First 'indipendent" portfolio

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Topic Author
carminuccio
Posts: 4
Joined: Fri Jul 31, 2020 5:34 am

First 'indipendent" portfolio

Post by carminuccio » Fri Jul 31, 2020 5:54 am

Hi Guys!

Long-time reader, finally I registered to the forum and ready to strive with you!

Short background:
- EU citizen, expat in Dubai, employed.
- No debts, no properties nor car (rented through employer allowance).
- I have a Sarwa (40k USD) account since 1.5yrs, and opened a separate indipendent IB account (4k USD) which I want to focus on to become my main investment portfolio.

I admit I started unconsciously the IB account thinking I knew what I was doing, but freedom kind of "tricked" me into expanding the portfolio more than necessary. So far I invested in:
- VTI 47%
- BND 15%
- FB (stock) 14%
- VNQ 12%
- SPCE (stock) 7%
- IEFA 3%
- DAL (stock) 2%

I would like to definitely reduce the number of positions, and exchange the VTI/BND/IEFA with Ireland domiciled funds in USD tracking S&P500, with the same expense ratio, and accumulating (which I guess is the best solution for my situation).

What you think is the best strategy and the best ETFs to invest with? I made a research on JustETF and found CSSPX as best match.

Any suggestion?

Thanks in advance for your help!

TedSwippet
Posts: 2991
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: First 'indipendent" portfolio

Post by TedSwippet » Sat Aug 01, 2020 4:46 am

Welcome.
carminuccio wrote:
Fri Jul 31, 2020 5:54 am
I would like to definitely reduce the number of positions, and exchange the VTI/BND/IEFA with Ireland domiciled funds in USD tracking S&P500, with the same expense ratio, and accumulating (which I guess is the best solution for my situation).
As a resident of a country without a US income tax treaty, you definitely want to drop all of these US domiciled ETFs and replace them with non-US domiciled ones instead. At the moment, you are significantly overpaying US tax on your dividends.

Aside from convenience and avoiding dividend reinvestment trading costs, there's no other advantage to you to hold accumulating rather than distributing ETFs.
carminuccio wrote:
Fri Jul 31, 2020 5:54 am
What you think is the best strategy and the best ETFs to invest with? I made a research on JustETF and found CSSPX as best match.
CSSPX would be a good choice to replace VTI. Also available in USD in London or EUR in Euronext, as CSPX.

You have other US domiciled ETFs you also want to replace, though. For example, your IEFA holding will be particularly tax-inefficient, since for you it comes with a completely avoidable 30% US tax drag.

Below $60k you don't have to worry about US estate tax, but you should also note that once you get above that in US assets, you risk losses of 26%-40% of your US holdings if you die and have no coverage from any US estate tax treaties. More motivation to move out of US domiciled investments there, then.

Topic Author
carminuccio
Posts: 4
Joined: Fri Jul 31, 2020 5:34 am

Re: First 'indipendent" portfolio

Post by carminuccio » Sun Aug 02, 2020 4:00 am

Thanks a lot Ted.

I will definitely follow your suggestion and do a makeover of my portfolio, selling VTI/IEFA/VNQ/BND and looking for their Ireland-based alternatives in USD.

Only doubt is accumulating vs distributing; ideally, I would go for an accumulating ETF, as I am not interested in withdrawing any money nor increasing the cash quantity over time, leave alone spending more on fees.

Apart that, I realized I made a disaster portfolio :D

Good thing is that is <4k USD at the moment, so I am on time to adjust.

ICH
Posts: 241
Joined: Wed Jun 13, 2018 3:08 am

Re: First 'indipendent" portfolio

Post by ICH » Sun Aug 02, 2020 7:20 am

Why not go for VWRA only and call it a day? Add bonds as needed.

Topic Author
carminuccio
Posts: 4
Joined: Fri Jul 31, 2020 5:34 am

Re: First 'indipendent" portfolio

Post by carminuccio » Mon Aug 03, 2020 2:36 am

CSSPX has 0.07% cost, while VWRA has 0.22%.

Holdings in both ETFs are pretty similar also.

As of now, again, doesn't make a lot of difference as the capital is small, but as I plan to make it my only long-standing portfolio, also the cost part has its importance.

Rosales
Posts: 76
Joined: Thu Apr 30, 2020 8:43 pm

Re: First 'indipendent" portfolio

Post by Rosales » Mon Aug 03, 2020 2:13 pm

carminuccio wrote:
Mon Aug 03, 2020 2:36 am
CSSPX has 0.07% cost, while VWRA has 0.22%.

Holdings in both ETFs are pretty similar also.

As of now, again, doesn't make a lot of difference as the capital is small, but as I plan to make it my only long-standing portfolio, also the cost part has its importance.
The difference in costs is smaller when you consider dividend tax withholding rate. 15% for CSSPX, 11-12% for VWRA.
VWRA is also much more diversified.
VWRA & chill | Retired @28 y.o.

Topic Author
carminuccio
Posts: 4
Joined: Fri Jul 31, 2020 5:34 am

Re: First 'indipendent" portfolio

Post by carminuccio » Wed Aug 05, 2020 5:30 am

Yes, had time to go through the KID and factsheets and VWRA is actually a much safer choice for my type of portfolio.

I will do the sell and rebuy process in the next few days, just I'll try to sell when at least all elements are at same of cost price; don't want to incur in losses, I am not in a rush.

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