*Official* Shiny Things club - Part 2

[BBCWatcher]

What I meant was if I were able to work and working. I'm thus able to obtain DII and hence while working and become disabled, it is either DII or TPD that will trigger but not both simultaneously.

No, if you're profoundly disabled both would pay out.

DII coordinates with DII if you have two or more DII policies. You're not allowed to exceed the maximum income insurable cap. But DII and TPD can be co-claimed if you're eligible for both (profoundly disabled). Where are you seeing otherwise?

After looking at the DI here in Singapore, I still can see holes hence one isn't really fully covered due to the restrictive definition.

Does that mean you shouldn't have any DII? The shoes are the wrong color, so therefore you'll walk barefoot to the supermarket? That makes no sense.

I'll look into individual SG bonds. Thanks. But I have a nagging feeling i'm missing out something. I think it has to do with either auction of such bonds isn't frequent enough ?

Frequent enough for what purpose(s)?

and I'm pretty certain it has to do with the secondary market having a wide spread since I could not buy my SG bonds as its not like easily available to be purchased as I have to subscribe and wait wait etc... or that if after I bought the SG bonds directly and having to sell, it will also not be as liquid ? I'll relook into it.

Why would you sell them? You'd have a ladder of such bonds and hold them to maturity, presumably. While they pay coupons along the way. Plus some A35 if you wish -- these holdings are not mutually exclusive.

Are you trying to design a wealth management strategy for a 60 year retirement (!), or are you striving for holdings that can be 100% liquidated within 60 seconds for one heck of a big bet at a casino? You don't need 100% highly liquid assets. You need adequate liquidity at any/every point in time, that's all.

I'm with Shiny Things here: you're not thinking straight, in multiple ways. Go back to the drawing board.

 

[321654987]

Hi, i have been on a look out for similar queries but cant find anyone else in a similar situation. Seeking advice from the pros here. TIA!

My profile:
<30yo, single
Conservative, have 0 debt other than monthly credit card bills

Holding:
SGD50K SSB
SGD50K Cash held in OCBC 360 account
SGD10K SGX Mainboard using SCB as broker.

I am definitely too conservative for someone my age, and want to hit a target annual return of about 5% for my non-SSB holdings.

Questions:
1. Interested in IWDA, SPY, maybe GLD, maybe ES3, and plan to make quarterly trades of maybe SGD5-10k to buy and hold the ETFs. Should I stick with SCB as a broker or are there cheaper options out there such as IB/Schwab/TD given my current position? I was thinking about Schwab but have read about the 30% with-holding tax charge for foreigners and it is.. holding me back. IB sounds attractive but the minimum monthly fee is quite a turnoff and the UI seems very complex. TD has a high minimum per trade.

2. Any thoughts about topping up of CPF Special Account to get higher rates?

3. Are there other alternative products that I should be dabbling in just for fun such as FX/Options/Crypto/Astrea V? I can see myself setting aside maybe 5K for this.

Any other advice is appreciated

 

[swan02]

No, if you're profoundly disabled both would pay out.

DII coordinates with DII if you have two or more DII policies. You're not allowed to exceed the maximum income insurable cap. But DII and TPD can be co-claimed if you're eligible for both (profoundly disabled). Where are you seeing otherwise?


Does that mean you shouldn't have any DII? The shoes are the wrong color, so therefore you'll walk barefoot to the supermarket? That makes no sense.


Frequent enough for what purpose(s)?


Why would you sell them? You'd have a ladder of such bonds and hold them to maturity, presumably. While they pay coupons along the way. Plus some A35 if you wish -- these holdings are not mutually exclusive.

Are you trying to design a wealth management strategy for a 60 year retirement (!), or are you striving for holdings that can be 100% liquidated within 60 seconds for one heck of a big bet at a casino? You don't need 100% highly liquid assets. You need adequate liquidity at any/every point in time, that's all.

I'm with Shiny Things here: you're not thinking straight, in multiple ways. Go back to the drawing board.

1. Both would pay out ? Would Singapore be so unique to Australia ? I'm highly skeptical as to why it should it be so ?

I hold the view Singapore is 10 years behind Australia. DI was not available not to long ago.

Will investigate further asking this from one of the major insurers providing such product. But I believe I already did with my insurance agent and clarified with interest parties, and concluded only ONE can trigger and NOT two simultaneously. I just need to make sure it didn't happen in my dreams.

I know for certain in Australia only ONE would pay out and not both and have verified with the Aussie "CPF" funds financial planner. The large super fund reply is consistent to what i've read and understood while undertaking financial planning certifications.

I'm selling bonds because as already mentioned, my asset allocation is dynamic, though it starts very small in equities can easily balloon to a large percentage very quickly depending whether a crash or not occurs the next few years. I know this is market timing and do not wish to argue further as this is against passive investing and highly discouraged.

I believe in Cape ratio and Wade pfau work in how equities perform to it. I'm just applying the tools to my financial planning as I want to take risk.

I've set a target if ever cape less than 20 of S&P 500, I'm quick to balloon the equity to at least 60% or 100% if needed. Hence I need a system that allows me to sell quick e.g. A35, and then buy without too much hassle. And I don't really care about the cape of STI index being a minor player, only S&P 500.

In fact, these next six months, I might consider pushing up my equity to 30% or 40% in a year.

If there is no crash or correction, then it won't be a large amount sold/buy from the bond section while increasing the equity component by 5 percent each year. Because it is still a maybe 50k to even 100k of bonds to be sold each year while rebalancing. More so if a correction occurs.

 

[BBCWatcher]

Holding:
SGD50K SSB because I want a rock solid, close to zero-risk core I can turn back to if all goes wrong
SGD50K Cash held in OCBC 360 account
SGD10K SGX Mainboard using SCB as broker. i have lost 50% on a certain green telco if that is important and still holding on.

Presumably also some CPF assets, correct?

1. Interested in IWDA, SPY, maybe GLD, maybe ES3, and plan to make quarterly trades of maybe SGD5-10k to buy and hold the ETFs. Should I stick with SCB as a broker or are there cheaper options out there such as IB/Schwab/TD given my current position? I was thinking about Schwab but have read about the 30% with-holding tax charge for foreigners and it is.. holding me back. IB sounds attractive but the minimum monthly fee is quite a turnoff and the UI seems very complex. TD has a high minimum per trade.

No need for SPY or GLD. IWDA or VWRA, and ES3 or G3B, are perfectly fine.

Standard Chartered and POSB Invest Saver work rather well for ES3/G3B. Interactive Brokers or Standard Chartered work rather well for IWDA or VWRA. Just compare the fees and expenses for what you plan to do and how often you plan to do it (monthly would be nice), including currency conversion costs.

2. Any thoughts about topping up of CPF Special Account to get higher rates?

I lean toward CPF MediSave top ups for tax relief first, as an early career person. MediSave top ups must fit within the CPF Annual Limit and the Basic Healthcare Sum.

3. Are there other alternative products that I should be dabbling in just for fun such as FX/Options/Crypto/Astrea V? I can see myself setting aside maybe 5K for this.

Disability Income Insurance (DII) if you don't have it yet. FX, options, and cryptocurrencies are gambling not investing. Astrea V was only mildly interesting when it was initially offered. It's not interesting at all on the secondary market, not for you anyway. I was a fan of the Temasek general obligation 2.7% retail bond when it was offered not too long ago, but again that's not something an already bond-heavy early career individual needs, especially from the secondary market. MBH and/or more SSBs will likely be your future solution when you reach the point you want to start accumulating both bonds and stocks -- when your allocations are aligned with your target percentages. But right now, for a while, you intend to raise the stocks percentage, and that makes sense to me.

I'm assuming you are not a U.S. person, you have an unambiguous right of abode in Singapore (citizenship works), and you plan to retire in Singapore.

1. Both would pay out ? Would Singapore be so unique to Australia ? I'm highly skeptical as to why it should it be so ?

Why do you assume two different private insurance policies issued in Singapore (most probably from two different carriers) have the same policy conditions as some other policies issued in a foreign country that happens to begin with the letter A? Don't assume. Go check the actual policy letters, in Singapore.

I hold the view Singapore is 10 years behind Australia. DI was not available not to long ago.

Whether that's true or not, it doesn't matter to you. You live in Singapore, so focus on doing the best you can in Singapore.

 

[321654987]

Presumably also some CPF assets, correct?

CPF excluded. I havent touched my CPF since i started work a few years back

No need for SPY or GLD. IWDA or VWRA, and ES3 or G3B, are perfectly fine.

Standard Chartered and POSB Invest Saver work rather well for ES3/G3B. Interactive Brokers or Standard Chartered work rather well for IWDA or VWRA. Just compare the fees and expenses for what you plan to do and how often you plan to do it (monthly would be nice), including currency conversion costs.

Thanks. I will use SCB given my infrequent trades. If I do more than monthly or if my portfolio grows above 100k USD, i will switch to IB. EDIT: Actually it seems that i would save about 3% on USD/SGD conversions between SCB and IB? this alone would be enough to make me use IB

I lean toward CPF MediSave top ups for tax relief first, as an early career person. MediSave top ups must fit within the CPF Annual Limit and the Basic Healthcare Sum.

Top-ups further back in my career (assuming my salary increases) will lead to more tax saved, so why is it better to make top ups early? Can I carry forward these deductions?

Disability Income Insurance (DII) if you don't have it yet. FX, options, and cryptocurrencies are gambling not investing. Astrea V was only mildly interesting when it was initially offered. It's not interesting at all on the secondary market, not for you anyway. I was a fan of the Temasek general obligation 2.7% retail bond when it was offered not too long ago, but again that's not something an already bond-heavy early career individual needs.

Admittedly i live in a bubble, but do people often stop work and claim DII? The old folk around me tend to be retrenched/retire due to old age but this is just personal experience. DII in this case appears to be a luxury i can do without (or is it?)

 

[justwakeup]

Hi BBC, since you touch on DII, any idea if a person suffering from vertigo eligible for claim? This considered physical or mental illness?

 

[AphoticFX]

What is everyone’s thoughts on the Ray Dalio’s All Weather Portfolio?

 

[BBCWatcher]

Hi BBC, since you touch on DII, any idea if a person suffering from vertigo eligible for claim?

Assuming there's no pre-existing condition exclusion, yes, vertigo is a perfectly reasonable, claimable disability under a DII policy, if it's a genuinely impactful disability. If you have only 30 seconds of vertigo the moment you wake up every morning, but the rest of the day there's no vertigo, you'd still be able to work. But sure, if it's serious enough to disrupt ability to work, it's claimable.

Migraine headaches can be another example of a claimable disability, if they're serious enough to impact ability to work.

Top-ups further back in my career (assuming my salary increases) will lead to more tax saved, so why is it better to make top ups early?

Oh, that's easy: 4% interest compounded annually, or 5% if you still qualify for bonus interest. The tax relief is nice, but so is the above market interest.

There's also a little quirk with MediSave. Once your MediSave Account reaches the Basic Healthcare Sum, compulsory contributions that ordinarily flow into MediSave will instead "spill over" into your Special Account. And this is nice because it helps you have more generally spendable wealth from age 55+. Once the Special Account reaches the Full Retirement Sum then the portion of compulsory contributions that ordinarily flows into MediSave then "double spills" into your Ordinary Account, still nice if you're servicing a mortgage with OA, using the CPF Investment Scheme prudently, and/or simply like a 2.5% interest bearing "piggybank" from age 55+.

And, as I mentioned, MediSave dollars can be useful at any/every age, if not for yourself then for your elders' medical bills, for example. Also, it's tougher to collect any tax relief for MediSave top ups when your salary is high enough, because then there's no room for top ups below the CPF Annual Limit. So for all these reasons, I like favoring MediSave top ups (for tax relief) first.

Can I carry forward these deductions?

Nope.

Admittedly i live in a bubble, but do people often stop work and claim DII?

If they're unable to work due to disability, fully or significantly (significant loss of income), then of course DII policyholders file and collect claims. That's what DII is for.

DII is not UI (Unemployment Insurance). UI pays a benefit when your employer terminates your employment against your wishes, typically subject to a few exclusions (for example, if your employer fires you because you're convicted of a crime and living in prison). There's also often a requirement to demonstrate job searching activities in order to continue to receive benefits. In the U.S. state of New York, to pick a random example, most employees are covered by the government UI program, employers pay the full premiums, and the maximum benefit is US$450 per week (2019 figure) for up to 26 weeks. During a recession (or worse) it's fairly typical for the U.S. federal government to increase that maximum benefit payout term to 52 weeks, but that's not the case right now with the low U.S. unemployment rate. UI benefits are income tax free, as far as I know.

I'm not aware of any UI offered in Singapore, but UI is available in many other countries. "Welcome to Singapore."

The old folk around me tend to be retrenched/retire due to old age but this is just personal experience. DII in this case appears to be a luxury i can do without (or is it?)

Oh no, definitely not a luxury. Unless you consider your future expected earnings to be disposable, something you really don't need. If you're unable to work next month, no problem, right?

....No, that's not most early and mid career workers in Singapore. The single biggest asset you've got by far is your future earning potential. And right now, apparently, your single biggest asset is uninsured. We can certainly quibble about the "correct" amount of DII coverage, but zero is the wrong answer in my view. Singapore is a high cost of living country with a lousy disability safety net, sorry to say. This one is quite important.

 

[assiak71]

The Eastspring funds that you’re looking at are all terrible investments, especially given your stated preferences. They’re all riskier than MBH (they own more corporate bonds and more equity-like risk), and they all have stratospheric TERs (north of 1.25%). Why pay more for a worse product?

Just to get the TER fact right.

https://secure.fundsupermart.com/fsm/funds/factsheet/PAM049

Eastspring Investments Unit Trusts - Singapore Select Bond A SGD

0.62% Annual Expense Ratio (As of 31 Dec 2018)

 

[Shiny Things]

Just to get the TER fact right.

https://secure.fundsupermart.com/fsm/funds/factsheet/PAM049

Eastspring Investments Unit Trusts - Singapore Select Bond A SGD

0.62% Annual Expense Ratio (As of 31 Dec 2018)

Sure, though that's not what he's looking at - he wanted, for reasons that are ENTIRELY unclear to me, overseas govvy bonds hedged into SGD. Those funds with the SGD cross-currency hedge are all way more expensive - that fund there is straight-up SGD bonds, no FX hedge needed.

And it still boggles my mind that funds like that can charge 62bps for something that looks an awful lot like "25% A35 + 75% MBH". (No, really! The Eastspring fund is 25% in SGS and 75% in SGD corporates). 65bps on a billion in assets pays for a hell of a lot of Lamborghinis for the fund managers!

(on a totally unrelated note, the singular should really be "Lamborghino", right? "Your fund manager just bought a Lamborghino with your money", but "your fund manager just bought two Lamborghini with your money".)

 

[ftpofmpo]

Singapore is a high cost of living country with a lousy disability safety net, sorry to say. This one is quite important.

You should trumpet it out loud in social media, not "sorry to say"!

 

[Shiny Things]

Too expensive for my budget.

You mean that the actual price-per-share of CSPX—$281/share—is too expensive for your budget?

What is everyone’s thoughts on the Ray Dalio’s All Weather Portfolio?

The implementation is really sensible - fixed allocations to certain asset classes, rebalance every so often, etc etc.

Where All Weather falls down is that the asset classes it invests in are a step up from "guns and canned goods". It's 50% in cash and bonds, and 15-25% (depending on the variant) in commodities. It's a portfolio designed for a seventy-year-old retiree who already has enough cash in the bank to retire, and still has a residual fear of runaway inflation because they lived through the seventies. (In totally unrelated news, guess how old Ray Dalio is.)

It's far too conservative, and the allocation to commodities is just backtest-humping. All Weather looks great in the backtests, because gold ripped higher all through the 2000s and bonds have gone up and to the right in a straight line for thirty years. Neither of those trends are likely to continue, though.

Questions:
1. Interested in IWDA, SPY, maybe GLD, maybe ES3, and plan to make quarterly trades of maybe SGD5-10k to buy and hold the ETFs. Should I stick with SCB as a broker or are there cheaper options out there such as IB/Schwab/TD given my current position?

I say this a lot, but: ETFs aren’t Pokemon, you don’t need to own ‘em all.

Gold is not a good investment; it has a negative yield, don’t forget. Ditch that one. And SPY is redundant, because it’s just an ETF of US stocks, and IWDA already owns those same US stocks.

Stick to IWDA and ES3, and pick a bond fund as well (MBH is the obvious choice) so you’ve got some diversification.

3. Are there other alternative products that I should be dabbling in just for fun such as FX/Options/Crypto/Astrea V? I can see myself setting aside maybe 5K for this.

Nope, don’t do this, and I say that as someone who used to trade FX options professionally. These aren’t appropriate for retail traders; they’re basically gambling.

The Astrea bond issuances are dumb for different reasons, but I wouldn’t put money in those either.

ya I’ve been through a dismal career. I think I do perform well but lack passion. I have switched careers multiple times and experienced many different industries. Nothing interests me. Like one astrologer once told me illl fail working for others and can only succeed as an entrepreneur.

I do wish to work as retiring for the last number of years is beginning to bore. All I do these days is yell at the kids. I do not have any ideas left. Wanna hire me ? I’m cheap and good.

OK, I have a suggestion for you. Your problem is not that you want investment advice without people telling you you're insane; and it's not that you want to know how to fund your mythical sixty-year retirement; the problem is that you’ve pulled the ripcord from a job you hate (which is totally justifiable!) but you don’t know what you want to do next.

Can I suggest that instead of a financial planner, you should look for a career counselor? (And maybe a therapist as well—I can’t imagine your better half is too pleased with having you sitting around unemployed, not wanting to get a job, and shouting at the kids all day.)

 

[littleredboy]

Yessu, I meant price per share.

For e.g. I dedicate a certain portion of my salary towards buying etf, such as IWDA. If at $281 per share, it doesnt give me very much room. But $281 allows me to buy more IWDA shares. So I rather much choose this instead of CSPX for now.

I don't intend to hold company stocks for the long term, although I do trade them for the mid-term.

 

[teArsBoy]

Hi St.

Should I attempt to sell off my A35 which I mostly bought at 1.70 range now that I'm buying and replacing it with MBH?

 

[Shiny Things]

Yessu, I meant price per share.

For e.g. I dedicate a certain portion of my salary towards buying etf, such as IWDA. If at $281 per share, it doesnt give me very much room. But $281 allows me to buy more IWDA shares. So I rather much choose this instead of CSPX for now.

I don't intend to hold company stocks for the long term, although I do trade them for the mid-term.

You understand this doesn't really make any sense, right?

If CSPX split 100-for-1, so it was $2.81 instead of $281, you might be able to buy 100 shares instead of 1 share (for example). But it would move one-one-hundredth as much - if the S&P 500 went up 1%, then our "split CSPX" would go up by 2.8 cents, but the actual CSPX would go up by $2.80. You'd make the same amount of money either way: either 2.8 cents per share on 100 shares, or $2.80 per share on one share.

That all said: you're investing for the long term, and you want to diversify, not go all-in on the USA. So IWDA is the right thing to buy anyway.

Hi St.

Should I attempt to sell off my A35 which I mostly bought at 1.70 range now that I'm buying and replacing it with MBH?

Nah. A35 is still perfectly good, and you don't need to run up transaction costs to sell it and re-buy something else. Just direct your new contributions toward buying MBH.

 

[nyl3v3]

F-2 is the visa for the dependent of a F-1 student visa holder. Did you mean you have a F-1?

It matters a little because F-1 holders get U.S. Social Security Numbers and F-2 holders don’t — but they can get Individual Taxpayer Identification Numbers (ITINs). Financial institutions can be a little more welcoming to SSN holders, in practice, but an ITIN should be good enough.


I have a perhaps surprising recommendation here: neither SCB nor IB at the present time. I would go with Schwab, and let me explain why.

Let’s suppose you’re investing US$350/month and live in the U.S. for 4 years. That adds up to US$16,800 total, and just as a rough estimate we’ll use a little more than half that (US$9,000) for cost calculation purposes — you’ll see that in a moment. And let’s assume a dividend yield of 2%. OK, let’s look at IWDA via IB:

Total brokerage commission: US$480
Total imputed dividend tax: 15% of 8% of US$9,000 (roughly) = US$108
Total fund management expense: 0.8% of US$9,000 (roughly) = US$72
TOTAL COSTS = US$660

OK, now let’s look at Schwab, and we’re going to use SWTSX and SWISX, a pair of mutual funds which you could buy in a 60:40 ratio. Here we go....

Total brokerage commission: zero
Total imputed dividend tax: 30% of 8% of US$9,000 (roughly) = US$216
Total fund management expense: about 0.042% * 4 of US$9,000 (roughly) = US$15
TOTAL COSTS = US$231

I’ve omitted the currency conversion cost since I wasn’t sure whether you already have these U.S. dollars or still have Singapore dollars. If the latter then let’s conservatively assume an additional currency conversion cost at Schwab of 0.4% of US$16,800 — it might be a better, but let’s go with that. That’d be another US$67 of cost, but obviously Schwab would still win.

So I’d pick Schwab here, for now. Then consider selling these mutual funds and immediately buying IWDA at SCB or IB in the future, when you’re “repositioned” and it makes sense to do so.

If you are on a F-2 and you’ve got a spouse on a F-1 who is earning legal income in the U.S., I should do some more checking to see if you and your spouse could make Roth IRA contributions, because that’d likely be even better.

Schwab U.S. offers an extremely lovely free Visa ATM card with its Schwab One brokerage account that’s a bonus. There’s a separate form to get that card (linked to the brokerage account) last I checked. When you open a Schwab One account Schwab offers to open a separate Schwab Bank checking account alongside. And then Schwab waives the US$1,000 minimum opening requirement if you get both. The only problem is you won’t be allowed to keep the checking account unless you keep a U.S. mailing address on it, so it’s up to you whether you want to bother with it. Regardless, go ahead and get the ATM card that’s linked to the brokerage account, even if you also get the equally lovely ATM card linked to the checking account.

And you will want to have/keep a U.S. bank account — a good one, with no minimum balance requirement, low or no fees, and a nice ATM card — but Schwab Bank isn’t best because of the U.S. mailing address requirement. But that’s another discussion for another day.

Hi BBCW! Thanks for replying! Yes, I am on F2 visa as a dependent. My husband is currently studying in MA. Unfortunately, we are not earning an income in U.S because I am taking leave off my work in Singapore to be with him and he's getting allowance from SG govt instead (in fact he actually cannot even work as a TA here in the university). I suppose we can't contribute to the Roth IPA you've mentioned, but still thank you for offering to find out more for me!

I was thinking of using IBRK and filling the application up as though I am just a Singaporean (without putting my US address etc.). Is it legal to do that? I was worried that it would complicate the tax reporting procedure in US, partly because I am too sheltered since my employer does automatic income tax reporting for me in Singapore. I was quite overwhelmed by the procedures in US (so many kind of forms ) And also I will return to Singapore end of this year anyway so just want to keep things simple and fuss free (before my husband nags me for being too enthusiastic about learning how to invest).

 

[ChinoGirl]

Repost

Hi everyone,

I need help to decide if I should opt for A35 from POSB-IS or MBH from OCBC BCIP.

OCBC BCIP
-Buying 0.3% of the total investment amount or S$5 per counter, whichever is higher.
-Selling 0.3% of the total sales proceeds or S$5 per counter, whichever is higher.

POSB-IS
- A sales charge of 0.5% will be deducted from investment amount into the ABF Singapore Bond Index Fund. Currently no sales charge for selling.

It looks like POSB-IS (A35) is the platform to go for? Would the better yield from MBH more than compensate the cheaper sales commission of A35 from POSB-IS?

Thanks!

 

[BBCWatcher]

Unfortunately, we are not earning an income in U.S because I am taking leave off my work in Singapore to be with him and he's getting allowance from SG govt instead (in fact he actually cannot even work as a TA here in the university). I suppose we can't contribute to the Roth IPA you've mentioned, but still thank you for offering to find out more for me!

No U.S. earned/taxable income = no U.S. IRA. So we can rule that one out.

I was thinking of using IBRK and filling the application up as though I am just a Singaporean (without putting my US address etc.). Is it legal to do that?

It seems to me like it would be, but for cost reasons I think it’s the wrong choice right now.

I was worried that it would complicate the tax reporting procedure in US, partly because I am too sheltered since my employer does automatic income tax reporting for me in Singapore. I was quite overwhelmed by the procedures in US (so many kind of forms ) And also I will return to Singapore end of this year anyway so just want to keep things simple and fuss free (before my husband nags me for being too enthusiastic about learning how to invest).

I don’t think it’s particularly complicated on the U.S. side, and it wouldn’t be any more or less complicated if it is complicated.

OK, I need to explain that. There are a lot of people who think, “Oh, if I get paid into an offshore bank account, don’t open accounts, etc., etc., then I don’t have any tax or reporting obligations in my temporary country of residence. Nope, that’s not how it works. You can be an undocumented immigrant in the United States, but you’re still required to follow all the applicable tax and financial reporting rules. (And undocumented immigrants in the U.S. pay plenty of tax.)

Fortunately F-1/F-2 status is roughly speaking the tax equivalent of being in a foreign embassy in the U.S. Generally speaking, except for U.S. source income, you’re “off the grid.” Check that, but that’s my understanding. So when you open a Schwab One account — did I mention their utterly globally fabulous ATM card? — you file a W-8BEN, you’re subject to automatic 30% dividend tax withholding, and that’s that. I don’t think it’s any more complicated than that. Same thing with bank and credit union accounts, and you will want to get a fabulous one before you leave since a basic U.S. dollar account in the U.S. can be quite useful in your financial life. And I’d open a TreasuryDirect account if you’re able, just because. (TreasuryDirect lets you buy and manage U.S. dollar U.S. government bonds, including ultra low denomination savings bonds.) Probably easier for your husband with a SSN, but he could at least add you as a “Payable on Death” (PoD) beneficiary. You’d need an ITIN.

Again, double check all this, but my understanding is that the F-1/F-2 folks are akin to foreign diplomats in the U.S.: excused from tax affairs, except for U.S. source income. At Schwab, with a Schwab One account and U.S. mutual funds, Schwab withholds and pays the dividend tax for you, and that’s that. Just file the W-8BEN with them per usual, that’s all. (Same as IB, another U.S. broker.)

Once you move back to Singapore you update your mailing address on your Schwab One account, and...nothing happens, or nothing should happen. Schwab has an office in Singapore, after all. And then you can decide about when and how to shift the mutual fund proceeds over to another broker. While keeping the ATM card and account, as I understand it. And you’ll need a U.S. bank or U.S. credit union account to get U.S. dollars shifted efficiently, at zero cost, from one broker to another (IB for example) — see how that all fits together?

Want some bank account recommendations next?

 

[AphoticFX]

Is the Regular Savings Plan the only automated way to purchase ETFs automatically on a monthly basis?

 

[nyl3v3]

No U.S. earned/taxable income = no U.S. IRA. So we can rule that one out.


It seems to me like it would be, but for cost reasons I think it’s the wrong choice right now.


I don’t think it’s particularly complicated on the U.S. side, and it wouldn’t be any more or less complicated if it is complicated.

OK, I need to explain that. There are a lot of people who think, “Oh, if I get paid into an offshore bank account, don’t open accounts, etc., etc., then I don’t have any tax or reporting obligations in my temporary country of residence. Nope, that’s not how it works. You can be an undocumented immigrant in the United States, but you’re still required to follow all the applicable tax and financial reporting rules. (And undocumented immigrants in the U.S. pay plenty of tax.)

Fortunately F-1/F-2 status is roughly speaking the tax equivalent of being in a foreign embassy in the U.S. Generally speaking, except for U.S. source income, you’re “off the grid.” Check that, but that’s my understanding. So when you open a Schwab One account — did I mention their utterly globally fabulous ATM card? — you file a W-8BEN, you’re subject to automatic 30% dividend tax withholding, and that’s that. I don’t think it’s any more complicated than that. Same thing with bank and credit union accounts, and you will want to get a fabulous one before you leave since a basic U.S. dollar account in the U.S. can be quite useful in your financial life. And I’d open a TreasuryDirect account if you’re able, just because. (TreasuryDirect lets you buy and manage U.S. dollar U.S. government bonds, including ultra low denomination savings bonds.) Probably easier for your husband with a SSN, but he could at least add you as a “Payable on Death” (PoD) beneficiary. You’d need an ITIN.

Again, double check all this, but my understanding is that the F-1/F-2 folks are akin to foreign diplomats in the U.S.: excused from tax affairs, except for U.S. source income. At Schwab, with a Schwab One account and U.S. mutual funds, Schwab withholds and pays the dividend tax for you, and that’s that. Just file the W-8BEN with them per usual, that’s all. (Same as IB, another U.S. broker.)

Once you move back to Singapore you update your mailing address on your Schwab One account, and...nothing happens, or nothing should happen. Schwab has an office in Singapore, after all. And then you can decide about when and how to shift the mutual fund proceeds over to another broker. While keeping the ATM card and account, as I understand it. And you’ll need a U.S. bank or U.S. credit union account to get U.S. dollars shifted efficiently, at zero cost, from one broker to another (IB for example) — see how that all fits together?

Want some bank account recommendations next?

I see! Thanks BBCW. I am looking into Schwab now and I do need to get ITIN to begin with. Will also get my husband to open an account there too!

Currently using... we both are using BoA savings, checking accounts and credit and debit cards. Just because... BoA is nearest to us. Haha. Any good recommendations?