*Official* Shiny Things club - Part 2

[tankahkee]

Hi All,

Does anyone know if there are any recommended ETFs for s&p 500 shariah index? And whether it's possible to purchase them via IB?

 

[ularlah]

1) Stanchart's FX cost is about 0.5% on the way in and 0.5% on the way out, so call it $10-ish a month. Basically you'd save $20 or so a month on brokerage and FX costs.
2) Change to IB. Yes, it allows joint accounts.

Hi so if i am just starting out and buying about 5/6k of iwda every 3/4 months is it better to use stanchart even if the FX cost is worse due to the min fee every month for ibkr?

 

[BBCWatcher]

Does anyone know if there are any recommended ETFs for s&p 500 shariah index? And whether it's possible to purchase them via IB?

As a direct answer, and assuming you are a non-U.S. person, take a look at the iShares MSCI USA Islamic ETF (ticker symbol ISUS on the London Stock Exchange). ISUS tracks a different index (of 144 U.S. large capitalization stocks rather than the S&P 500 Shariah Index's 240), and I have serious concerns about the fund size and its limited trading volume, but it's probably the best all around, closest match to what you specifically request.

But I don't think you should overweight U.S. listed stocks unless you're quite sure that's what you want to do, and with some good reason(s). Another fund, ISWD, is a global stock index fund with a shariah filter applied. I have the same basic concerns, but at least it's a more diversified fund holding 509 stocks listed/traded around the investable world.

To repeat, I am assuming you are solely tax resident in Singapore and not a U.S. person.

 

[rararara]

Hi! I am signing up for an FSMone personal account, and was wondering if anyone has a referral code?

 

[feralslash]

Hi so if i am just starting out and buying about 5/6k of iwda every 3/4 months is it better to use stanchart even if the FX cost is worse due to the min fee every month for ibkr?

Do your own calculations lo. Give yourself a timeline, say 2 years. Add up the fees to be incurred for both SCB and IBKR. Then make a decision.

 

[limster]

It depends on your allocations of es3 n mbh vs iwda. There may be advantage in reaching pb for scb first to get lower n no min comm. Some also find the usd high account debit card saves them money for usd transactions

 

[tangent314]

Hi so if i am just starting out and buying about 5/6k of iwda every 3/4 months is it better to use stanchart even if the FX cost is worse due to the min fee every month for ibkr?

If you are buying every month, it does not matter how much you buy, IBKR will *ALWAYS* be cheaper better than SCB.

 

[ularlah]

Do your own calculations lo. Give yourself a timeline, say 2 years. Add up the fees to be incurred for both SCB and IBKR. Then make a decision.

It depends on your allocations of es3 n mbh vs iwda. There may be advantage in reaching pb for scb first to get lower n no min comm. Some also find the usd high account debit card saves them money for usd transactions

If you are buying every month, it does not matter how much you buy, IBKR will *ALWAYS* be cheaper better than SCB.

Thanks guys, guess i'll just use IBKR,i've calculated and the costs ain't much different, and it'll also be an incentive to hit 100k faster!

 

[Wonderer haha]

SRS and US Person

Hi guys is that a good idea to have a SRS account, and use it to invest in stocks? It seems that this has been heavily promoted by CPF and local banks recently.

Another dumb question - has been seeing this US Person a lot in this thread. So if a Singaporean happens to work at US, s/he will be considered as US tax residents = US Persons. Which means that s/he only allowed/able to invest in US listed ETF, and not a chance for LSE ETF like IWDA or VUSD?

Thanks !

 

[brendalowe]

hi all, lets say i have 100k worth of ETFs on Stand Chart. How do i transfer them to Interactive Brokers?

 

[havetheveryfun]

hi all, lets say i have 100k worth of ETFs on Stand Chart. How do i transfer them to Interactive Brokers?

dont think you can.

just sell them all then buy them again on IB loh

 

[CWL84]

You can transfer. Fill up the Standard Chartered's share transfer form and initiate the transfer instruction from IBKR. Do take note that the transfer fee has increased to around around SGD$50.

So, I've mentioned previously that SCB charges USD 13 per counter for outward share transfer of USD-denominated assets on foreign markets... which is true for the usual suspects of IWDA, VUSD, VWRD, etc. This could be useful for folks to buy all their shares on SCB, get to SCB priority banking faster for lower trading fees and no minimum commissions, and perhaps to do a transfer to IBKR to get to 100k AUM at one go instead of paying $10 monthly activity fees.

I've also chatted with Aiko O on IBKR to confirm that they have no fees for inbound transfers (and also no fees for outbound transfers of UK shares).

Since it's cheaper to transfer than to sell and buy back, I'm testing the waters with my VWRD. The needed details are here:

Standard Chartered's Share Transfer Form
Name of Counterparty: Interactive Brokers LLC [UK CREST ID: 6DKAV]
Name of Contact Person: Clearing Operations
Email: assettransferservice@interactivebrokers.com
Telephone/Mobile Number: +41 41 726 9500
Fax: +41 41 726 9678

IB's Position Transfer Instruction
Account Management > Funding > Position Transfers
Transfer Method: International Assets
Type: Deposit
Instruction: Add New Instruction

Brokerage Firm / Bank Address Line 1: Wealth Management Operations, Standard Chartered Bank at Changi
Brokerage Firm / Bank Address Line 2: 7 Changi Business Park Crescent, Level 2
Brokerage Firm / Bank City: Singapore 486028
Brokerage Firm / Bank State/Province: Singapore
Brokerage Firm / Bank Country: Singapore
Contact Name: Eric Chow / Li Kay
Contact Email: sgwm.assettransfer@sc.com
Contact Phone: +65 6242 5333 SC says they coordinate transfers over email and do not provide a phone number but Aiko O says this is mandatory, so I've inserted the SCB online tradinge general enquiries hotline
Contact Fax: Left blank as it is optional, and SCB could not provide it

 

[tangent314]

Thanks guys, guess i'll just use IBKR,i've calculated and the costs ain't much different, and it'll also be an incentive to hit 100k faster!

Once you calculate in forex charges, the difference becomes significantly bigger

 

[mianbao321]

Hi Shiny Things,
I have been managing my portfolio through SCB, but really have found it to be quite tedious, especially now that I have family commitments. Thus, thinking of using RSP by maybank. Any idea if the HKSE offers anything similar to IWDA? Non-divided paying. Or any other better rsp plans thay you can recommend? Thanks.

 

[BBCWatcher]

Any idea if the HKSE offers anything similar to IWDA? Non-divided paying.

Hong Kong does not enjoy the 50% lower (15% instead of 30%) dividend tax rate on U.S. listed stocks that Ireland (as a notable example) does. So if there were a Hong Kong equivalent to IWDA, it’d be more expensive. Whether or not it distributes dividends, it’d have to pay about 20 basis points more in tax (assuming a 2% dividend yield on about 62% of the fund subject to a 15 percentage point higher tax). That’s the whole fund manager’s fee right there, really.

 

[Shiny Things]

Hi All,

Does anyone know if there are any recommended ETFs for s&p 500 shariah index? And whether it's possible to purchase them via IB?

Nope, I can't find any ETFs tracking that index.

There's ISWD which tracks a global sharia-compliant index, but the thing I've learned about Islamic finance is that "sharia-compliant" means very different things to different people, so you're going to want to go through the list of companies it owns and make sure it doesn't hold anything that you don't consider sharia-compliant.

When buying IWDA which holds UK shares which give dividend, is that taxed 20% before giving back to iwda to reinvest?

Along same lines, any dividend reinvesting low fees equivalent for vuke? Even if it does exist, does it mean it's also subject to same with holding tax before it's reinvested?

1) Err, I don't know to be honest. Why does it matter, though? It's not like you can dodge taxes.
2) CUKX, yep.

Hi Shiny Things,
I have been managing my portfolio through SCB, but really have found it to be quite tedious, especially now that I have family commitments. Thus, thinking of using RSP by maybank. Any idea if the HKSE offers anything similar to IWDA? Non-divided paying. Or any other better rsp plans thay you can recommend? Thanks.

1) I'm looking quite hard at the Maybank / Kim Eng RSP, especially 'cause they offer MBH (and don't charge dividend or custody fees on Singaporean stocks). You wouldn't use them for non-Singaporean stocks, but for Singaporean stocks they might be good until POSB Invest-Saver offers MBH.
2) Why do you want to use the HKSE?

hi all, lets say i have 100k worth of ETFs on Stand Chart. How do i transfer them to Interactive Brokers?

I've never done this myself, but you'll need to fill out transfer forms at Interactive Brokers, and then notify Stanchart that you want to transfer your stocks out. The process varies depending on whether they're US ETFs or non-US, so it's a bit hard to say exactly what's involved.

 

[Shiny Things]

Hi guys is that a good idea to have a SRS account, and use it to invest in stocks? It seems that this has been heavily promoted by CPF and local banks recently.

Another dumb question - has been seeing this US Person a lot in this thread. So if a Singaporean happens to work at US, s/he will be considered as US tax residents = US Persons. Which means that s/he only allowed/able to invest in US listed ETF, and not a chance for LSE ETF like IWDA or VUSD?

Thanks !

1) I think it is, yeah. If you're on a high income - above I think $80k/yr - it makes sense to contribute to an SRS account and defer the tax.
2) BBCW is most up on this, but my take: generally if you're in a position where you have to file a US tax return, you should be buying US-listed ETFs rather than LSE ETFs. And that's fine! If you're a US taxpayer, the tax treatment on those US ETFs is pretty good!

Hi so if i am just starting out and buying about 5/6k of iwda every 3/4 months is it better to use stanchart even if the FX cost is worse due to the min fee every month for ibkr?

Uh, no, in this case you'd want to use IBKR.

At IBKR: Every month, you pay $10 minimum activity. Your FX costs are basically zero. So that's $30 USD every three months.
At StCh: Every three months, you pay $10 brokerage, and $30-ish SGD in FX spread costs. So that's about $40 SGD - or $30-ish USD - every three months.

All things being equal, you're better off doing it through IBKR if the costs are the same.

 

[Wonderer haha]

1) I think it is, yeah. If you're on a high income - above I think $80k/yr - it makes sense to contribute to an SRS account and defer the tax.
2) BBCW is most up on this, but my take: generally if you're in a position where you have to file a US tax return, you should be buying US-listed ETFs rather than LSE ETFs. And that's fine! If you're a US taxpayer, the tax treatment on those US ETFs is pretty good!


Hi Shiny Things thanks for your advice. In that case which US ETFs we should look at? URTH, ACWI, VT ?

 

[cplusplus]

Hi Shiny things, what is the best way to invest in IWDA if I am putting in $500 a month? Would it be better to accumulate the money over a few months doing DCA to decrease the fees paid? Which broker should I use?

 

[BBCWatcher]

2) BBCW is most up on this, but my take: generally if you're in a position where you have to file a US tax return, you should be buying US-listed ETFs rather than LSE ETFs. And that's fine! If you're a US taxpayer, the tax treatment on those US ETFs is pretty good!

I’d put it more strongly than that. As a U.S. person, you should not hold non-U.S. listed funds, and you should not hold most non-U.S. listed securities. Before you become a U.S. person, you should consider exiting such positions. If you are a U.S. person already in such positions, you should consider unwinding them.

The PFIC taxes (“mark to market” elections) and non-qualified dividend taxes are just not attractive, and you get to pay higher commissions and management fees too. (The U.S. financial markets are incredibly competitive and efficient.) I’m also not fond of the FinCEN Form 114 and IRS Form 8938 reporting requirements involved with non-U.S. financial accounts, but that’s just extra paperwork.

Ordinary non-U.S. bank accounts, traditional CPF(*) (and other traditional, government mandated social insurance programs), ordinary bonds (not exotics such as “Astrea” notes, and not bond funds), and simple fixed deposit-like insurance endowment plans are all generally OK from a U.S. tax point of view. They’re treated on equal footing with U.S. equivalents (outside U.S. tax advantaged accounts), which is to say neither favored nor disfavored. Much beyond that, it can get expensive.

Yes, these limitations mean that a U.S. person would find Singapore Supplementary Retirement Scheme (SRS) accounts comparatively less attractive. SRS accounts are only Singapore tax advantaged (often, not 100% of the time), not U.S. tax advantaged.

Finally, I generally do not recommend that U.S. persons have joint accounts with non-U.S. persons. There are exceptions, but as a general rule I don’t like it. A “Payable on Death” (POD) account arrangement is generally better.

(*) Even traditional CPF is a bit odd from a U.S. tax point of view, but I’ve written about that before. It’s odd in a good way, usually.