OP here again. So, at long last I'm about to make my investments during the coming week and I'm suddenly paralyzed with the following doubts:
- I chose euro as my base brokerage currency. But it seems most of the ETFs I'm interested in have their base currency as dollar; i.e., the ETFs can be bought in euros from European stock exchanges, but the underlying currency is dollar. My concern is that in choosing euro as my brokerage currency, I have chosen inefficiently.
- I had intended to buy two equity ETFs: VUSA (for US exposure) and VEUR (for European exposure). VUSA, when bought in euros, does not track the same as its NYSE equivalent, VOO. So, I am now thinking to buy VWRL instead of those two. VWRL is an all-world stock ETF which I can buy in euros; but again, the ETFs base currency is US dollar.
I doubt anyone can forecast currency changes over 2 months never mind your 30 years. Surely if you keep investing in a regular way it will average out over the long term
- Another nagging doubt is that all the ETFs are domiciled in Ireland, and although I am a non-resident Irish national, I have discovered that I would fall into the category of "ordinarily resident" for another 12 months. Therefore, I'm concerned I have tax exposure.
[B]es I have looked this up and I think you do but I am not an accountant. But think you only pay tax on interest of around 3000 euro so you would need a big investment pot
I have not yet deposited funds to my broker account, though I'm sitting on 20k ear-marked for it. Would appreciate some opinions regarding the base currency of my brokerage account, the base currency and domicility of the ETFs I should buy, and whether the account should be in my name or my wife's name only, or whether it's OK to have it in both our names.
You are over thinking it.
For 20k thinking about putting in a single fund, say an MSCI world index. Here is one registered in LUX since you seem to prefer non Irish.
You are investing in MNCs, so they will have more less the same exposure to the world economy and FX risks in the long term!
Jim two questions
1 can you access the LUX fund through saxo or other online brokers?
2 what is an MNC Please ?
You are over thinking it.
For 20k thinking about putting in a single fund, say an MSCI world index. Here is one registered in LUX since you seem to prefer non Irish. And here is a EURO hedged version of the same.
You are investing in MNCs, so they will have more less the same exposure to the world economy and FX risks in the long term!
I have no fears thereI think the clever answer here is it depends on marriage!! I suspect some high profile developers are very very worried about keeping their wives happy!!
I'll also buy a short-term first world government bond ETF.
Why? Keep the 6K in cash with no transaction or depo fees the return should end up about the same.
- If I buy a eurozone bond ETF like IEGE or CBE3 (both iShares), is this riskier than a multiple currency bond ETF like ISHG? After all, eurozone countries cannot print money to pay their debts. Would I be better off going for an ETF that contained bonds from the US, UK, Japan, Australia and the eurozone, or should I stick to the eurozone only?
- If I have a choice, should I buy an inflation-linked bond ETF over a non-inflation-linked government bond ETF? Again, iShares have several inflation-linked government bond ETFs on offer.
I have a feeling that my job here won't last much beyond another 2 or 3 years. If that happens, my plan would be to seek a similar role in Singapore or another Middle East country. Only as a last resort would I move back to Europe for work.
I should point out that another book I'm reading carefully at the moment is Millionaire Next Door. It does emphasize that homes should be modest, not in the most upmarket areas, and not costing more than double one's annual realized income. These are precepts I will follow if I do eventually buy a home.
I am not by any means an expert in investment strategies but a couple of things strike me from your post. You say that you are assuming as part of your investment strategy that you will have 1k a month to invest on an ongoing basis. Surely you can only be confident of this for the next 2 - 3 years?
. Noted. I am following this advise and am maintaining around 22k in cash just in case.If there is any possibility at all of you having to live in Ireland on 38k a year, I disagree that your 22k is 'doing nothing but wasting away slowly'. Even if you are lucky and get to move to Singapore or another ME destination, you'll inevitably incur costs from the move. Perhaps you don't need as much as 22k in cash but I wouldn't go below 15k if I were you.
Hehe, fair point! To be honest, my wife and I would consider any tropical place to retire. Granted, Belize isn't a good bet right now. Perhaps things will have improved by 2044. If not, there's Panama, Palawan, places like that. Pure speculation at this stage, though.Have you ever been to Belize? It currently has one of the highest homicide rates in the world. Of all the LatAm countries I have ever visited, it is the last place I'd plan to retire!
Final question - are you considering having children? It is a less nosy question than it seems, as it will (or should) affect your investment outlook. A 30 year time frame for your investment strategy to mature is all very well if you don't plan of having a family - but your savings and expenditure priorities could change quickly if, say in 5 years time, you find yourself with 2 or 3 extra mouths to feed, clothe and educate!
Sorry, one more point. Whoever wrote Millionaire Next Door has clearly never been to Ireland. You estimate that if you moved back to Ireland, your net income would be 38k. Never mind the most upmarket areas and modest or immodest houses, 76k wouldn't get you a hovel anywhere in Ireland, never mind anywhere you or your wife would be likely to find employment (essentially Dublin, Cork, Galway and surrounds). I applaud your advance financial planning for your future but I think you need to be realistic. You are currently earning an excellent salary, tax free and you should certainly save while you can, but, in a sense, you are currently living in a bubble when it comes to extra disposable income, and it is one that may not last, even if you don't end up moving back to Ireland. I am really not sure that your reliance on books written by US authors for your life investment strategy is very realistic.
Why? Keep the 6K in cash with no transaction or depo fees the return should end up about the same.
When stocks rise, bonds often fall in price. Cash won’t. You will want to sell stocks (after they have risen) to buy the cheaper bonds when rebalancing. Also, have a look at the following charts. Here’s Canada’s short term government bond index.
In the past five years, $10,000 grew to roughly $11,500. You would have had no such luck with cash. A broader Canadian bond market index would have done even better: turning $10,000 into $12,657 over the past five years. Check out the iShares ticker, XBB.
If you’re American, and you invested in Vanguard’s broad bond market index five years ago, you would have turned $10,000 into $12,367: [broken link removed] With cash, you would have made nothing.
If you are British you would have turned 10,000 pounds into roughly 12,600 pounds in the past five years with the iShares UK government ETF. Again, with cash, you would have made nothing.
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