*Official* Shiny Things club - Part 2

[kingsfall]

No. Saxo is a bad broker - they charge hefty custody and dividend fees. Don’t use them.

Hi ST, could you please elaborate this? For an investor, we are only getting charged

- 0.06% (min. USD 4, max. USD 100) for NYSE and
- 0.10% (min. GBP 8) for LSE per transaction right?

if we dont use them what do we use?

 

[InvestingDummy]

Hi all,

Need some help with the SCB trading account - If for example, IWDA is in USD, do I have to open the USD trading account? Or GBP, since it's traded on the LSE?

Appreciate it!

 

[flowerpalms]

You need to set up both USD and SGD trading settlement accounts

Hi all,

Need some help with the SCB trading account - If for example, IWDA is in USD, do I have to open the USD trading account? Or GBP, since it's traded on the LSE?

Appreciate it!

 

[kram62]

Hi ST, could you please elaborate this? For an investor, we are only getting charged

- 0.06% (min. USD 4, max. USD 100) for NYSE and
- 0.10% (min. GBP 8) for LSE per transaction right?

if we dont use them what do we use?

The problem with saxo is not the transaction fees, but the custody fee: 0.12% of AUM. This fee increases in absolute value over time the more AUM you have. At some point (actually 100k usd AUM) the monthly fee of saxo is more than 10 USD per month even if you do nothing for that month.

Over long term, that's a significant cost.

SCB more or less provides same service without custody fee compared to saxo.

IBKR has min activity fee 10 USD per month for AUM under 100k, but any other fee is subtracted to it.

Above 100k AUM ibkr wins clearly.
Under 100k AUM, it depends on how often and how much you trade, rule of thumb is less than 1000 usd per months scb is better, otherwise ibkr still better.

In any case saxo is not better.

 

[cassowary18]

Above 100k AUM ibkr wins clearly.
Under 100k AUM, it depends on how often and how much you trade, rule of thumb is less than 1000 usd per months scb is better, otherwise ibkr still better.

Actually, can someone explain to me how the 1000 USD per month threshold comes about? I see it bandied a lot around here. Shouldn't IBKR be the clear winner for anything monthly, since you're paying 10 USD per month, whereas SCB charges a 10.70 USD minimum commission, so if you're trading monthly the charges for IBKR are still going to be lower than that for SCB. Of course the math gets more complicated if you're choosing to "batch up" and trade instead of trading monthly, but that's not a caveat that I see.

 

[BBCWatcher]

Actually, can someone explain to me how the 1000 USD per month threshold comes about? I see it bandied a lot around here. Shouldn't IBKR be the clear winner for anything monthly, since you're paying 10 USD per month, whereas SCB charges a 10.70 USD minimum commission, so if you're trading monthly the charges for IBKR are still going to be lower than that for SCB. Of course the math gets more complicated if you're choosing to "batch up" and trade instead of trading monthly, but that's not a caveat that I see.

You're absolutely correct, but I believe the presumption is that those with monthly savings below US$1,000/month would indeed "batch up" their IWDA, VWRA, or LCWD buys and do them less often than monthly.

 

[decibel.]

I'm thinking of stopping my BCIP sometime in future once my cash flow stabilize. Should I then move my G3B allocations to my personal CDP and proceed with SCB to buy ES3 regularly?

Sent from HUAWEI VOG-L29 using GAGT

 

[Shiny Things]

Oh boy, it's December!

I'm about to head off on holidays for a couple of weeks (road-tripping through California with my parents), so expect slower-than-normal replies; talk amongst yourselves in the meantime, and be nice.

Actually, can someone explain to me how the 1000 USD per month threshold comes about? I see it bandied a lot around here. [...]Of course the math gets more complicated if you're choosing to "batch up" and trade instead of trading monthly, but that's not a caveat that I see.

That is actually the caveat, yeah. You only need to buy one ETF each month (whichever one you're the shortest of, compared to your target allocation). If you're only buying IWDA once every two or three months, then yeah, Stanchart's probably cheaper.

The $1000-a-month rule comes about because it's (VERY roughly) the line where the extra FX spread at Stanchart becomes more expensive than the $10-a-month minimum monthly activity fee at Interactive.

Any advise for investing in TH stocks / ETF. Will make use of the LTF / RMF to reduce taxes but the funds have high expense ratio.

I guess my question would be why are you buying Thai stocks? Thailand is one of those markets where even if you plan to retire there, I'd still advise against allocating to local assets.

Hi ST, could you please elaborate this? For an investor, we are only getting charged

- 0.06% (min. USD 4, max. USD 100) for NYSE and
- 0.10% (min. GBP 8) for LSE per transaction right?

if we dont use [Saxo] what do we use?

You use Interactive Brokers, which is cheaper on both fronts and doesn't charge a custody fee.

 

[snorex]

Hi Shiny Things,

Trying to research on ETFs and stumbled into an old thread you responded to. https://forums.hardwarezone.com.sg/stocks-shares-indices-92/investing-lse-4358949.html

Can I check if the following is still accurate?

1. If buying US ETFs, go for those that reinvest dividends, otherwise there will be a dividend withholding tax. However, for US ETFs there are no capital gains taxes.

2. If buying UK ETFs, there are no dividend withholding taxes or capital gains taxes. Thus should go for VWRD.

3. To buy US or UK ETFs, use either standard chartered (easier to use but potentially more expensive) or interactive brokers (more difficult to use but cheaper).

4. Any other key factors I missed?

Thank you and have a great trip!

 

[kkcheng77]

What mobile app do you guys use to track stocks and ETF from LSE, HK, US and SGX Is there an all in one app that could track all these?

 

[Okenba]

Hi Shiny Things,

Trying to research on ETFs and stumbled into an old thread you responded to. https://forums.hardwarezone.com.sg/stocks-shares-indices-92/investing-lse-4358949.html

Can I check if the following is still accurate?

1. If buying US ETFs, go for those that reinvest dividends, otherwise there will be a dividend withholding tax. However, for US ETFs there are no capital gains taxes.

Disclaimer: I'm not ST.
Both accumulating and distributing ETFs pay the same tax. Otherwise, everyone would choose accumulating.

2. If buying UK ETFs, there are no dividend withholding taxes or capital gains taxes. Thus should go for VWRD.

My understanding. And I'm by no means an expert:
It's not about UK ETFs, but about where the ETF is domiciled.

This has to do with tax treaties that the country has with the US. The US is the main problem with their 30% dividend tax and the fact that many people buy US stocks/ETFs or global stocks/ETFs that are heavily US weighted.

SG does not have appropriate tax treaties with the US, so we pay the full 30% tax. Places like Ireland does have a treaty, so they pay 15% tax instead of 30%. So if we buy ETFs that are Ireland domiciled, we tag on to this treaty and pay only 15%.

That's my understanding anyway.

 

[kram62]

That's correct, if US domiciled there's always 30% dividend withholding tax for holders based in SG. Doesn't matter whether it is accumulating or distributing otherwise it would be easy to cheat. For accumulating one, the fund manager pays the withholding tax before reinvesting the remaining value of dividend.

Ireland domiciled funds (remember, listing and domicile are not the same concept, IWDA for example is an example of Ireland domiciled fund, listed at the LSE (London stock exchange) in UK) enjoy a preferential dividend withholding tax ratio of 15% instead of the default 30%. So your dividends are still taxed there, but only half of what you would have been taxed if buying a US fund.

 

[BBCWatcher]

1. If buying US ETFs, go for those that reinvest dividends, otherwise there will be a dividend withholding tax.

Disclaimer: I'm not ST.
Both accumulating and distributing ETFs pay the same tax. Otherwise, everyone would choose accumulating.

Okenba is right, and moreover U.S. domiciled funds are not allowed to reinvest dividends at the fund level. Just outside the fund, brokers/custodians frequently offer automatic dividend reinvesting (especially for U.S. mutual funds). But technically, mechanically, U.S. funds always distribute their dividends. The IRS (U.S. tax agency) insists on it.

However, for US ETFs there are no capital gains taxes.

There are ordinarily no U.S. capital gains taxes on U.S. domiciled funds when the holder is a non-U.S. person. A non-U.S. person may be subject to some other tax jurisdiction's capital gains and/or other taxes, and U.S. estate tax still applies.

2. If buying UK ETFs, there are no dividend withholding taxes or capital gains taxes. Thus should go for VWRD.

My understanding. And I'm by no means an expert:
It's not about UK ETFs, but about where the ETF is domiciled.

VWRD and VWRA are domiciled in Ireland, and they are listed/traded on the London Stock Exchange which happens to be located in the United Kingdom.

This has to do with tax treaties that the country has with the US. The US is the main problem with their 30% dividend tax and the fact that many people buy US stocks/ETFs or global stocks/ETFs that are heavily US weighted.

SG does not have appropriate tax treaties with the US, so we pay the full 30% tax. Places like Ireland does have a treaty, so they pay 15% tax instead of 30%. So if we buy ETFs that are Ireland domiciled, we tag on to this treaty and pay only 15%.

Yes, that's right. The fund managers for VWRD/VWRA and other Irish domiciled funds pay dividend taxes, such as the Irish tax treaty rate of 15% on dividends distributed by U.S. listed shares that the fund holds. (Other countries often have their own dividend taxes, and the fund managers pay those, too.) For VWRD the net (after tax) dividends are distributed to shareholders, and for VWRA the net (after tax) dividends are automatically reinvested in the fund.

Depending on your tax jurisdiction(s), you might be subject to additional taxes associated with these vehicles. For individuals who are solely tax residents of Singapore (not subject to some other tax jurisdiction), there are currently no personal taxes associated with ordinary individual VWRD/VWRA investing. Of course that could change; Singapore's government is free to levy taxes whenever it wishes.

3. To buy US or UK ETFs, use either standard chartered (easier to use but potentially more expensive) or interactive brokers (more difficult to use but cheaper).

You can use any broker you wish that provides access to those markets, but those two brokers are popular choices. I wouldn't say that Interactive Brokers is particularly more difficult, by the way. Their WebTrader interface is reasonably approachable, for example.

4. Any other key factors I missed?

Probably.

 

[snorex]

VWRD and VWRA are domiciled in Ireland, and they are listed/traded on the London Stock Exchange which happens to be located in the United Kingdom.

Thanks alot for the detailed reply. So for VWRD and VWRA there will be a 15% dividend withholding tax regardless of whether it is reinvested or paid out.

However, what about capital gains tax for Singaporeans who buy these ETFs?

Thank you.

 

[cassowary18]

Thanks alot for the detailed reply. So for VWRD and VWRA there will be a 15% dividend withholding tax regardless of whether it is reinvested or paid out.

However, what about capital gains tax for Singaporeans who buy these ETFs?

Thank you.

Singapore does not charge capital gains tax.

 

[snorex]

Singapore does not charge capital gains tax.

The above posters seem to suggest that it depends on the domicile of the fund. So if I buy VWRD (a Ireland domiciled fund) then I don't think it has got to do with whether Singapore charges capital gains tax or not?

 

[Han Shot First]

Any opinion on AutoWealth robo-advisor?

 

[kram62]

The above posters seem to suggest that it depends on the domicile of the fund. So if I buy VWRD (a Ireland domiciled fund) then I don't think it has got to do with whether Singapore charges capital gains tax or not?

You do not understand the difference between the dividend withholding tax and capital gain tax. The first one is paid to the country where the fund is domiciled.

The capital gain tax depends on the country where the individual is tax resident and paid by the individual. Mister A and mister B might both hold the same VWRA units, but mister A lives in France for example and has to pay capital gain tax when he realize gains because France levy it on individuals, while mister B is tax resident of Singapore and not not have any capital gain tax to pay because Singapore does not have it for individuals.

 

[snorex]

You do not understand the difference between the dividend withholding tax and capital gain tax. The latter one is paid to the country where the fund is domiciled.

Thanks for the clarification! For this last sentence, I believe you mean where the individual (instead of the fund) is domiciled?

Thank you.

 

[kram62]

Thanks for the clarification! For this last sentence, I believe you mean where the individual (instead of the fund) is domiciled?

Thank you.

No. That's what "withholding tax" means, it stays where it originated.

Edit: ah sorry you're right about the mistake but the correction is not the one I would choose. I meant the "first" instead of "latter". I've edited the post.