Official Shiny Things thread—Part III

[powerfulhorse]

just saw a new feature on workstation - adaptive LMT. should i stick to the usual limit order or should we use this adaptive feature moving forwards?

 

[livingcharsiew]

hi guys i am keen to buy vanguard value etf
https://investor.vanguard.com/etf/profile/VTV
did a search on standard chartered trading and saw that it is on the ASE(american stock exchange)
will buying this etf on this stock exchange have alot of tax?
seems like not much talk on this exchange here, mostly about LSE

Shiny Things will say it is not irish domciled and thus not tax efficient unless you are a US citizen.
Shiny Things might say that you should invest in broad base ETF instead of just a single country allocation
Shiny Things might say the value index is less efficient that doing a proper market cap weighted index

 

[celtosaxon]

I assume you mean the VT ETF? In a previous post I asked whether I can (or should) invest into this via IBKR SG as I wasn't too sure.

Yes the ETF is VT.

Yes, you can invest in VT via IBKR SG.

Should you? I see no reason not to. If you want a US situated low cost global index fund, VT is hard to beat. And since you are moving to the US in a couple of months, it means you will almost certainly become a US person for tax purposes. Once that happens you’ll need to file a W-9 with your broker(s), then you will no longer have the 30% withholding on dividends - instead you’ll report it together with your US income. That could mean as little as 0% tax if they are qualified dividends, depending on your bracket.

You might even be able to get back any 30% withholdings that happen the same year you become US taxable. BBC can correct me if I’m wrong on that one.

 

[hwckhs]

just saw a new feature on workstation - adaptive LMT. should i stick to the usual limit order or should we use this adaptive feature moving forwards?

If you usually use LMT order at ASK price + a small % or ticks, making it adaptive will not make any difference because the order will still be filled instantly.

When I DCA into VWRD every month, I always use adaptive LMT order at mid price. Read from IBKR that I may earn exchange rebate for providing liquidity, though I never check or really care. I use adaptive simply because it is more fun and it makes me feel good that I am getting a better price. Note that this method does not guarantee a better price, especially if volume is low, because the bid & ask prices can move up (detrimental) or down (beneficial) while waiting for the order to be filled. If my order is not filled after 15 minutes, I will increase the limit price slightly and the order should be filled within a minute or two. The benefits/difference is very small, if there's any at all.

Note that this method only works for counters with decent volume (eg. IWDA, VWRD) and will not work well with ETFs with very low volume. Learn more at https://www.interactivebrokers.com/en/index.php?f=19091

In short, it doesn't matter for a long term investor.

 

[xiaonajia]

Hi ST, have you heard about Catherine Wood and Ark Invest?

What's your view on "actively managed" ETF such as ARKK with high expense ratio? Are they avaialble so that they can suck retail in and because no institutional investor want it or are they reliable enough that a credible pension/soverign fund (just example) would buy and hold?

What are the downside risks to be aware of such "actively managed ETF"?

 

[JadenQ]

I was afraid you'd say that.

OK, I think the basic, threshold question is whether it's reasonably possible to be subject to U.S. tax and financial reporting rules on worldwide income and assets while on a H-1B1 visa for a planned 2 year stint. And I think the fair answer to that question is "Yes, it's reasonably possible." You might be able to wiggle out of U.S. tax residence in certain circumstances, but even so I think you ought to plan as if you'll be fully subject to U.S. tax and financial reporting obligations. And you could always fall in love with an American.

Now, if your employer is "tax equalizing" you, and providing tax preparation assistance, that'd be nice. Then you'll still want to learn, at a basic level anyway, what's going on and how the numbers work, but you probably don't have to do anything in particular to reorient your financial life prior to stepping foot in the U.S. Otherwise, it'd be prudent to adopt a "U.S. posture" prior to stepping foot in the U.S.

If you're going to the U.S. specifically to teach, special exceptions may apply.

Hm its not exactly a planned 2 year stint, could be longer depending on how things go over there. Would it make tax filing complicated if I were to invest into VT using the IBKR SG entity? In which case would it make life easier to just wait till I'm in the US before investing any lump sum I have currently?

 

[Abjure]

Anyone buy smart beta etfs?

 

[BBCWatcher]

Hm its not exactly a planned 2 year stint, could be longer depending on how things go over there. Would it make tax filing complicated if I were to invest into VT using the IBKR SG entity? In which case would it make life easier to just wait till I'm in the US before investing any lump sum I have currently?

No, it wouldn’t make tax filing complicated at all. You’d just inform IB after you move to the U.S., and they’ll probably switch you to IB LLC. The assets are what matter, really.

But is VT the right instrument, and is IB the right broker? For the latter, I’d say yes assuming you switch to IBKR Lite. Then there’s no harm in keeping the account. IB is also terrific if you need to shift some Singapore dollars, although the ICBC Global Travel Mastercard is even more terrific at merchants that accept Mastercard.

For the former (VT), maybe not. You could head over to Fidelity after you arrive and invest in their mutual fund pair FZROX and FZILX. Those are literally zero expense ratio index funds, and the pair of them effectively replicates VT. Granted, you would have to manually rebalance them periodically if you wish to do that, and selling a portion of either is a U.S. taxable event (just as at VT — VT will throw off some taxable capital gains as it rebalances inside the fund, but the fund managers try to minimize that). But you don’t necessarily have to sell either. You could just buy a little more of the laggard and rebalance that way. Also, since they’re mutual funds, you can set them up for regular, automatic monthly purchases. And you can set them up for automatic dividend reinvestments. And you can buy them in specific dollar amounts. OK, yes, ETFs and brokers that handle them are starting to figure out the same mechanisms, but they’re not as highly developed yet.

Yet another choice is Schwab’s “target date” index fund. While they’re designed with a U.S. dollarized retirement assumption, since those are the bonds it buys and gradually moves into as you approach the target retirement age, this still works pretty well if you’re far enough away from retirement and “U.S. retirement curious” (could fall in love with an American). Schwab charges a mere 0.08% expense ratio on these funds, and that’s fabulous. Same deal as Fidelity in terms of mechanics, and Schwab also offers their lovely Visa ATM/debit card. If you open a Schwab account be sure to get the ATM/debit card linked to the brokerage account. Schwab also offers a “Schwab Bank” account with its own ATM/debit card, and it’s fine but not an account you’ll be able to keep if you try to put a non-U.S. mailing address on it. (Alliant Credit Union apparently works better in that respect, also offering a fabulous ATM/debit card.)

This is one of the lovely aspects of a U.S. sojourn, that there are some terrific, free, basic consumer financial products that are good to get and good to keep even after you leave. If you want a fuller list, let me know. And you get a U.S. Social Security Number which is yours for life. (Don’t forget the number, and keep the card in a safe place.)

You’ll also presumably have 401(k), IRA, and 529 account opportunities if/as you wish. These are the major U.S. tax advantaged accounts. I think Singaporeans generally ought to pick Roth 401(k) and Roth IRA variants. Roth 401(k)s aren’t always available, but they’re pretty common. “Roth” means the contributions are after-tax, and qualified withdrawals (minimum age 59 1/2 usually) are U.S. tax free. Dividends, interest, and capital gains in the account are also U.S. tax free if you make only qualified withdrawals. If you’re a non-U.S. person when you make a withdrawal you’ll still be subject to withholding, but you can claw the withholding back in full with a 1040NR tax filing. (And this is one reason why you’ll maintain at least one zero cost U.S. bank or U.S. credit union account, for direct deposit from the IRS.) A Roth 401(k) can be shifted into a Roth IRA after you leave employment, U.S. tax free, and Roth IRAs currently have no Required Minimum Distributions (RMDs), meaning you can leave the funds parked as long as you wish — although you probably don’t want to go too long if you’re a non-U.S. person because these are generally U.S. estate taxable assets. Maybe not, though, if your IRA is shifted to IB and you have IWDA or VWDA inside the IRA by that point in time — I think that’s all possible.

 

[cre8ate]

Hi all. Hoping to get some advise from people who transferred from Saxo to IB.

I have some USD in Saxo USD sub account and am thinking of transferring USD to IB to buy USD dominated ETFs. Anyone has any experience with this? Trying to find the most efficient way to do this. Is it possible to

1. Transfer USD directly from Saxo to IB?
2. If not, should i transfer USD from Saxo to my DBS Multiplier account (will there be any fees? I have seen some incurring TT charges) and then transfer USD to IB?

Thanks!

 

[moolala]

Anyone buy smart beta etfs?

Which one? Ticker/symbol?

 

[BBCWatcher]

Is it possible to

1. Transfer USD directly from Saxo to IB?

Possibly via an Automated Customer Account Transfer Service (ACATS) transfer, but Saxo would charge a 50 euro fee to facilitate the transfer. They have a maximum total fee of 160 euro for transfers (per transfer of a group of securities), so if you're already going to have to pay the 160 euro then adding the cash to the transfer pile won't cost anything extra, assuming again Saxo allows it. Otherwise, you can do better....

2. If not, should i transfer USD from Saxo to my DBS Multiplier account (will there be any fees? I have seen some incurring TT charges) and then transfer USD to IB?

DBS charges a S$10 inward telegraphic transfer fee (according to reports we've seen for this type of transfer), but then their DBS USA Remit transfer service is free.

If you have a U.S. bank or U.S. credit union account to facilitate the U.S. dollar fund transfer, obviously that works and is almost always free. (Bank of America is often one notable exception for many account holders, which is really quite nasty, but I digress.)

If you don't have a U.S. bank/credit union account, cannot get one, and want to avoid DBS's S$10 fee then this path may work:

(a) Transfer from IB to a U.S. dollar account you have at a bank that doesn't charge an incoming TT fee, such as CIMB Singapore.

(b) Write a paper U.S. dollar check on that account, and deposit the check into your U.S. dollar subaccount at DBS.

(c) Then use DBS USA Remit to send the funds to IB.

 

[cre8ate]

Possibly via an Automated Customer Account Transfer Service (ACATS) transfer, but Saxo would charge a 50 euro fee to facilitate the transfer. They have a maximum total fee of 160 euro for transfers (per transfer of a group of securities), so if you're already going to have to pay the 160 euro then adding the cash to the transfer pile won't cost anything extra, assuming again Saxo allows it. Otherwise, you can do better....


DBS charges a S$10 inward telegraphic transfer fee (according to reports we've seen for this type of transfer), but then their DBS USA Remit transfer service is free.

If you have a U.S. bank or U.S. credit union account to facilitate the U.S. dollar fund transfer, obviously that works and is almost always free. (Bank of America is often one notable exception for many account holders, which is really quite nasty, but I digress.)

If you don't have a U.S. bank/credit union account, cannot get one, and want to avoid DBS's S$10 fee then this path may work:

(a) Transfer from IB to a U.S. dollar account you have at a bank that doesn't charge an incoming TT fee, such as CIMB Singapore.

(b) Write a paper U.S. dollar check on that account, and deposit the check into your U.S. dollar subaccount at DBS.

(c) Then use DBS USA Remit to send the funds to IB.

Thanks for the insights! I would probably spend one time $10 to transfer USD from saxo to DBS then to IB since it's still reasonable and relatively easy.

 

[Dustbeans]

Hi Josh,

I recently bought your book and it was crazy amazing, it was exactly what I needed! An idiotproof guide, every $1 was worth it.

There's one thing I don't get though. I did my own intensive research on critical illnesses and see that it was something that was necessary. Especially situations whereby I am ill, but not dead and in a coma for example. This would activate the CI rider.

Can you share your thoughts on why we should not buy CI?
To clarify, I'm not talking about ECI, just normal CI.

 

[cassowary18]

Hi Josh,

I recently bought your book and it was crazy amazing, it was exactly what I needed! An idiotproof guide, every $1 was worth it.

There's one thing I don't get though. I did my own intensive research on critical illnesses and see that it was something that was necessary. Especially situations whereby I am ill, but not dead and in a coma for example. This would activate the CI rider.

Can you share your thoughts on why we should not buy CI?
To clarify, I'm not talking about ECI, just normal CI.

The logic is that if you're in hospital with a coma, hospitalization insurance will take care of your hospital bills and DII will take care of your lost income.

 

[moolala]

Hi Josh,

I recently bought your book and it was crazy amazing, it was exactly what I needed! An idiotproof guide, every $1 was worth it.

There's one thing I don't get though. I did my own intensive research on critical illnesses and see that it was something that was necessary. Especially situations whereby I am ill, but not dead and in a coma for example. This would activate the CI rider.

Can you share your thoughts on why we should not buy CI?
To clarify, I'm not talking about ECI, just normal CI.

u really spend money on the book ah? i thought can go download pdf....

 

[hwckhs]

u really spend money on the book ah? i thought can go download pdf....

Respect copyright and people's hardwork.

 

[powerfulhorse]

for discussion purposes... any thoughts on VDEV for pple who prefer distributing etfs?

Although one might argue that the spread and the trading volume might be an issue, the TER is much lower than IWRD and IWDA and the spread is almost identical to VWRA. I think the fund size is small but decent enough. Thanks again.

 

[cassowary18]

for discussion purposes... any thoughts on VDEV for pple who prefer distributing etfs?

Although one might argue that the spread and the trading volume might be an issue, the TER is much lower than IWRD and IWDA and the spread is almost identical to VWRA. I think the fund size is small but decent enough. Thanks again.

VWRA has a distributing equivalent, VWRD.

 

[BBCWatcher]

for discussion purposes... any thoughts on VDEV for pple who prefer distributing etfs?

VWRA has a distributing equivalent, VWRD.

And VDEV has an accumulating sibling: VHVE.

 

[swan02]

Anyone knows any good sector ETFs world or USA sectors ?

I’ve seen SPDR but AUM seem dubious.

R we destined to buy direct from USA ?

Sectors of interest
Industrials and financials