ).
The American economy has done so well it is about 55% of the global index trackers. IMHO, unless you have a crystal ball, a global index tracker is a good balance between US exposure and international diversification.
Dion wrote:
Tue Mar 24, 2020 6:56 pm
Besides that I want to go for precious metals as they did quite well after the 2008 crash and it is a hedge against stocks.
Red flag: Past performance doesn't predict future performance
Dion wrote:
Tue Mar 24, 2020 6:56 pm
I do not like bonds (yet) as the return is quite low in my opinion. So using metals, I can be diversified as well. Does this reasoning make sense?
Bonds have a low intrinsic fixed income return but metals have a zero intrinsic fixed income return. And higher volatility. IMHO, the only argument for holding them is a diversification argument, not a returns argument.
Dion wrote:
Tue Mar 24, 2020 6:56 pm
I'm thinking of the following asset classes/ ETFs:
- iShares Core S&P 500 UCITS ETF (0.07%) (Accumulating) (Irish, so only 15% WHT)
- Precious Metals (any recommendations)? Maybe one in Gold and one in Silver? Or a basket ETF?
- All world ETF? Or maybe a REIT?
All world ETFs are generally recommended to the non-US community. They already included REITs and the S&P in sizeable chunks. That would save you from bothering with two extra ETFs
Dion wrote:
Tue Mar 24, 2020 6:56 pm
I’m looking for a high performing diversified aggressive portfolio. I can take some losses now, as I think in 5 or 10 years we are higher than where we are now.

What are your recommendations and ideas? Does anybody have ideas on percentages for the asset allocation?
An aggressive portfolio should be held for at least 10 years, if not 20 if you want to have confidence in seeing gains. Go to something like https://portfoliocharts.com to see what I mean. It's a good site for testing your real risk tolerance. There's a non-trivial chance your portfolio will still be down after 5-10 years.
Dion wrote:
Tue Mar 24, 2020 6:56 pm
3. I think we have not found the bottom in the stock market yet. So I’m leaning more towards precious metals now, and gradually do some profit taking along the way and invest more in the S&P500. What do you think of such a strategy? This would have been quite profitable after the 2008 crash right?
Red flag: Using past performance to predict the upcoming future to drive your strategy.
Dion wrote:
Tue Mar 24, 2020 6:56 pm

4. Besides this, I’m thinking to do some Dollar-cost-averaging along the way. I’m thinking of a period of 6 months or so. What are your ideas on that?
Sure
Dion wrote:
Tue Mar 24, 2020 6:56 pm

5. I’m thinking to choose Interactive Brokers as brokerage firm. They have a wide range of ETFs, low fees and are expat-friendly. What are your opinions on IB for someone like me?
I use them happily
Dion wrote:
Tue Mar 24, 2020 6:56 pm
Thank you so much! Every response will be greatly appreciated! Any questions, please let me know :sharebeer
As for general advice, I'm a proponent of a simple 2 ETF portfolio of global equities and global bonds, allocated appropriately to your risk tolerance.

Topic Author
Dion
Posts: 3
Joined: Mon Mar 23, 2020 8:21 pm

Re: Seeking advice for expat: Investment plan and asset allocation

Post by Dion » Wed Mar 25, 2020 12:03 am

glorat wrote:
Tue Mar 24, 2020 11:13 pm
Welcome to the forum! There will be some harsh thoughts coming! Don't shoot me :sharebeer
Haha happy to hear them! That's how I learn! Thanks!
glorat wrote:
Tue Mar 24, 2020 11:13 pm
Do you mean to borrow to invest? a 1.48% loan is an extremely high drag to your earnings, not to mention the risk of being leveraged.
Correct. The debt will be paid back monthly with interest. I can opt to save monthly a bit more and put it into the market, or I borrow a lump sum and invest it (in these great times) now. My philosophy is that i can make more on the market than 1,48%. There is no need to sell though. If i'm down after 5 years, that's totally fine. I'm looking to sell in 40/45 years. Also after my monthly personal expenses, I can cover the monthly payback 2,5 times.
glorat wrote:
Tue Mar 24, 2020 11:13 pm
The American economy has done so well it is about 55% of the global index trackers. IMHO, unless you have a crystal ball, a global index tracker is a good balance between US exposure and international diversification.
Thanks! good to know! I will check some All world ETFs then. As well because you mentioned that they already include REITs and the S&P.
glorat wrote:
Tue Mar 24, 2020 11:13 pm
Red flag: Past performance doesn't predict future performance
I understand. However, it is an indicator right? All the time i'm looking at prices, yield, etc. etc. That is all based on the past. I do understand though that it doesn't give me any guarantees.
glorat wrote:
Tue Mar 24, 2020 11:13 pm
Bonds have a low intrinsic fixed income return but metals have a zero intrinsic fixed income return. And higher volatility. IMHO, the only argument for holding them is a diversification argument, not a returns argument.
With my investing horizon i can withstand high volatility right? Why there is no returns argument? Gold also an asset class which goes up and down.
glorat wrote:
Tue Mar 24, 2020 11:13 pm
An aggressive portfolio should be held for at least 10 years, if not 20 if you want to have confidence in seeing gains. Go to something like https://portfoliocharts.com to see what I mean. It's a good site for testing your real risk tolerance. There's a non-trivial chance your portfolio will still be down after 5-10 years.
Thanks!! I will check it out! If i'm down after 5/10 years that's totally fine, however I would like the returns to be higher then of course. Aggressive = high risk = high return right? (obviously on the long term)

Thanks Glorat! Really appreciate your help, ideas and advice!

DJN
Posts: 585
Joined: Mon Nov 20, 2017 12:30 am

Re: Seeking advice for expat: Investment plan and asset allocation

Post by DJN » Wed Mar 25, 2020 6:10 am

hi,
here is the link to the Bogleheads Wiki for non-US investors. Have a good read:
https://www.bogleheads.org/wiki/Outline ... _domiciles
DJN
Yah shure

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