# 27 year old non-resident with €500,000 to invest



## alwaysonit

*Age:*
 27
*Spouse’s/Partner's age:*
n/a

*Annual gross income from employment or profession:*
€40,000 but varies

*Expenditure pattern:*
Save more than I spend

*Rough estimate of value of home *no property

*Other borrowings – car loans/personal loans etc*
None

*Do you pay off your full credit card balance each month?*
Yes

*Savings and investments:*
All in domestic banks on demand earning the maximum interest from CiaranT’s best buys thread while keeping below the deposit insurance limit in each bank.

*Do you have a pension scheme?*
No

*Do you own any investment or other property?*
No.

*Ages of children:*
None.

*Life insurance:*
No

*What specific question do you have or what issues are of concern to you?*
I am not a tax resident of anywhere (but am an Irish citizen) and I feel I could be doing better than earning circa 1% p/a after DIRT seeing as I can invest somewhere with no withholding tax legally. It seems impossible to change my Irish bank accounts to non-resident, I have tried.
  I’ve looked at foreign bank accounts paying high interest on hard currencies while keeping below deposit insurance limits in the specific countries but most people on this and other forums think this is a poor long term investment. http://www.askaboutmoney.com/showthread.php?t=187709
  Recently I have been reading other forums such as mrmoneymustache where most people seem to invest everything in ETFs. I don’t know much about this and it seems that I can’t invest in an ETF without paying at least 1% fee per annum, rather than the 0.17% Americans can pay with Vanguard.
  I have no commitments anywhere and have no idea which country I will eventually settle in but settling seems light years away to me at the moment, so property investment might not be the best idea.
  So in summary, I’m young, don’t have to pay taxes to revenue, have half a million Euro and it’s only making me about €5,000 a year. Help me make my money work for me! Thanks.


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## Firefly

Forums such as this are great, but with respect, with that much money on the line I would most definitely seek professional advice. 

Failing that I'll mind it for you


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## Bronte

I agree with the statement that with that kind of money you need professional advice, but tread carefully. Also you need to officially clarify your tax resident status, you have to be resident somewhere. You don't want this to come back and bite you in 10 years time.


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## alwaysonit

Can you provide a link to the legislation that states "you have to be resident somewhere"?
I have certainly not satisfied residency requirements anywhere in the past few years.


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## Brendan Burgess

Firefly said:


> Forums such as this are great, but with respect, with that much money on the line I would most definitely seek professional advice.



For the general investment advice, most situations have roughly similar principles.  You will get good ideas and opinions on askaboutmoney. I can suggest what you should do, and someone else can challenge it. You can then make up your own mind. 

By going to a professional advisor, you are taking a few risks.  They may be incompetent and give you inappropriate advice. There is no real quality control on it. But worse, they may not put your interests first and may try to sell you something not suited to your needs. 

For the tax advice, you definitely need professional tax advice.  This would have to be someone specialising in international taxation.  I too find it odd that you are not resident anywhere.  I also find it odd that a non-resident would have all their money in Irish deposit funds subject to DIRT.


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## Brendan Burgess

At 27 years of age, with €500k, what are your financial objectives: 

I suggest a combination of wealth preservation and wealth maximisation. 

This can be best achieved through a 100% allocation to the stock market. A diverse portfolio of international stocks is most likely to both preserve and maximise your wealth. 

*Your current strategy of investing it all in Irish deposits is very risky
*You are taking unnecessary risk by having all your wealth dependent on the solvency of the Irish state.  I don't expect the Irish state to collapse, but there is a risk. There is absolutely no reason for a non Irish resident to take that risk. 

You are taking unnecessary risk that Ireland may pull out of the euro. Again very unlikely, but why are you taking this risk? 

And of course, you will probably be slowly wiped out by inflation. As you are aged 27, inflation has plenty of time to impoverish you, slowly or suddenly. 

*You do not need to own property 
*As you don't know where you will end up, you should not buy property as an investment.  You are well off, so if you decide you want to keep an apartment in Ireland for when you visit, that would be a fine use of your money.  But this would be expenditure rather than investment. 

*How should you get exposure to the stock market?
*My own preference is for a diverse portfolio of around 10 directly held blue chip shares. You pay no management fees to anyone. There would be minimal administration. 

However, I don't know if this would be tax efficient for you. You will need to take advice where you live as to what the best vehicle for such investment is.  

It could be that you can invest through a vehicle in the country in which you live, very tax efficiently.

Whatever vehicle you choose, should be flexible and low cost.  So if you find yourself moving from wherever you are at present, to a different tax jurisdiction, you must be able to cash your shares without penalty and significant cost if that vehicle is no longer appropriate.


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## ashambles

I don't think someone should move all their savings into shares in one move, which probably isn't what Brendan is suggesting but just in case that's what anyone takes from it. It's moving from concern you're about earning just 5k per year to possibly losing 50k overnight due to some bad news.

Everybody's risk tolerance is different, you need to find out what yours is. One way is to incrementally invest and at the point where you've trouble sleeping, roll it back. You'll also get the benefit of experience as you'll start to figure out when your stock market hunches were wrong and right.

Also as regards professional advise, this isn't a scientific discipline. The advice you get will be vague and based on the limited number of products the professional is familiar with, plenty of Irish people invested in loss making property related funds based on paid for professional advice. While it can't hurt to have a chat as long as you keep an open mind, if you lose money based on their advice you'll find you're on your own.


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## Brendan Burgess

Hi ashambles 

I am actually suggesting that.  The correct financial decision is to buy €500k worth of shares. 

You raise a valid point though.   If he invests €500k in shares today, and the stock market falls by 10% tomorrow, he may well find his tolerance for risk is very low indeed and cash out at a loss.  In practice, this is a greater risk than Ireland going bust or leaving the euro.

So, psychologically, it might be better to gradually increase your holdings in the stock market from 0% to 100%.  Maybe kick off with €100k, and see how you handle the inevitable market drops.


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## Bronte

alwaysonit said:


> Can you provide a link to the legislation that states "you have to be resident somewhere"?
> I have certainly not satisfied residency requirements anywhere in the past few years.


 
No I cannot provide a link, but you cannot either provide a link that states that a person can not be resident anywhere. Unless you fall under some special tax regime in the country you are currently 'residing' in. Those do exist. But with your money and income I'd want it in writing from a lawyer/tax consultant that you are non resident everywhere.

And you'd be mad to put 500K in shares.  Sure to have a heart attack at the first major drop.  If you'd bought shares yesterday today is the day you'd be having the heart attack (Ukraine area - Malaysian plane shot down - shares plummet)

I guess diversification is key.  Some in shares, some in deposits, some in property.


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## Brendan Burgess

Bronte said:


> If you'd bought shares yesterday today is the day you'd be having the heart attack (Ukraine area - Malaysian plane shot down - shares plummet)



Eh? 



> London's FTSE lost 41 points (0.6%) to trade at 6,697 by 11am this  morning, while the Paris CAC fell 13 points (0.3%) to 4,303 and the  Frankfurt DAX decreased by 78 points (0.8%) to stand at 9,676.
> Dublin's ISEQ index lost 29 points (0.6%) to trade at 4,705 this morning.



I don't think that "plummet" is the right word here.


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## noproblem

Stick €200k into An Post bonds,  collect €260k tax free in 10 years. No high folutin big wigs will guarantee you a better return than that, but they'll all tell you of the danger in doing so. Don't listen to a word they say. Go on , do it. The rest of it I'd stick into a 1 yr best return deposit a/c and see what the situation looks like in a years time. If you deal with the pro's they "might" get you a better return, but they'll guarantee you nothing and they'll scoop a big wad out of your bundle. I'll guarantee you that. Oh, make a will, you never know!!!!!!!!!!!!


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## Brendan Burgess

The very worst place you can put your money is An Post bonds.

The tax free bit is of no interest. 

At 27, you do not want to tie up your money for 10 years. 

And you should not have a big part of your wealth dependent on the solvency of the Irish state.


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## noproblem

Brendan,
you tell him what he can get into his hand that's better than that after 10 years and guarantee it. At 27 years of age, it's a perfect time for him to stick it away for 10 years. It might not be a great return on one's money in the eyes of a "pro", but it's guaranteed and forget about Ireland going belly up which is a lame excuse we've been fed by whizkids for the last few years. I wonder how many hundreds of thousands of people would be happily smiling today if they did something like I've recomended a few years ago? I'm not a stupid person, but find someone saying it's the worst possible place to put your money to be an offensive comment. It's not the worst place, but putting it in shares could be, putting it into property could be, giving it to fund managers could be. Taking a guaranteed return isn't.


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## Purple

A lot can happen in 10 years. Why on earth would anyone tie up 40% of their savings for that amount of time?


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## Sophrosyne

It is difficult for anyone to provide advice without knowing your residence position for tax purposes.

From your first post, you appear to be an employee. Where is your employer based and how are you paid?

Were the funds in your Irish bank accounts deposited before you left Ireland or are you sending money from abroad into those accounts?


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## noproblem

I and I'm sure alwaysonit are well aware of what can happen in 10 years, but maybe you could answer the posters question instead of berating my answer. Maybe I'm being totally naive and stupid, but tell us how you can get a better guaranteed return. In fact, can anyone? Not a projection, not a maybe, not what might or might not happen, just a guaranteed better return, not what's so stupid or amateurish about my advice. Thank you.


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## Jim2007

alwaysonit said:


> Can you provide a link to the legislation that states "you have to be resident somewhere"?
> I have certainly not satisfied residency requirements anywhere in the past few years.



If you have not statisfied the residency requirements in any other country, then you remain Irish resident.  The legislation and tax treaties are written in the opposite direction - you become resident somewhere by meeting certain criteria there and be definition you are no longer resident in the previous country where you were considered resident.  

Think about it for a minute... people like Tina Turner, James Galway and Phil Collins all have access to the best tax advice going and if there was a way to be 'not resident anywhere' they'd have figured it out.  But all three have established residence in Switzerland because they were able to do a special deal there - lump sum taxation:  They pay a fixed amount (usually a couple of million) every year regardless of how much they earn.  They would not be paying it, unless they had to.


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## Jim2007

noproblem said:


> I'm not a stupid person, but find someone saying it's the worst possible place to put your money to be an offensive comment. It's not the worst place, but putting it in shares could be, putting it into property could be, giving it to fund managers could be. Taking a guaranteed return isn't.



It is actually terrible advice you're giving out!  To maintain purchasing power alone the payout in 10 years time would need to be closer to say 320K - 350K, there is a very real risk in what you are saying, one you fail to appreciate.

There is no such thing as a safe option when it comes to finance, every single decision has associated risks and unfortunately when it comes to bonds, time deposits etc... most people are oblivious to the risks involved.


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## Bronte

Jim2007 said:


> If you have not statisfied the residency requirements in any other country, then you remain Irish resident. The legislation and tax treaties are written in the opposite direction - you become resident somewhere by meeting certain criteria there and be definition you are no longer resident in the previous country where you were considered resident.


 
Actually Jim that makes sense.  You can also be taxed as a resident for certain taxes.  For example if you or I sold a property in Ireland we would be liable for CGT.  But both of us are exempt from Dirt tax.


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## Jim2007

Brendan Burgess said:


> I am actually suggesting that.  The correct financial decision is to buy €500k worth of shares.



Great in theory from a tax point of view, but terrible in practice from a behavioural point of view!

First off, is the issue of price - most people will have no problem coming up with a list of 10 top shares such Coke Cola, 3M or whatever, but very few people, professionals included will be able to if the stock is reasonably valued or not.  And one the keys to investing in individual shares is to at least buy at reasonable prices.  So we are already off to a bad start for most people.

Next is the volatility issue, individual stock are more volatile that an index and since the holder can easily trade out of stock and back in again, they is exactly what the do, the result being that they often fail to catch the bounce on the stock, plus they incur additional trading charges.

Then there is the tendency to twig - if Coke Cola jumps 5% and it is not in my portfolio, then it will be tomorrow, just in case it might go up an other 5%... so I'll sell 3M and buy KO... and what happens 3M goes up 7% and KO goes back down.... no problem I'll just sell 3M and by KO and so the dance goes on....

Another issue is rebalancing - most people just can't bring themselves to do it, in fact may people do the opposite they continue to buy the winner while ignoring the rest and thus build up an incredibly risky portfolio.

I've no hesitation in saying that individual stocks are a bad idea for most people because despite all the tax advantages, very few of them will be in position to benefit from them.

I'd far prefer people to do will on index investing and deal with the tax consequence of success than trying to be smart about taxes and fail to perform in the process....


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## noproblem

Jim2007,
I notice you're very good at telling people, including me, of how their particular advice is sooooo bad in the investment sense, but you yourself don't attempt to answer the question which was posted originally. I do hope you're not one of those tut tutting financial advisors who think they're very special when it comes to investments, et all that twaddle. I simply answered the question posed, I asked others to come up with better, but all I see is blah blah about how inferior my advice is. Once again, without the mouthing off about inflation, index's , etc, etc, come up with better please if you're able to. Most reasonable people know full well the bunkers that are out there in every sense of the word, we don't need a sermon from those on high. Very simply, give a better return that what I've given, guaranteed. Thank you. We're waiting.


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## alwaysonit

In relation to my tax efficiency, I don’t “live” anywhere. I travel the world at my own pace but have never stayed in a country long enough in the past few years to fulfill their requirements to be a tax resident. 

  Is it wise or foolish to contact the revenue directly, explain my situation to them and get clarification that I won’t be charged CGT until/if I return to being Irish resident?

  It does seem like, in the long run, having all of my wealth invested in ETFs will maximize my wealth, and it’s very encouraging that Buffet also said this. I agree that atoning to the exposure of the stock market might be tough but using some type of dollar cost averaging would certainly help this.

  I was working remotely for an Irish company that payed me a minimal amount and I was taxed by revenue for this. However at the moment I’m unemployed but make money from online poker. I’ve made pretty much all of my wealth since I started traveling.

  Noproblem, as for a better *guaranteed *return, if you read the thread linked in my original post these all offer better returns. I thought that if I keep below the deposit insurance in each country it’s a risk free investment (apart from the conversion of my EUR to their potentially worthless currency if the countries banking system fails) but users on this and other forums have slated this idea. It doesn’t seem to be something that many people do.

  Jim, I was an Australian tax resident in 2010. I’ve just used their “determination of residency tool” on their official website and it tells me I am not resident any more.


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## noproblem

have half a million Euro and it’s only making me about €5,000 a year

Above is what I picked out from your original post and can't see how you're earning more than what I showed you. Going on what you have shown your interest per yr is €5k, on my deposits you would earn €15k per yr tax free. Each to their own I guess.


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## Fella

I'm in a similar situation but am an Irish residents , not at your savings level yet and a few years older , there is no real agreed  advice what to do with your cash , I read forums like this (which is great) and other forums a lot of conflicting advice. I was fully set on ETF's openned an online trading account to buy them , read up about currency transfer to transfer my euros to dollars and send it to TDwaterhouse , but then did nothing else after reading that the tax on them is a grey area , nothing seems straight forward in Ireland , i've friends in England and they all use these ISA things to invest in shares  ,Ireland is so backward when it comes to actually getting proper information or things done. 

I really want to invest in ETF's but might just pay an advisor to tell me how to get them the cheapest way with least comission and what to do with the tax implications. It really is true more money more problems , all the banks are cutting the deposit rates so I feel my hand is been forced.

If you do invest in ETF's please post how you got on because I would love to follow cheers, I think I'd like to go with Vanguard myself


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## invest101

*investing*

It is difficult to find advice you can trust. There are any number of advisers out there with perhaps conflicts of interest. There are thousands of high return get quick rich schemes promoted by people looking for high commissions.

It is true the biggest problem with investments is your own emotion. If you think making money is hard, try keeping it for any length of time. You have to detach yourself from it and not try too hard to make it increase fast. Don't do anything too risky with the potential of a wipe out. Put it in the right place relax leave it alone and give it time to generate a return. Eventually (for you in 20 years  ) move capital to stuff that generates an income and spend that.

For any amount of money the advice of 10 shares is a pretty good one. Make sure there are huge companies with a very long history of generating value, there are quite a few of these, look at their long term charts. They can also often pay a 2-3% dividend. It can be useful that they throw some cash in your direction every now and then. Perhaps re-balance every year of so. Over the longer term you should make 6-10% per year, perhaps double your money every 7-8 years. Every now and then they will drop 10-20% or perhaps more, but keep them and they should recover to new highs - you have time.

Buffets advice is also pretty good to the young guy with his first 1M$ - buy a low cost ETF that tracks the S&P500 and then get back to work.

Just my 2c. I have been there and yes it is a nightmare to try find your way... before it's all gone....


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## noproblem

Buy 10 good shares, hold them for a while, then every now and again switch into different ones, etc, etc, etc.  Typical financial advice with no certainty of anything, not even a mention of what the shares should be in but then telling a person they should double their money every few years. Now, where did I hear all this bull before? Try finding a needle in a haystack, because that's what you and others are advising.


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## alwaysonit

After months of research, I've finally come up with the following.
What do you guys think?


INVESTMENT THEORY:

I am an Irish citizen but a resident of  nowhere so only have to deal with withholding tax. I am certain of this  and have been advised so by 3 separate tax specialists, so no need to  discuss this part.

For my equity side, I will invest in VWRL (an  all world ETF), using Interactive Brokers. VWRL is domiciled in Ireland  and traded on the Amsterdam Exchange, so I avoid the USA estate tax and  avail of Irish tax treaty rates. The TER is 0.25% and IB charge a  maximum of €28 per transaction, or 0.1%. VWRL is denominated in EUR but  underlying currency is USD and so interest payments are made in USD to a  separate USD account. I will then reinvest the dividends in VWRD (the  same ETF but based in USD) to avoid paying to change my currency.

My  total equity amount is €300,000 but I have €72,000 tied up in equity  like investments which will be treated as equity and transferred to VWRL  when possible (May 2015). I will DCA investing €98,000 by the end of  October, €76,000 by the end of November, and €54,000 by the end of  December. The final €72,000 will be invested in May when my P2P lending  has been repaid including interest.

I am still unsure on my fixed  income side and will leave this where it currently is, in Irish and UK  bonds and bank accounts earning a net of 1% interest. When I have had  time to educate myself on investing in the fixed income side of my  portfolio I will make a one time change here. Total amount here is  €200,000. 

MY BACKGROUND AND ASSET ALLOCATION

Net worth is currently €600,000.

I  am a 27 year old professional gambler and the very maximum I can see  myself losing in one year is €80,000. As my average expected profit per  bet is positive and I have lots of bets per year it is unlikely  for a losing streak like this to happen, let alone continue. I spend  €40,000 per year.

For my AA, I will knock €100,000 from my net  worth and go 60/40 in favour of equities with the remainder. The  €100,000 is an emergency fund (it covers 2.5 years of expenses or a  maximum loss year plus 6 months expenses).
When I cash out over  €10,000 from a gambling account, I will invest it accordingly, bringing  my AA back to 60/40 and if I need to withdraw on rebalancing day to take  my short term reserves back to €100,000 I will also withdraw  accordingly, keeping my AA at 60/40. I will do this regardless of the  market.

I will rebalance on the second Tuesday of January,  beginning in 2016. If I have between 55% and 65% stocks, I will do  nothing. If my portfolio is out of this bound, I will rebalance to 60%  stocks 40% bonds. I will also re-evaluate how much the higher bound of  2.5 years of spending money or 6 months of spending money plus maximum  possible loss in a year is, as I would expect this to increase with  inflation. 

INVESTMENT PRINCIPLES
1. Keep costs low, preferably by holding low cost index funds for the long term. 
2. Stay out of the CGT tax net as long as possible. If it is unavoidable, sell everything before and reassess.
3. Never try to time the market.
4. Hold the cheapest well diversified ETF that tracks the world holding the assets physically.
5. Portfolio will never go above 60% stocks until I have fixed income (outside of this portfolio) of over €40k per year.
6.. I may change the above dependent on any tax changes relevant to the portfolio
7. Changes to expense ratios and available funds may lead to switching to a cheaper fund.


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## noproblem

A hell of a lot of paperwork for "exactly" what? There's a lot of assumption in there also. As per your question, that's what I think.


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## Setanta12

Hi Jim,

Are you sure you're not mixing up residence with domicile?  AFAIK the Revenue will pay back PAYE deducted once you declare (/prove?) you are leaving the country for a defined period - you do not have to declare residency elsewhere.

Tina T et al. move to Switzerland and base themselves there.  The OP chooses not to base himself anywhere.  So far, he is doing okay - but with 'tie-breaker' clauses becoming a feature of tax treaties - he is likely to find himself resident somewhere, whether he likes it or not !



Jim2007 said:


> If you have not statisfied the residency requirements in any other country, then you remain Irish resident.  The legislation and tax treaties are written in the opposite direction - you become resident somewhere by meeting certain criteria there and be definition you are no longer resident in the previous country where you were considered resident.
> 
> Think about it for a minute... people like Tina Turner, James Galway and Phil Collins all have access to the best tax advice going and if there was a way to be 'not resident anywhere' they'd have figured it out.  But all three have established residence in Switzerland because they were able to do a special deal there - lump sum taxation:  They pay a fixed amount (usually a couple of million) every year regardless of how much they earn.  They would not be paying it, unless they had to.


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## alwaysonit

noproblem I don't understand your reply at all, was there another post below mine that your replied to that has since been deleted?

I should assume that the lack of replies in the past 24 hours are a positive thing, ie there are not many obvious flaws with my investment policy?


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## Bronte

alwaysonit said:


> I am a 27 year old professional gambler and the very maximum I can see myself losing in one year is €80,000.


 
Oh my goodness.  

My advice to you is to buy a couple of properties in Ireland before year end and hang onto them.  No CGT if you hold onto them for 7 years.  At least you'll still have the properties in 7 years time as you might have nothing at all left otherwise.  

Winning steaks don't last forever.


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## noproblem

alwaysonit said:


> noproblem I don't understand your reply at all, was there another post below mine that your replied to that has since been deleted?
> 
> I should assume that the lack of replies in the past 24 hours are a positive thing, ie there are not many obvious flaws with my investment policy?



I'm really sorry you take my reply in such a manner. If you can't understand my reply, that's your problem,  no, it wasn't aimed at anyone else, just yourself. I really wish you luck with what you seem to have chosen and hope that in a few years you still have the sum you have now.


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## Fella

Bronte said:


> Oh my goodness.
> 
> My advice to you is to buy a couple of properties in Ireland before year end and hang onto them.  No CGT if you hold onto them for 7 years.  At least you'll still have the properties in 7 years time as you might have nothing at all left otherwise.
> 
> Winning steaks don't last forever.



Losing streaks don't happen forever either, once your getting a positive expected value on your bets your more likely to win than lose long term.

I find it strange attitude if you tell people you trade markets and make your living people look at you different compared to saying you gamble on sports even though I make 6 figures every year from it people tell me I'll lose it all soon

I posted here months ago actually about saving 12k a month and just checked and I've saved 140k this caalender year. I would say property carries a lot more risk most successful gamblers have good bank roll management and would only bet a tiny percentage on each value bet not a large percentage on property which could do anything price wise.

I put money into msci world etf ( dividends reinvested ) emerging markets etf , 3-5 year government bonds all with saxo , I'm doing similar with DCA investing an extra 10-20k per quarter , been looking at a few more etf's also that I'll probably add to it and a few individual stocks that I'll have a gamble on. Next on my list is trying to understand this 8 year deemed disposal rule fully but I'll worry about that in a few years.

Congrats on your investments it's very similar to my own, keep updated how you get on .


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## elacsaplau

Wow alwaysonit

I think your analysis is genuinely incredibly impressive. Actually, amazingly so! - then again, frankly, you don't beat the markets as successfully as Fella and yourself do without having superior numerical/analytical ability.

I, too, am struggling to comprehend noproblem's comments.

I think you have produced a magnificent template and it would be great if others could add constructive comments as to how your template could be improved upon and why.

From my perspective, 

1.	You have a sensible initial asset allocation. I'm taking it that your equity allocation is intended as the growth element of your investment so I'd be interested to hear if others have an added value comments in relation to a 40% allocation to bonds. In particular, whether there are better defensive, hedging strategies available. <Personally, I just can’t get excited about bonds at current levels.>

2.	You have addressed the following very well:

-	Taxation 
-	Diversification of equity investments
-	Market access charges
-	Timing of investments
-	Rebalancing of investments
-	Provider risk (by using a few brokers)
-       Inflation risk  
-       Liquidity risk

Well done again!


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## Jim2007

alwaysonit said:


> Can you provide a link to the legislation that states "you have to be resident somewhere"?
> I have certainly not satisfied residency requirements anywhere in the past few years.



Well you have been told this before and I'm aware you found so called tax advisers who confirmed you're not resident anywhere, but here is a clause from the Irish-Swiss tax agreement that says otherwise:



> if he has an habitual abode in both States _*or in neither of them*_, he shall be deemed to be resident of the State of which he is a national.



So as far as the Swiss tax authorities are concerned when you come to try and claim back withholding taxes from them, they will treat you as being resident in Ireland for tax purposes and apply the terms of the treaty accordingly.

Now here again is the same clause from the Irish-Austrian agreement:



> if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;



And again from the agreement with Canada:



> if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;



So I would expect that you will find similar clauses in all the double taxation agreements.  Meaning that if you can't meet the residency requirements of another state *you are Irish resident for tax purposes!*

So depending on when the Revenue catch up with you, this could be a very expensive mistake!


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## Jim2007

Bronte said:


> Oh my goodness.
> 
> My advice to you is to buy a couple of properties in Ireland before year end and hang onto them.  No CGT if you hold onto them for 7 years.  At least you'll still have the properties in 7 years time as you might have nothing at all left otherwise.
> 
> Winning steaks don't last forever.



That is exactly why we diversify our investments and not concentrate in a single asset class in the first place as you are suggesting!


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## Jim2007

Kildavin said:


> Hi Jim,
> 
> Are you sure you're not mixing up residence with domicile?  AFAIK the Revenue will pay back PAYE deducted once you declare (/prove?) you are leaving the country for a defined period - you do not have to declare residency elsewhere.
> 
> Tina T et al. move to Switzerland and base themselves there.  The OP chooses not to base himself anywhere.  So far, he is doing okay - but with 'tie-breaker' clauses becoming a feature of tax treaties - he is likely to find himself resident somewhere, whether he likes it or not !



See my most recent post


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## Bronte

Jim2007 said:


> Well you have been told this before and I'm aware you found so called tax advisers who confirmed you're not resident anywhere,


 
He has not one but 3 tax advisors tell him so, but he has not given us their qualification nor their confirmation in writing.  And in writing from a country in which it can be relied.


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## Bronte

Jim2007 said:


> That is exactly why we diversify our investments and not concentrate in a single asset class in the first place as you are suggesting!


 
I agree with you, but I'm diversified enough for myself in relation to cash and pensions and property in two locations to be happy with my choices.  

And you and I are never going to agree in relation to the Irish obsession with property, and I have to stick with what I know.


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## Jim2007

*Asset Class Returns & The Diversified Portfolio*

Here is an interesting chart on asset class returns from BlackRock.

Clearly the diversified portfolio reduces very acceptable results over the long term.  The portfolio did take a big hit in the most recent recession, but had fully recovered by 2009 and has produced positive results thereafter.  This is in contrast to many Irish investors who concentrated their investments in property and are still waiting for a return to positive figures...

People advocating fixed income & cash instruments should not that they rarely perform as well as other asset classes and thus there is a a very significant price to be paid for that guaranteed income and minimal risk offering.  In fact when converted to real returns it is not unfair to say that in most cases investors in such products would have been luck to break even.


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## moneybox

alwaysonit said:


> I am an Irish citizen but a resident of  nowhere so




I have read this sentence in so many of your threads that you are beginning to sound like a broken record player.

For a 27 year old you sound like you have no idea where you are going, have you thought about your future?? You have €500,000 to invest would you not consider buying a house in a good location like South County Dublin, it looks like half the country want to live there at the moment but they can't afford it but you can, so maybe it might not be a bad idea........


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## RichInSpirit

For exposure to Etf's and every other type of investment opportunity I'd stick the 500k into a spread betting account with one of the bigger UK spread betting crowds and play around a bit.
Just be careful of course, you could lose it all, but maybe not.


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## dub_nerd

Jim2007 said:


> Here is an interesting chart on asset class returns from BlackRock.
> 
> Clearly the diversified portfolio reduces very acceptable results over  the long term.  The portfolio did take a big hit in the most recent  recession, but had fully recovered by 2009 and has produced positive  results thereafter.  This is in contrast to many Irish investors who  concentrated their investments in property and are still waiting for a  return to positive figures...
> 
> People advocating fixed income & cash instruments should not that  they rarely perform as well as other asset classes and thus there is a a  very significant price to be paid for that guaranteed income and  minimal risk offering.  In fact when converted to real returns it is not  unfair to say that in most cases investors in such products would have  been luck to break even.



Wow. I look at the same chart and I see insane volatility. Sure, it looks fine overall from 1993 to 2013. But get your timing wrong or choose the wrong investment mix (or an investment company with the usual large and opaque charges) and you are in nightmare territory, even over 20 year timeframes. Look at the 2000/01 and 2007/08 crashes and the insane run-up since then (which frankly, anybody who knows anything about anything realises this is on the back of monetary easing attempting to "fix" the last crash) and you would have to ask yourself if we are poised for the next big drop ... and a quick look at the telly will confirm that we may actually be in the midst of it right now.


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## Jim2007

dub_nerd said:


> Wow. I look at the same chart and I see insane volatility.



Well volatility is not the same as risk, which is why in Switzerland at least we do not recommend investing in anything other than cash or near cash investments unless you can commit the funds for at least five years.  I believe in Ireland they seem to apply a three year rule.


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## alwaysonit

Jim, I would hope the following post is true from this thread?
http://www.askaboutmoney.com/showthread.php?t=188169


mandelbrot said:


> The point of DTAs is not to impose a liability to tax, but to prevent double taxation. A DTA cannot impose a taxation or a liability where domestic legislation doesn't provide for it.
> 
> If you're not resident here and not taxable here under the domestic code, a DTA cannot make you resident.





Bronte said:


> He has not one but 3 tax advisors tell him so, but he has not given us their qualification nor their confirmation in writing. And in writing from a country in which it can be relied.


  I don’t want to name names but they are all long-serving Irish tax advisors, and between the 3 of them are AITI registered tax consultants, have worked for Revenue before and have independently come up with the same conclusion.


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## Jim2007

alwaysonit said:


> Jim, I would hope the following post is true from this thread?



The statement is correct, however your understand of it is not correct!  You are and have always been Irish resident for tax purposes by virtue of your passport, so there is no need for a DTA to make you resident and subject to domestic tax law.

In the normal course of events, when the Revenue raises a tax assessment on you the defence would to show by virtue of a DTA that you are resident else where  and thus not subject to Irish tax law.  However since you have failed to meet the residency requirements of any other state, I fail to see how you are going to prove that you stopped being Irish tax resident at some point since all DTAs carry tha nationality clause I quoted.


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## alwaysonit

So:
1.A DTA does not impose a liability to tax.
2. The DTA is the only legislation that would suggest I'm Irish resident.

Are you sure I would need to show by virtue of a DTA that I'm resident elsewhere? Or just show proof that I have not fulfilled the required days to become Irish resident and they'll leave me be?

Do you suggest I go to another advisor and include these DTA pieces and see what conclusion they come to, having taken this into account?


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## alwaysonit

At the beginning of almost every DTA it says "This Convention shall apply to persons who are residents of one or both of the Contracting States."

Going by the residency rules, I'm not a resident of either and so the DTA has no effect over me. If revenue ask to prove how I stopped being Irish resident at some point I will send them a scan of each page of my passport, although I'm sure they must link up with Irish immigration in cases like this.

Does what I'm saying here make sense?


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## RichInSpirit

If you are a professional gambler would you be liable for tax in any case?
Maybe 1% or something small like that.


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## Jim2007

alwaysonit said:


> Going by the residency rules, I'm not a resident of either and so the DTA has no effect over me. If revenue ask to prove how I stopped being Irish resident at some point I will send them a scan of each page of my passport, although I'm sure they must link up with Irish immigration in cases like this.
> 
> Does what I'm saying here make sense?



And that will confirm that you have no established residency anywhere else and so remain Irish resident....


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## alwaysonit

I'd hope that once I'm not a resident going by the days rule, which as far as I know is the only rule revenue document (apart from the rules within the treaty that you have highlighted) then the tax treaty tiebreakers cannot make me a resident.

The very first line of most of these treaties says "This Convention shall apply to persons who are residents of one or both of the Contracting States." I would also hope that that this is the first line for a reason - that once you read this line you can disqualify yourself from any of the rules they make further down in it.

The part that you have quoted from the treaties is a subsection of a subsection, it is Article 3A-2-(d). At the beginning of 3A-2, before it goes into the four subsections, it says "Where by reason of the provisions of paragraph 1 of this Article an individual is a      resident of *both* Contracting States, then his status shall be determined as follows" and then the rule you have brought to my attention is mentioned.
However you want to look at it, I'm sure that this disqualifies me.
Any sentance in the English language that says
Where by (a condition) then (a consequence), if you do not satisfy the condition then in this case you do not suffer the consequence. 
Although this does not mean the consequence stated cannot happen another way, I am not aware of a condition that would make me suffer this consequence (ie a state of affairs that currently makes me Irish resident).

Jim I really appreciate the time you have spent helping me here and hope that it does not seem that I am  trying to shy away from the information you have given me and instead stick to my guns saying that I'm not a resident simply because it benefits me not to be.
I have analyzed it and from the argument I have provided I think that if this went to court my argument would win.

After this lengthy (and possible confusing - sorry!) post, do you agree with my argument Jim? Any other posters have anything to add?


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## Bronte

alwaysonit said:


> Jim I really appreciate the time you have spent helping me here
> 
> I have analyzed it and from the argument I have provided I think that if this went to court my argument would win.
> 
> Any other posters have anything to add?


 
Yes I have.  

You are an out an out gambler, and on top of that you have the audacity to come on and state you would win in court.  

Go and pay a top accountant/solicitor with the best expertise in this area to confirm what you state is true.  It might cost you 5K and save you thousands.  

And stop peddeling nonsense like 3 experts have told you that you are non resident.


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## so-crates

alwaysonit - I think what Jim2007 is trying to get across to you is that there is a default position. The starting point is "you are tax resident in Ireland", *you need to prove you are tax resident elsewhere* otherwise you will always be tax resident in Ireland.
Stamps in your passport would not constitute sufficient proof I think. They do not mean you are liable for taxation in any other jurisdiction.


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## moneybox

Bronte said:


> Yes I have.
> 
> You are an out an out gambler, and on top of that you have the audacity to come on and state you would win in court.
> 
> Go and pay a top accountant/solicitor with the best expertise in this area to confirm what you state is true.  It might cost you 5K and save you thousands.
> 
> And stop peddeling nonsense like 3 experts have told you that you are non resident.



OP aged 27 is out of the country jusy a few short years and  its laughable that he is now saying he is a resident of no place in order to escape paying tax on the proceeds of his rather dubious profession.


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## Jim2007

so-crates said:


> alwaysonit - I think what Jim2007 is trying to get across to you is that there is a default position. The starting point is "you are tax resident in Ireland", *you need to prove you are tax resident elsewhere* otherwise you will always be tax resident in Ireland.
> Stamps in your passport would not constitute sufficient proof I think. They do not mean you are liable for taxation in any other jurisdiction.



Exactly and as the OP has already stated he has checked the DTAs and he does not meet the residency requirements in any other jurisdiction he has been in, so show them his passport would only confirm their case!


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## elacsaplau

I am not a tax consultant but have read several books on tax.

Frankly, I am amazed by the idea that if you don't satisfy the prescribed rules for residency in Ireland, you may still be resident by some sort of default - unless you satisfy the residency conditions of some other country.

I genuinely believe Jim and others may be confusing Domicile with Residency and that the advice the OP received from tax specialists is correct.

My confusion now is why doesn't the OP validate the position with one of his tax advisors; and where have the usual tax gurus on AAM gone?


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## Sophrosyne

Without commenting on the merits of the OPs “Investment Theory”, the tie-breaker rules are contained in article 4 of the OECD model treaty –


“OECD MODEL TAX CONVENTION​ 

_Article 4_​ 

RESIDENT​ 

1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

2. Where by reason of the provisions of paragraph 1* an individual is a resident* *of both Contracting States*, then his status shall be determined as follows:
_a_) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);​_b_) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;​_c_) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;​_d_) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.​3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.”

In other words, the tie-breaker rules apply where an individual is, under domestic legislation of both contracting states, deemed a *resident* of *both* states.

They do not apply to non-residents of either states.


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## elacsaplau

Thank you Sophrosyne

You have just confirmed my understanding clearly and authoritatively.

Perhaps posters can now address the OP's "investment" question??!!


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## Jim2007

Sophrosyne said:


> They do not apply to non-residents of either states.



This is just repeating what has now been said several times!  The OP started out Irish resident, By virtue of the various DTAs he has failed to meet the requirements to establish his residence in any other state hence the DTAs nor the convention rules apply.  Therefore he remains resident in Ireland.

So far nobody has provide a valid reference to show how the OP can relinquish his Irish resident status, while not establish resident status in another state.  Now it is a very long time ago since I took the Irish tax exams, but I do not remember coming across any legislation that would allow for the OP's claim, nor has anyone else pointed us to such legislation, if it exists I'd very much obliged to receive a reference as it would be very useful.


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## Bronte

elacsaplau said:


> I am not a tax consultant but have read several books on tax.
> 
> I genuinely believe Jim and others may be confusing Domicile with Residency and that the advice the OP received from tax specialists is correct.
> 
> My confusion now is why doesn't the OP validate the position with one of his tax advisors; and where have the usual tax gurus on AAM gone?


 
Soo you've read several books on tax, but you are not a tax consultant. Are you qualified to state the legal status of the OP's domicile or residence?

Yet you are able to state that the advice the OP got from 3 tax specialist is correct, despite now knowing the competence or expertise of these 'experts'. 

Have you ever heard of expats living the high life in far flung destinations being conned in places like Dubai and other dubious places into believing that the only way is up. They are all at it. Places like that, and elsewhere, Ireland too, they are out there to fleece suckers. 

You refer to the tax gurus on this site, you presumably are referrring to the accountants on here, you do realise that this area of law, Conflict of Laws, in relation to domicile etc, is an exceedingly complex area, and no regular accountant would have an idea. You'd need not just a tax expert, but a legal expert and an expert on cross border rules.

The OP needs to back up the experts advice by having it in writing from an expert who is a) legit b) reputable and c) can be sued if incorrect advice is given.


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## Sophrosyne

Jim2007 said:


> By virtue of the various DTAs he has failed to meet the requirements to establish his residence in any other state hence the DTAs nor the convention rules apply. Therefore he remains resident in Ireland.


 
Where are you getting this information?

An individual either satisfies the rules of residence of a particular State or does not.

The OP is not the first tax nomad and I daresay will not be the last.


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## elacsaplau

Hi Jim

I have looked up the Taxes Consolidation Act 1997.

The definition of residency is prescribed in s. 819

Also, I can not see anywhere in the Act anything that contradicts this.


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## noproblem

Would a return to revenue not give their take on it. I'd imagine they will at least rule if any monies need to be paid to them, or not. It doesn't have to be taken as gospel, but it would be a start. If it's favourable, accept it, if not, money will have to be spent to get a ruling.


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## Setanta12

elacsaplau said:


> i genuinely believe jim and others may be confusing domicile with residency and that the advice the op received from tax specialists is correct.



+1,000


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## Setanta12

noproblem said:


> Would a return to revenue not give their take on it. I'd imagine they will at least rule if any monies need to be paid to them, or not. It doesn't have to be taken as gospel, but it would be a start. If it's favourable, accept it, if not, money will have to be spent to get a ruling.



You mean to fill out an 'Expression of Doubt' ?  He will need an advisor for that .... ... (there are rules re EODs)


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## noproblem

Kildavin said:


> You mean to fill out an 'Expression of Doubt' ?  He will need an advisor for that .... ... (there are rules re EODs)



Ok, that's fine, but would it not be the best way to go? After all, he wants finality on this and surely this will give him that. Once he has his Expression of Doubt filed, they will make a ruling and explain (if required) their finding.  It would make interesting reading.


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## Setanta12

I think he's paid money for tax-advice from tax-experts and he should adhere to their advice (given individually, and at different stages).

(Unsure if another poster has pointed this out too - but tax treaties are expressly designed to alleviate double-taxation, not non-taxation (although some newer treaties do tackle non-taxation now too)


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## FANTANA

Hi Alwaysonit. I'm in a similar position to you tax wise so I'll let you know how I deal with revenue. I work at sea and spend over eight months a year travelling around the world on a ship registered in the Marshall Islands for a company from Singapore. I file a form 11 every year declaring my foreign income and days out of the country and every year (for a decade) revenue have dedcided I don't owe them a cent. To prove my time abroad I keep my boarding passes, stamps in my passport, sea service records in my seamans book and if necessary a letter from my employer stateing how long I served on their vessels that year. All though I have never been asked for them yet. You will be able to do all these things too apart from the last two obviously. The reason I file a form 11 at all is because I want revenue to be aware of my tax situation and occasionally I do some work in Ireland. Once you have the required days out of the country (and can prove so) revenue seem happy and will leave you be. I claim my DIRT back on Irish deposits too every year.


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## noproblem

Very good and informative post Fantana. Will be helpful to a lot of people.


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