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Old 06-12-2018, 05:42 PM   #3196
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For portfolio size of six figures and up, how necessary is it to have EIMI in addition to IWDA? If EIMI is just 10% of the global portion, it's not really that significant right? Is there a good case for including or excluding it?
It's not too important.

If you're concerned about the additional expenses involved in adding a ticker to your portfolio, no problem, skip it. Or pick VWRD which effectively blends IWDA+EIMI, albeit with some minor disadvantages compared to IWDA.
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Old 06-12-2018, 05:54 PM   #3197
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Well, what do you count it as then?


Yes, the government could start taxing your stocks tomorrow, which is much more likely (in any rational analysis) than the government taxing CPF assets. But they'd still be stocks, and you wouldn't stop counting them.

This isn't complicated. All assets count, so count them. You can add footnotes or asterisks if you wish, but count them.
Can count as property downpayment

yea they can tax stocks but at the end of the day u can choose to liquidate and withdraw whether at loss or profit. But CPF withdrawal, u have no control. Let's say the government taxes dividend and capital gains, then we do what is done for ETF, look for the preferential tax treatment or lowest cost route. We can sort of control or optimize this.

But CPF? u cant do much until it goes into your bank account or when u receive the notification allowing for withdrawal. Sure, u might use it for investment but even liquidating cpf investment goes back inside.
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Old 06-12-2018, 06:01 PM   #3198
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What a complete reversal from Monday!
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Old 06-12-2018, 06:04 PM   #3199
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Can count as property downpayment
That's not an asset class for purposes of making portfolio allocation decisions.

yea they can tax stocks but at the end of the day u can choose to liquidate and withdraw whether at loss or profit.
Or not. The government has lots of power to change whatever rules it wishes. The government could levy a 90% tax on "short-term" stock capital gains, for example. (Would that give you pause?) Practically anything is possible, and most things have happened somewhere in the world at some point.

But CPF withdrawal, u have no control.
In fact, you do, and under current rules. You're free to terminate your status of/with Singapore, leave Singapore (and the immediate region), and withdraw every single dime of your CPF assets. If you wish. Yes, some citizens and permanent residents really do this. I don't think it's a great idea, but people do it anyway.

....But back up here, because you're making something very simple way too complicated. You're digging deep into footnotes and asterisks, and that's just not necessary when deciding on your investment portfolio allocations. Just tally up all your assets, assign those assets to a couple asset classes ("stocks and stock-likes" and "bonds and bond-likes" work), decide on a desired split (e.g. 80%-20%) that makes sense for your investing time horizon, and then see whether and how that desired allocation can be put into effect in the best way(s) possible. But just count it all. If it's a long-term bond-like paying 4% interest with a minimum holding period, OK, so what? It's still a bond-like, so count it in that bucket.

Last edited by BBCWatcher; 06-12-2018 at 06:06 PM..
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Old 06-12-2018, 07:13 PM   #3200
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Part of the SSB is part of my emergency fund. Do you still count it when calculating the equity vs bond ratio or is it supposed to be excluded from the calculation?
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Old 06-12-2018, 07:59 PM   #3201
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Do you still count it when calculating the equity vs bond ratio or is it supposed to be excluded from the calculation?
It's an asset, so you include it.

Portfolio allocations should be decided on a total asset basis. If nothing else, it's simpler that way. Emergency reserve fund decisions are separate decisions. It's perfectly fine, even better than fine, for specific assets to satisfy two or more financial goals.
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Old 06-12-2018, 08:15 PM   #3202
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Hi Shiny, BBCW, and all,

I've just finished reading the past 200+ pages in this thread and Shiny's book earlier this week, and I'm extremely new to investing. I'll like to thank both of you for the insightful recommendations and replies to all sorts of questions. I'm a Singaporean (29yrs old, no dependents), currently working in Japan as I graduated early this year (am also a tax resident of Japan, it's been about 10 months since I moved here). I'm considering myself an international nomad as I have no inclination where I would settle down/retire 30 years later.

Current plan is to follow the steps you have laid out in Shiny's book, insurance, emergency fund, then invest rest into IWDA through IB but am still confused on details regarding tax.

Please excuse my newbie questions,
1) If I did my homework correctly, I'm considered a non-permanent resident of Japan. Therefore non-japan source of income are non-taxable. But I'm confused when I start diving into the details what is considered taxable. As IWDA reinvests dividends, are these dividends considered non-japan source of income if I buy IWDA them through IB using Jap local bank account? Meaning to say the Japanese government will know when I transfer Yen to USD through Japan local bank account, thus I believe the bank will report to the Jap Gov due to tax compliance. Or am I overthinking and over complicating all of it or maybe I'm just confused on the terms used for understanding tax?

2) If the answer to the previous question is yes and I will be taxed (20.315%) on dividends. Would it make more sense for me to remit Yen to Singapore local bank via TransferWise, then transfer to IB to buy IWDA, all the while eating up FX charges. I believe total FX charges would be still significant less than 20% tax. But is this considered tax avoidance?

3) Even if I don't plan to retire in Singapore, would it still be wise to invest in ETFs in Singapore, maybe 10-20% of my portfolio as a backup plan? As it's still the only country where I can fall back upon.

4) I'll like to understand more about the state nearing (7 years?) to retirement, since stocks are not currency, does it make sense to still think about returning back to SG to enjoy retirement as personal investments are non-taxable? Or am I overthinking about ramifications which are 20+ years later down the road?

5) I'm on the fence on this on self-contribution to CPF (naturally my Jap company doesn't contribute to CPF), I'll like to hear your take on this. Reading through many of BBCW replies, where if you have no idea where you'll retire, it kinda make sense to take on globalised investments such as IWDA 80% and CORP 20% of my portfolio?

Looking forward to your opinions or advice!

Let me know if this isn't the correct thread to ask for clarifications regarding tax.
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Old 07-12-2018, 12:16 AM   #3203
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I count CPF as a CPF component.

It is truly unique, so it does not fit in any category.
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Old 07-12-2018, 12:29 AM   #3204
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Hi Shiny, BBCW, and all,

I've just finished reading the past 200+ pages in this thread and Shiny's book earlier this week, and I'm extremely new to investing. I'll like to thank both of you for the insightful recommendations and replies to all sorts of questions. I'm a Singaporean (29yrs old, no dependents), currently working in Japan as I graduated early this year (am also a tax resident of Japan, it's been about 10 months since I moved here). I'm considering myself an international nomad as I have no inclination where I would settle down/retire 30 years later.

Current plan is to follow the steps you have laid out in Shiny's book, insurance, emergency fund, then invest rest into IWDA through IB but am still confused on details regarding tax.

Please excuse my newbie questions,
1) If I did my homework correctly, I'm considered a non-permanent resident of Japan. Therefore non-japan source of income are non-taxable. But I'm confused when I start diving into the details what is considered taxable. As IWDA reinvests dividends, are these dividends considered non-japan source of income if I buy IWDA them through IB using Jap local bank account? Meaning to say the Japanese government will know when I transfer Yen to USD through Japan local bank account, thus I believe the bank will report to the Jap Gov due to tax compliance. Or am I overthinking and over complicating all of it or maybe I'm just confused on the terms used for understanding tax?
JP huh? Tokyo? Can I crash at your place if I fly there for concerts? Just kidding.

Note that IDWA does have JP holdings, so I suspect it will complicate matters. I think you have to check with local experts on taxes to clarify.

2) If the answer to the previous question is yes and I will be taxed (20.315%) on dividends. Would it make more sense for me to remit Yen to Singapore local bank via TransferWise, then transfer to IB to buy IWDA, all the while eating up FX charges. I believe total FX charges would be still significant less than 20% tax. But is this considered tax avoidance?
Probably yes. Don't screw around with such things. Check with local tax experts (check with 国税庁?).

3) Even if I don't plan to retire in Singapore, would it still be wise to invest in ETFs in Singapore, maybe 10-20% of my portfolio as a backup plan? As it's still the only country where I can fall back upon.

4) I'll like to understand more about the state nearing (7 years?) to retirement, since stocks are not currency, does it make sense to still think about returning back to SG to enjoy retirement as personal investments are non-taxable? Or am I overthinking about ramifications which are 20+ years later down the road?

5) I'm on the fence on this on self-contribution to CPF (naturally my Jap company doesn't contribute to CPF), I'll like to hear your take on this. Reading through many of BBCW replies, where if you have no idea where you'll retire, it kinda make sense to take on globalised investments such as IWDA 80% and CORP 20% of my portfolio?

Looking forward to your opinions or advice!

Let me know if this isn't the correct thread to ask for clarifications regarding tax.

How long do you expect to stay in Japan? In Japan, you will be pension contributions. Meanwhile, you are not contributing (unless you do money transfers and make voluntary contributions).

IMO, don't put money into SG ETFs. Do a shift in your portfolio only when you actually move back to SG.
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Old 07-12-2018, 12:30 AM   #3205
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Part of the SSB is part of my emergency fund. Do you still count it when calculating the equity vs bond ratio or is it supposed to be excluded from the calculation?
The emergency fund is not part of your portfolio.
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Old 07-12-2018, 12:33 AM   #3206
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For portfolio size of six figures and up, how necessary is it to have EIMI in addition to IWDA? If EIMI is just 10% of the global portion, it's not really that significant right? Is there a good case for including or excluding it?
There is no "necessity" for any portfolio of size to have EIMI. It can make sense to try and capture greater potential* gains for greater volatility, or not bother to.


* Obviously there are no guarantees that EM will outperform the developed world in the long run.
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Old 07-12-2018, 12:51 AM   #3207
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Why all this complication? Yes, your emergency reserve funds are assets. Yes, CPF savings are assets. Yes, the cash under your mattress is an asset. Yes, your collection of rare baseball cards is an asset. It all counts.

A portfolio allocation decision ought to be based on a total view of all your assets. There’s absolutely no need to make that analysis artificially complicated. It’s really quite simple, actually. It just boils down to what split you want between stocks/stock-likes and bonds/bond-likes at particular phases in your life. That’s it.

I really don’t understand the impulse to add complexity where none is merited. If you don’t like “the answer” when you toss in all your assets, no problem! You get to decide the split. You’re not required to make this decision based on what some person named BBCWatcher or Shiny Things or Mr. Moon suggests. But just toss in everything to this particular simple analysis, because what’s the rationale for excluding any asset? I can’t make a coherent argument for why this counts and that doesn’t in deciding a portfolio split. Why would you do that? (“I’ll split 78-22 ex-X, Y, Z, P, D, and Q”? Huh? How do you even wrap your head around that?)

Relax, already! Don’t insert advanced calculus where elementary school math will perform beautifully.

Last edited by BBCWatcher; 07-12-2018 at 12:54 AM..
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Old 07-12-2018, 01:26 AM   #3208
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1) If I did my homework correctly, I'm considered a non-permanent resident of Japan.
Yes, I think that's right. Since you have lived in Japan for less than 60 months out of the past 120, and since you are not a citizen of Japan, you are considered a non-permanent resident taxpayer. That is, you're a tax resident, but you're allowed some temporary benefits on foreign (non-Japanese) source income, with certain conditions. Once you hit the 5 year mark those temporary benefits end.

Several of the major accounting firms publish useful tax summaries. PwC's is located here (click on the topics under "Individual"). You've probably already done that, or something like it, but for future reference for others it's useful.

You have a big tax-related decision to make if/as you approach the 5 year mark. Reading through the rules, Japan has a lower tax rate on capital gains for assets that are held at least 5 years. What might be possible before you hit the 5 year mark is to liquidate appreciated foreign assets to reset the cost basis, reinvest them (subject to any "wash sale" restrictions if Japan has them), and then avoid any short-term capital gains (selling assets held for less than 5 years). What I'm thinking here, specifically, is that you could start with the popular Irish domiciled/London listed funds (e.g. IWDA, EIMI, VWRD) but then, if you end up approaching the 5 year mark (and strictly before crossing it, whatever the tax year definition is), sell those assets and recycle them into the lower cost U.S. domiciled/listed equivalents or near equivalents. Japan has a reasonably favorable tax treaty with the U.S., as I recall....

....Yes, it does, so if you're able now or later to claim Japanese tax treaty benefits with the U.S., you'll really like investing in U.S. listed securities. In particular, the dividend tax rate is 10%, which is even better than the Irish treaty rate of 15%. Are you allowed to claim the Japanese tax treaty benefit without paying income tax during this first 5 year period? Interesting question! It's worth checking. Wouldn't that be something?

Therefore non-japan source of income are non-taxable.
Well, sometimes. From 2017, Japan started taxing the non-permanent resident taxpayers' income from the sale of personal property, such as houses and collectibles, even if not remitted to Japan. Foreign-listed securities are still non-taxable, at least if the proceeds (dividends, interest, capital gains) are not remitted into Japan. And before hitting the 5 year mark.

But I'm confused when I start diving into the details what is considered taxable. As IWDA reinvests dividends, are these dividends considered non-japan source of income if I buy IWDA them through IB using Jap local bank account? Meaning to say the Japanese government will know when I transfer Yen to USD through Japan local bank account, thus I believe the bank will report to the Jap Gov due to tax compliance. Or am I overthinking and over complicating all of it or maybe I'm just confused on the terms used for understanding tax?
First of all, IWDA reinvests dividends. There is never any distributed dividend, so there's nothing to remit even if you wanted to, except if you sell shares of IWDA. Second, it's perfectly OK to send money out of Japan to go buy something elsewhere in the world, such as foreign-listed securities. That's not a taxable event, not by itself.

If/when you hit the 5 year mark, you'll be subject to Japan's financial reporting requirement, to report your overseas assets.

2) If the answer to the previous question is yes and I will be taxed (20.315%) on dividends.
No, there are no distributed dividends with IWDA. They're internal to the fund. There are no dividends to remit. Only share sale proceeds, which include internally accrued dividends.

3) Even if I don't plan to retire in Singapore, would it still be wise to invest in ETFs in Singapore, maybe 10-20% of my portfolio as a backup plan? As it's still the only country where I can fall back upon.
You could, and you could use Interactive Brokers to do it (buy ES3) since you're a resident of Japan.

4) I'll like to understand more about the state nearing (7 years?) to retirement, since stocks are not currency, does it make sense to still think about returning back to SG to enjoy retirement as personal investments are non-taxable? Or am I overthinking about ramifications which are 20+ years later down the road?
The latter, I'd say. Singapore could quite easily change its tax treatment of passive income. I certainly wouldn't rule it out.

However, you probably should investigate what the Japanese tax advantaged savings vehicles are to see if those have merit. You could end up staying in Japan for a long time, or even forever, and I don't see any harm in taking advantage of those vehicles if they otherwise make sense.

5) I'm on the fence on this on self-contribution to CPF (naturally my Jap company doesn't contribute to CPF), I'll like to hear your take on this. Reading through many of BBCW replies, where if you have no idea where you'll retire, it kinda make sense to take on globalised investments such as IWDA 80% and CORP 20% of my portfolio?
I think the logic is similar to your approach to #3. You only currently have one country where you have an unambiguous right of abode, so to some extent you ought to respect that. Plus CPF really is a rather good deal. I think I'd do "a little." You'll probably need to add a little to your MediSave Account anyway in order to pay your MediShield Life premiums, at least. (MSL premiums cannot be skipped until you hit the 5 year mark overseas, and then you still might not.)

Always double or triple check tax advice, especially. I have some familiarity and experience with Japan's tax rules, but I'm not a true expert.

You didn't mention Japanese gift and inheritance taxes, but those are rather "interesting" from the 5 year mark onward. Just be aware of those if you decide to cross that threshold.
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Old 07-12-2018, 02:50 AM   #3209
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Btw what bond ETF do you guys suggest or buy?

I saw a few but not sure which one so I went for AGGG (ishares global aggregate bond etf)
Assuming you're a normal investor who's planning to retire in Singapore, I think MBH is all you need.

Bonds are about having a stable asset in your portfolio—stable compared to the ups and downs of stock markets. Global bonds are just a giant lump of currency risk that tends to outweigh the yield that you get from them.

If you're planning to retire overseas, then yes, you should have an allocation to global bonds, and I think CORP's the pick (AGGG has too much in low-yielding EUR and JPY and AUD govvy bonds).

got a qn about this 110 rule thingy. Does the SSB or CPF count as bonds? Or as cash equivalents? Do i disregard SSB and CPF and only count like the ABF as a true bond?
SSBs: absolutely yes, those are bonds. It's even got "bond" in the name.
CPF: I'd say yes, you count it as a bond, because it's a thing with relatively stable value and a fixed-ish coupon. (To the person upthread saying "don't count CPF as a bond because the rules might change": the government can default on Singapore government bonds as well, but they're still bonds.)

For portfolio size of six figures and up, how necessary is it to have EIMI in addition to IWDA? If EIMI is just 10% of the global portion, it's not really that significant right? Is there a good case for including or excluding it?
I don't think it's necessary if you wanna be lazy (nice handle by the way), but it's nice to have the extra diversification. And frankly I think EMs are cheap at this point (though to be fair I've thought EMs are cheap for a few years now and they've only gotten cheaper, so I've been excruciatingly wrong on that one for 2-3 years).


3) Even if I don't plan to retire in Singapore, would it still be wise to invest in ETFs in Singapore, maybe 10-20% of my portfolio as a backup plan? As it's still the only country where I can fall back upon.

4) I'll like to understand more about the state nearing (7 years?) to retirement, since stocks are not currency, does it make sense to still think about returning back to SG to enjoy retirement as personal investments are non-taxable? Or am I overthinking about ramifications which are 20+ years later down the road?


Let me know if this isn't the correct thread to ask for clarifications regarding tax.
I'm going to defer to BBCW on the tax questions because I am not a tax guy, but I can help with 3 & 4:

3) Nah. If you really don't have a strong commitment to where you're going to retire, I'd keep it simple. 110 minus your age in IWDA LN, the rest in CORP LN.

4) I think you're overthinking it. Circle back to where you want to retire when you're closer to the date. (And don't just optimise for tax. I mean, California's not a low-tax jurisdiction by any stretch but I love it.)

Last edited by Shiny Things; 07-12-2018 at 02:55 AM..
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Old 07-12-2018, 07:26 AM   #3210
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MBH or A35

Hi there:

Ive just got out of posb invest save mainly for a few reason. You will take days to sell them and rates changes from the date of the selling actually being process.

So now I'm using SCB to purchase my bonds, I'm just wondering the difference between MBH and A35, maybe it's been answered but i cant seem to find it.

I intend to stay and live in Singapore all the way, if this makes a difference.

Thanks
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