*Official* Shiny Things club - Part 2

[opt1m4l]

Are there any bond ETFs with US exposure domiciled in Ireland for the 15% DWT?

Looking for exposure to US treasuries and US corp bonds.

Or am I asking the wrong question? (Are bond ETFs subjected to DWT?)

LQDE/LQDA
CORP/CRPA

 

[kingboonz]

LQDE/LQDA
CORP/CRPA

Thanks!

Are there any other recommended ETFs for me to check out as well?

 

[BBCWatcher]

Or am I asking the wrong question? (Are bond ETFs subjected to DWT?)

There are lots of discussions about this, but I'll briefly recap.

When a non-U.S. person (without "effectively connected" U.S. income) holds a U.S. domiciled bond fund that holds U.S. government bonds, U.S. corporate bonds, and/or U.S. municipal bonds, and if the bond fund managers report net qualifying interest income correctly, there should be zero tax withholding. As always, you need to file a truthful IRS W-8BEN with your broker every 3 years, or sooner if your W-8BEN/W-9 status changes.

However, a U.S. bond fund is still apparently subject to the U.S. estate tax. Non-U.S. bonds held within U.S. domiciled bond funds are subject to U.S. tax withholding.

 

[kingboonz]

There are lots of discussions about this, but I'll briefly recap.

When a non-U.S. person (without "effectively connected" U.S. income) holds a U.S. domiciled bond fund that holds U.S. government bonds, U.S. corporate bonds, and/or U.S. municipal bonds, and if the bond fund managers report net qualifying interest income correctly, there should be zero tax withholding. As always, you need to file a truthful IRS W-8BEN with your broker every 3 years, or sooner if your W-8BEN/W-9 status changes.

However, a U.S. bond fund is still apparently subject to the U.S. estate tax. Non-U.S. bonds held within U.S. domiciled bond funds are subject to U.S. tax withholding.

Thanks BBCW! So in other words I can buy US govt bonds from US exchanges without worry of any taxes other than estate taxes?

 

[BBCWatcher]

So in other words I can buy US govt bonds from US exchanges without worry of any taxes other than estate taxes?

If you are a non-U.S. person (and without "effectively connected" U.S. income), if you buy U.S. government bonds (or bills or notes) and hold them directly (without a fund "wrapper"), there is no U.S. income tax and no U.S. estate tax. Just file a truthful IRS Form W-8BEN with your broker, as always.

Charles Schwab probably offers the best, easiest, most accessible way for Singapore resident investors to buy U.S. Treasuries at original auction. However, TreasuryDirect.gov is great for those who are eligible to open a TreasuryDirect account.

If you buy a U.S. domiciled bond fund, you have to do some more checking. You need to check the prospectus to determine what the fund holds and also whether the fund reports qualifying interest income. If the prospectus has a discussion about non-U.S. persons ("foreigners") and tax implications, the fund is probably reporting interest correctly for these purposes. The U.S. estate tax still applies. And, despite your careful research, you may wish to test this, with the particular fund and with your broker, by buying a small position and then waiting to see how the next fund distribution is handled.

 

[YouHeypiCanLiao]

For equities etf should buy iwda through LSE? Thanks

Thanks BBCW! So in other words I can buy US govt bonds from US exchanges without worry of any taxes other than estate taxes?

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[fmradio]

https://www.bloomberg.com/news/arti...business-economists-see-recession-by-end-2020

So .. a bit early to jump the gun. What do you guys think for all the IWDA CSPX or whatever ETFs. Sell before the crash? Then again who knows when is the crash starting. LOL

 

[chainer22]

A few questions regarding purchase of overseas stocks (namely US stocks) and could also be applied to SG stocks:

1. How do i identify which are growth or dividend stocks?

2. Other than purchasing Ireland domiciled ETF (e.g IWDA), how else can one avoid the withholding tax?

 

[limster]

A few questions regarding purchase of overseas stocks (namely US stocks) and could also be applied to SG stocks:

1. How do i identify which are growth or dividend stocks?

Shiny Things' does not advocate stock picking. Instead you should stick to diversified ETFs and not worry about a stock is growth or dividend.

 

[BBCWatcher]

2. Other than purchasing Ireland domiciled ETF (e.g IWDA), how else can one avoid the withholding tax?

You don't avoid U.S. tax on the dividends that U.S. stocks distribute when you buy an Irish domiciled fund that holds U.S. stocks. You don't avoid other countries' dividend taxes either. Blackrock, IWDA's fund manager, pays those countries their dividend taxes. The U.S. dividend tax rate is 15% for Irish funds, and that tax is paid. Then the fund manager either distributes dividends (VWRD for example) or reinvests them (IWDA). But there is still dividend tax, at a lower rate thanks to the U.S.-Ireland tax treaty.

As it happens, there's no additional dividend tax owed if you're a resident of Singapore and hold investments in your personal capacity, and as long as your country of citizenship or permanent residence doesn't tax you.

OK, now, answering your question, you can avoid all U.S. dividend taxes under these circumstances (examples):

* You invest in a U.S. domiciled stock fund (which will probably be lower cost than IWDA) via a qualified contribution to a Roth 401(k), and you make only qualified withdrawals from that U.S. tax advantaged account;

* You invest in a U.S. domiciled stock fund via a qualified contribution to a Roth IRA, and you make only qualified withdrawals from that U.S. tax advantaged account;

* You invest in a U.S. domiciled stock fund via a 529 education savings plan, and your 529 beneficiary makes only qualified withdrawals from that U.S. tax advantaged account;

* You invest in a U.S. domiciled stock fund in an ordinary account, and you have an unspent foreign tax credit for passive category income that you can apply to offset the tax on the dividends;

* Your total taxable income is low enough such that your dividend income falls within the 0% tax bracket.

All of the above examples apply to U.S. persons and only rarely and exceptionally apply to non-U.S. persons. "Become an American" in some fashion, basically.

Of course, it's possible to avoid dividend tax if you're never paid dividends. One way to do that is via the stock futures and options markets. Those markets allow you to bet in various ways on the movement(s) of popular stocks. But you're not holding the stocks themselves, so you're not receiving any dividends. Another way is to invest in zero dividend stocks, a.k.a. "growth stocks." Some companies issue preferred voting shares that pay no dividends, so that's another way. And there are some individual stocks that obviously could pay dividends but don't. Berkshire Hathaway is perhaps the most famous example, although last year Warren Buffett suggested he might reconsider his multi-decade avoidance of dividends.

 

[LyzeOfKiel]

From what we understand now, IWDA contain a list of developed countries stock while EIMI contain a list of developing countries stock.

Let say 40 years later...

TENCENT HOLDINGS LTD (from China) which is part of EIMI, has become developed countries stock. Will TENCENT HOLDINGS LTD stock move to IWDA? If yes, How does the price affect the ETF stock price?

 

[BBCWatcher]

Let say 40 years later...
TENCENT HOLDINGS LTD (from China) which is part of EIMI, has become developed countries stock. Will TENCENT HOLDINGS LTD stock move to IWDA?

Yes, if the fund manager reclassifies China as a developed country, then its stocks would qualify for inclusion in IWDA.

If yes, How does the price affect the ETF stock price?

There's no direct effect. The fund manager would adjust its allocations within the fund itself, with existing capital. Since it's existing capital, there's no direct change in the value of fund shares. A fraction of the fund's holdings in every other country would be sold, and those proceeds would then buy the new included country's stocks. The fund manager might choose to take some time to do this.

Investors would then make their own individual decisions about how much they like or don't like that adjustment in the composition of the fund, and of course the ongoing, constant changes in the valuations of the fund's holdings at any moment continues forward.

The fund manager might propose this idea to its shareholders for a vote.

 

[limster]

From what we understand now, IWDA contain a list of developed countries stock while EIMI contain a list of developing countries stock.

Let say 40 years later...

TENCENT HOLDINGS LTD (from China) which is part of EIMI, has become developed countries stock. Will TENCENT HOLDINGS LTD stock move to IWDA? If yes, How does the price affect the ETF stock price?

VWRD doesn't have this 'problem' as it already has 3.2% China.

 

[unhinged_loon]

https://www.bloomberg.com/view/articles/2018-10-02/meet-wall-street-s-latest-frankenstein

 

[mattzakh]

Hi, I just want to start investing and is currently deciding between 2 brokers for US stocks:

1. Saxo Capital Market (less fee per trade, custody fee, can get referral promo to offset the fees)

2. Standard Chartered (no custody fee, higher fee per trade)

My plan is to use one of these 2 platforms until I have 100k and move to IB. I estimated that Saxo is cheaper for me now, but as I have more assets the annual custody fee will increase.

Any advice or review on this? Or am I thinking too far because the fees may change in the future?

Thx!

 

[revhappy]

Hi, I just want to start investing and is currently deciding between 2 brokers for US stocks:

1. Saxo Capital Market (less fee per trade, custody fee, can get referral promo to offset the fees)

2. Standard Chartered (no custody fee, higher fee per trade)

My plan is to use one of these 2 platforms until I have 100k and move to IB. I estimated that Saxo is cheaper for me now, but as I have more assets the annual custody fee will increase.

Any advice or review on this? Or am I thinking too far because the fees may change in the future?

Thx!

How much do you plan to invest every month?

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

 

[mattzakh]

How much do you plan to invest every month?

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

For now about 10-15k usd per year, not sure if buying monthly is worth the cost.

 

[revhappy]

For now about 10-15k usd per year, not sure if buying monthly is worth the cost.

In that case you can jump straight away to Interactive brokers. Your currency conversion cost+commissions will definitely be more than USD 120 a year with other brokers.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

 

[Xanthyon]

How about posb invest saver for local stocks? Thus far, it has been commission free with the paylah apps rebates. There is no redemption fee too, and you can ask to transfer the units to your cdp account, does scb allows that?

Off-topic, but does anyone actually get the rebates into their Paylah account? If yes, can GPGT?

I've been buying G3B/A35 since May and still have yet to get a single cent into my Paylah account.

Last I called POSB, they said the rebates will be credited into my Paylah account by end Sep, but until now still nothing.

 

[kingsfall]

Hi guys, just did a DCA calculations for STI over a period of 9 years, realize that the total percentage year on year increment was only around 2.5%. I am not sure if my calculations are correct. Anybody can advise? If my calculations are right, then STI's ROI is actually quite pathetic...

Date Close Volume of stock purchased using $1500 (close)
31/1/2009 1.62 1,052
28/2/2009 1.71 997
31/3/2009 1.9 897
30/4/2009 2.35 725
31/5/2009 2.34 728
30/6/2009 2.67 638
31/7/2009 2.66 641
31/8/2009 2.67 638
30/9/2009 2.68 636
31/10/2009 2.77 615
30/11/2009 2.91 586
31/12/2009 2.77 615
.
.
.
.
.
31/5/2017 3.34 467
30/6/2017 3.42 456
31/7/2017 3.41 454
31/8/2017 3.35 462
30/9/2017 3.51 441
31/10/2017 3.56 435
30/11/2017 3.54 437
31/12/2017 3.61 429
31/1/2018 3.6 423
28/2/2018 3.51 434
31/3/2018 3.74 407
30/4/2018 3.58 425
31/5/2018 3.4 448
30/6/2018 3.42 445
31/7/2018 3.33 450
31/8/2018 3.38 444
30/9/2018 3.38 444
Total volume of stock purchased over 9 year period: 63,372
Total payout: $214,199
Invested amount: $175,500
% year on year: 2.5%