News For Expatriate Canadians Investing in Singapore and SE Asia

Vanguard has released some cheap ETFs on the Toronto stock exchange which you could purchase through a DBS Vickers brokerage.

I’ve outlined the process of building low cost ETF in my post, Expatriate Canadians Investing in Singapore Find a Cheaper Option.  If you haven’t read this blog post, please read it before venturing to the rest of the article below.

For the bond component of my portfolio, I have been using the ishares short term Canadian bond index, ticker symbol XSB, for the past ten years.  The expense ratio is 0.25 percent, but Vanguard has lowered the bar, introducing an ETF option with an expense ratio of just 0.15 percent.

How much money could this save?

If you own $100,000 of the short term Canadian bond ETF (XSB) then you are paying $250 in expense ratio fees.  With Vanguard’s short term Canadian bond alternative (VSB) you would be paying just $150 in hidden costs.  Other than the cost, the Vanguard product is virtually identical.

Why am I not switching from XSB to VSB?

Despite the obvious advantages of owning VSB, I won’t be selling XSB, and I want to explain why. 

If I sold in favour of the cheaper exchange traded fund, I would save roughly $900 per year in expense ratio fees (based on the size of my XSB holding) but to sell my XSB holdings in favour of VSB would cost me roughly $7000 in commission transaction costs:  roughly $3,500 to sell and then another $3,500 to buy.  It’s the cost of switching in and out of $700,000 in Singapore.

I didn’t switch, but you may want to.

If your holdings in XSB are relatively small, then the switch could make sense for you.  If you’re switching less than (roughly) $50,000 it will cost you about $60:  $30 to exit XSB and $30 to enter VSB.

I will be buying VSB from now on

Although I won’t be selling my XSB holdings, when I wish to add to my bond holdings in the future, I’ll be adding money to VSB and not XSB.

Regardless of what you choose to do, VSB is a cheaper purchasing option for your short term Canadian bond content.





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (Wiley 2011) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use.

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107 Responses

  1. adam says:

    Hi Andrew, this really puts MERs into perspective. The new Canadian Vanguard funds seem to have a higher tracking error, but I'm sure this won't be an issue in the long haul. You are saving $900 between VSB & XSB, wow!!

    A question.. I've read your book and followed your blog for about a year now & I'm a fan of Vanguard too and done a good job saving money over the past 10 years. But I'm having a problem "pulling the trigger" on putting my cash into a diversified portfolio. I'd like to commit 100% to a diversified portfolio but just can't stomach buying any US index fund right now (VTI) to go along with my Canadian and International index funds. Any advice?

  2. Peter says:

    To Adam:

    Me, too. I find VTI a bit too pricey, and I have a hard time buying it as supposed to the Canadian and Int'l indices. However, we all know that longer term, it doesn't matter that much.

    • Adam and Peter,

      This might sound strange coming from me, but I think you guys might be better off hiring an advisor to manage your money with low cost ETFs. You might end up paying him or her 1%, but consider the benefits. If neither of you is comfortable buying an ETF with a PE ratio of 14X earnings (the historical average) then neither of you will likely be able to rebalance a portfolio if the market collapses and every publication is calling for the death of equities. If you guys hire someone to dispassionately rebalance the money for you, then you won't have to worry about speculating. To be honest, I've wondered, for years, whether there's a genetic component to investing. It's simple to diversify and rebalance, but emotionally, it's not easy–and I've found that most people can't (emotionally) do it. This is why I'm regularly suggesting to people that the expense ratios on one ETF versus another isn't going to be the biggest long term obstacle. The ETF you choose isn't going to matter much. But what will matter is investor behaviour. And each of you guys is exhibiting speculative suggestions when the market is at a historically average PE level. That might be a sign for each of you to hand the reigns to someone to do it for you. Yes, you may pay 1%, but I think your returns will be much better in the long run.

  3. Barry says:

    Reminds me of a quote "Price is what you pay, Value is what you get"

    Some of the indexes are priced higher than what i'm used to dabbling in, however if I mean to follow the strategy I've got to do so

    The US index I've purchased (Australian) is

    VANGUARD US TOTAL MARKET SHARES INDEX ETF (VTS)

    • Hey Barry,

      You're right. By far, the hardest part about investing is dealing with your emotions. We try to rationalize reasons for all kinds of things, and unfortunately, studies have proven that when it comes to money and speculating, our brains are somewhat reptilian in nature. For a great book on this, check out Jason Zweig's latest book about Your Money and Your Brain. It's worth the read.

  4. Frank B says:

    Andrew, why are your commissions so costly?. Do Canadians (who pay high MERs – not me, of course 🙂 benefit from low commissions (i.e. $9.95 flat) while Singaporians don't…if so, how come?

    • Every country is different Frank. Over here, I pay $30 USD per trade up to about $40,000. I can buy $40,000 or so of any ETF and pay just $30 USD per trade, but after that the cost climbs. This is why I never make a purchase with less than $10,000 at a time. Doing so usually puts me in the same commission ballpark as a Canadian (in Canada) investing $2,500 and paying $9.99 for the trade.

  5. Tyler says:

    Hi Andrew

    Hoping you can help a fellow Canadian.

    I am living in Dubai and need to start saving for retirement. I would like to access the Vanguard funds. You have mention DBS Vickers. Do they allow access to the index funds or only ETFs?

    I will be in Singapore most likely in a few weeks time so if I can I would like to open an account with a firm there if possible. What steps do I need to take?

    Also is there other online options?

    And lastly I dont plan on going back to Canada however if I purchase Canadian Index funds how does that effect tax status?

    • Hi Tyler,

      There's no issue with tax status if you want to open an account here in Singapore with DBS Vickers and buy exchange traded funds–even those on the Canadian market. You could buy Vanguard ETFs off either the Canadian stock market or the U.S. stock market. As a non resident, of Singapore, you can't open an account with Standard Chartered, which would normally be the other option.

      Keep in mind that you should pass the online test before you come though. It's easy to do. But you will have to study the material. You can take it online. Once you pass, you can open an account, upon your visit. https://onlineeducation.sgx.com/specifiedinvestme

      Cheers,

      Andrew

  6. Hi Andrew,

    What about for expats living in China?

    I am currently based in Beijing after having lived in KL and Singapore. Investment opportunities locally are tough and I can't open investment accounts in Canada (I am a Canadian) without affecting my tax/residency status.

    I am interested in purchasing the Canadian Vanguard options but am unaware of an outlet in which to do it.

    Any options that you would advise?

    Thanks so much,

    Steve

  7. Tyler says:

    HI Andrew

    Thanks for the reply and sorry to bother you again.

    I have completed the SGX online test and passed. I have sent an email to DBS Vickers about opening an account when Im there in a few weeks time.

    Couple of questions:

    1) is there other options online for Index/EFTs such as vanguard that I can access? I ask because you mention that DBS raised their commissions fees. Are they still the cheapest option?

    2) Do I need to deposit money with the DBS online account when Im in Singapore or do I just open it and then deposit money when I make my first trade?

    3) As a 36 year old Canadian what portfolio balance would you recommend?

    Thanks for all your great work on this website and your book which I have just read is fantastic.

  8. Dan says:

    Hi Andrew,

    Dan here from Bangkok (we ran together while you were visiting in May).

    My father-in-law, with our help, is putting some money away for our children's education. He is taking advantage of the RESP offered in Canada. He has just dumped some actively managed funds with the TD and has opened up a TD e-series Funds Account as you suggested in your book.

    My question is, having kids with current ages of 5 and 7, how would you suggest allocating these investments within these e-funds? Percentage Bonds? Percentage Equities? International? Canadian?

    Thanks for any advice you may have.

    Cheers,

    Dan

    • Hey Dan,

      It's great to hear from you. As for that money…your dad could split it this way:

      10% Canadian Bond

      50% Canadian equity

      20% U.S. equity

      20% International equity

      Or, if he wants to keep it really simple:

      10% Canadian bond

      90% Canadian equity

      The important thing is to creep the bond allocation up each year. By the time your kids are about 15, the money should be almost entirely in bonds.

      If the markets drop when they are 15,16,17, or 18, there isn't a lot of time left for the money to recover….if it were invested mostly in stocks. That's why teenaged kids should have RESPs that are similar to 90 year olds. The money will be fully depleted in a few short years, as they account goes from an "accumulator's" account to a "spender's" account, as college costs are being paid for.

      Let me know if you have any other questions. And please congratulate your dad for setting up such a great, low cost option.

      Cheers,

      Andrew

      PS–Please let Steve know that the jersey he sent me fits perfectly, and I'll be wearing it home tonight.

  9. Joe says:

    Andrew,

    I am a Canadian (but resident in Malaysia) trying to open an offshore brokerage account. I tried to open a DBS Vickers account in Singapore but I can't due to not being a resident there.

    I am not intending to go back to Canada as a resident and hence now looking for a good, affordable, offshore brokerage option. Can you or somebody else have any further suggestions? Thanks

    -Joe

    • Hi Joe,

      Please try calling DBS Vickers again. You can open an account with them if you visit Singapore to do so. Arrange it before coming. You spoke to someone who didn't want to deal with something unknown to them. Dozens of people have opened DBS Vickers accounts from overseas. Many of my readers have flown in from Vietnam, Malaysia and Thailand to do it. Give them another ring and push the issue.

      Cheers,

      Andrew

  10. Tammy says:

    Hi Andrew,

    I have a few burning questions.

    1. After reading your response to the person in Dubai, I am confused about Vanguard and DBS Vickers. I was under the impression that they are both securities companies, so you sign on with DBS and you purchase their indexes. By the sounds of your reply, I can sign up for a DBS Vickers account and then purchase Vanguard ETF's?

    2. You recommended people not purchase any ETF's for less than $3,000 at a time, due to the $30 fee. We can afford to invest $4,000/ month, but are thinking of keeping $1,000 aside each month for when the market goes on sale. Was your recommendation based on spending around $3,000 in total across all of your funds or per fund? Is the fee per fund or for total monies invested at one time?

    3. My husband and I have been paying into Friends Providence's Premiere Plan out of the Isle of Man. We signed into a 20 year plan and have been with them for 4 years. If we to close the account we would be penalized $6,000 on $25,000. We have stopped putting money into the fund, but are not sure what to do with it. If we stay with Friends Providence, we can move our money to their index funds and not be penalized. My husband and I disagree as to the course of action. I know in the grand scheme of things it is not much money, but $6,000 to me is a lot of money. Our choices: Take the hit, move the money to Singapore (we are teachers here) and deal with DBS from now on OR keep it with FP, but move it to their Index Funds or even just a bond account and count that towards our bond %. Would it be better to find the below funds and then balance through our account in Singapore?

    4. If you were creating a balanced portfolio today, what Indexes would you choose. These are our thoughts based on your globe and mail article:

    22% VCE (Canadian Market)

    35% VSB (Canadian Bond)

    21% VTI (US Market)

    22% VEA (Europe, Asia, and Australia) –> Would this be what you would recommend as an international fund?

    I'm 37 and my husband is 40.

    5. We are currently banking with Standard Chartered Bank. For ease of investing through DBS Vickers should we consider switching to DBS bank?

    Your thoughts are more than welcome.

    Thank you in advance for your advice.

    Sincerely,

    Tammy

    • Tammy says:

      Ignore question 5… We went and opened a DBS bank account and DBS Vickers account today!

      Ignore question 3… I read your post on Friends Providence and wanted to cry. At least we don't have much money in there. It feels like we are always starting over. So we have decided to close the account. Funny enough we had our financial advisor contact us right away. 🙂

      Hope your having a great week.

  11. Harold says:

    Hi Joe,

    Read your post. I'm a Canadian in the UAE. Read my recent post to Andrew under the other blog post:

    "Expatriate Canadians Investing in Singapore Find a Cheaper Option"

    I've called DBS Vickers a couple of times and yes, one well meaning person told me I couldn't set up an account but when I told her she was wrong, she checked with her colleagues and stood corrected.

    • Joe says:

      Andrew / Harold,

      Yup that was the case infact. I called again today and a guy told me I just need to pop down to Singapore without appointment and open the bank account and brokerage account on the spot.

      So for other non-residents of Singapore if you get a misinformed person that says no they are most likely wrong!

      Now I need to find the best choice of bonds and indexes to consider to suit my specific situation. I don't plan to move back to Canada anytime soon and will most likely settle for the long term in Brazil. Any suggestions?

      • Harold says:

        Hi Joe,

        Again if you read my post on the other blog you'll see that you don't even have to go through the expense of flying to Singapore..unless of course you want to.

        Download the forms, get them to email you the Canadian expat declaration form, get your signatures notarized locally and send it in. No Sing bank account necessary unless you want to trade on the Sing stock exchange.

        H

  12. MArc says:

    The DBS vickers website now states that they will not open accounts for U.S. and Canadian residents. I've been living in Honk Kong for 3 years and they would not allow me to open an account here

  13. Ann says:

    Hi Andrew,

    I have just bought and started reading your book, Millionaire Teacher and I think it is great and really inspirational! I just finished chapter 6 and have found this blog. I have read some of the comments but am getting confused as to what to do in my situation. I am a 26 year old Canadian currently living in Singapore working on a 2 year contract. It is my first real job out of school and I am finally starting to make some real money and want to start investing! I do plan to move back to Canada in 2014 when my contract is up so I'm not sure what is best for me right now. Should I open an account with DBS Vickers or wait until I go back to Canada and go with Vanguard? If I do go with DBS Vickers now, what will I need to do when I go back to Canada a year later?

    Thanks!

    Sincerely,

    Ann

    • Hi Ann,

      Considering the short duration of your contract, you should probably consider investing in a Canadian brokerage. My advice would be to check with a Canadian accountant to be sure. Your duration is short. To invest here, as a non resident, you should have cut all Canadian ties: no Canadian driver's license, Canadian medical, no Canadian bank accounts, no Canadian credit cards. But your duration is far too short for revenue Canada to buy your "non residency" status. In that case (and again, confirm with a Canadian accountant) you may want to wire your savings home to a Canadian brokerage account. You could do that, and start investing right away. Please let me know what the accountant says.

      Cheers,

      Andrew

  14. Shane says:

    Hi Andrew,

    I would like to start by thanking you for all your information and taking the time to help so many people with your time and advice. I'm a Canadian living in Shanghai and am looking for a place to invest my money for retirement and a nice little nest egg for the future. I read your interview with Tony and that is something I am very interested in doing. I was wondering if you know anyone like him who works with Canadians, and will help in building us a portfolio for a low cost.

    Thanks, Shane

    • Hi Shane,

      Guys like Tony are very rare–especially in Asia. You may want to ask him if he could build you a couch potato portfolio with a Canadian equity bias–or of he has recommendations. Please keep me posted. As a Canadian, tax issues are much simpler for us (we don't file nor pay capital gains taxes to Canada if our money is overseas and in a capital gains free zone).

  15. Mark says:

    Hi Andrew,

    I am marrying an american in the next few months and have been wondering what to do with her investments. What advice would you give to a non-resident Canadian marrying an American? She has some investments now but are just in bonds at the moment and we are considering opening a brokerage account. Would it be better if she opened one up in her name (and risk paying hefty taxes later) or would it be better that I opened a 2nd account in my name but use her savings as I wouldn't be paying taxes on it (at least not to the same extent)? Should we have a joint account?

    Sorry but not sure how to do this as a couple. Any advice would be greatly appreciated!

  16. Carole says:

    Hi Andrew,

    As an Canadian expat teacher who has recently moved to Singapore, I was intrigued by how you made your first million and have been recently inspired by your book.

    I had lived in Hong Kong since 2003, trading blue chip stocks with reasonable success, but am now looking at slowly transforming my not so diversified portfolio to a more "couch potato" model. I'm looking at retiring within 5 years before age 60 without the coveted Ontario Teachers' Pension.

    I've investigated the DBS Vickers account option and buying the Vanguard ETF's but have decided to stick with trading on the HKSE using my HSBC Premier account in Hong Kong. ETFs offered by Deutsche Bank (db X-trackers) seem like a good option. They offer 30 ETFs on the HKSE and they were the Asia Risk Awards 2012 winner – ETF Provider of the Year 2012

    Below are the US and World Indices offered by db X-trackers:

    3020 MSCI USA TRN INDEX ETF (* This is a synthetic ETF)

    3019 MSCI WORLD TRN INDEX ETF (* This is a synthetic ETF)

    I'm not sure I need or want exposure to the relatively small Canadian market. I'd buy the next two ETFs instead:

    Emerging markets Index consisting of the following 25 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey.

    3009 MSCI EMERGING MARKETS TRN INDEX ETF (* This is a synthetic ETF)

    and 4 Developed Market countries: Australia, Hong Kong, New Zealand, and Singapore.

    3043 MSCI PACIFIC EX JAPAN TRN INDEX ETF (* This is a synthetic ETF)

    I think that will take care of my appetite for equities, but I'm still looking at an addition to my handful of income producing dividend stocks, a real return bond fund and a managed rental property as retirement draws near. I could bump up contributions to the real return bond fund, but it's a unit trust with a higher MER. Any suggestions?

    I'm enjoying the blog and look forward to a new book. I'd be interested in how you are planning the transition back to Canada as that is also a possibility for retirement for me for at least part of the year.

    Cheers

    • Hi Carole,

      You sound like you have your financial house in order. Congrats!

      You may be interested in an international government bond index. I believe ISHG is yielding roughly 4%. Regardless of the yield, it might provide some nice, further, diversification.

      Cheers!

      Andrew

  17. Carole says:

    Thank you for the suggestion, Andrew. Happy Holidays!

    Cheers,

    Carole

    • You're welcome Carole,

      I actually bought $50,000 worth of ISHG this morning. The yield is currently 2.6%. But I am far more interested in its capacity to provide dry powder to rebalance my portfolio if it falls.

      On an unrelated note: did you book your flight to Cuba? From where? My wife and I will be leaving for Cuba from Vancouver in July with our tandem. We were going to go for Christmas, but the flights are too costly, in comparison, considering that we will be in Canada in July anyway. We hope to cycle around there for a couple of weeks.

  18. Carole says:

    Hi Andrew,

    I thought Canadian investors in Hong Kong and/or China trading on the HKSE might be interested in the following for their fixed income/bond component if they're bullish on Asian currencies including the Renminbi and don't want the risk of a single country short term bond fund ETF.

    I've decided on a sizeable contribution with the ABF PAIF Asian Gov Bond ETF 2821.hk to add to my dry powder. It's the Largest Asian Fixed income ETF registered in Singapore and currently yields 2.82%. It invests in the local government bonds of China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore and Thailand. As at June 30, and since 2005 the PAIF's annualised total return was 7.52% while the total return for the last 12 months was 4.68%. It won the Best Asia Bond award at the Morningstar Awards for Singapore 2012, I can see the appeal.

    About the unrelated note-try a charter flight with Sunwing.ca or Air Transat last minute if you've got some flexibility.

    Cheers,

    Carole

    • Thanks Carole,

      That bond ETF sounds like a great option. I like having a Canadian bond bias myself, only because most of my future bills will be Canadian, but your option (and/or addition) would be a solid one.

      As for Sunwing, you're right. Booking last minute (and we are flexible) is a great idea.

      Thanks!

      Andrew

  19. scott says:

    hi Andrew, I'm just comparing VEA to XIN. I'm wondering with the recent dividend taxes changes its worth it to change from one to the other.I haven't altered my postion greatly (15000 invested) but i'm in it for the long haul. Like many here i too have read your book and it inspired me to take charge of my finances.take care

  20. Kyle says:

    Hi Andrew,

    So, I'm about to pull out around 30,000 USD from Friend's Provident (22 year diversified portfolio plan… er'… life sentence…) and hoping the Surender amount I get back isn't lower than my principal investments. Haven't contacted them yet, treading water carefully here. Any idea on the amount I should expect before I ask them?

    After that is done…

    Vickers or TD e-indexes?

    I know you recommend the Vickers because of the risk of loosing residency status. I talked to my accountant in Canada over the holidays and he claims I need not worry about residency status and that whatever I gain in Canada gets taxed on the spot under non-resident withheld tax (or something along those lines).

    I do have an account with TD Canada Trust, and am simply wondering if it is in my best interest to go through TD Waterhouse with their e-indexes or DBS Vickers?? I've read your book (thanks!) and understand what to do with the money- it's just the platform and hidden rates/fees/withheld tax/residency issue that I'm not sure about….

    Appreciate any input on these few issues. Thanks for what you're doing here…

    Kyle

    • Kyle says:

      Oh…fyi,

      I’m Canadian working at CIS here in Singapore.

      (also, to open a Vicker’s accn’t, do you recommend going in person or doing it online- should the Vicker’s be better than the e-indexes with TD that is)

      Thanks for your time,

      Kyle

      • Kyle,

        The Canadian investment account is definitely the cheaper option: lower currency spreads and far lower commissions. That said, I would ask another accountant specializing in Canadian expats. If I could invest in a Canadian brokerage without hurting my non residency status, then I would certainly do it. But my accountant (a non-residency expert) has suggested otherwise. It might be better to play it safe. As for DBS Vickers, if you are residing in Singapore, I believe that you will need to go to a branch and take a multiple choice test. You take the test online, and you will have to study a couple of hours for it.

    • Kyle says:

      Oh…fyi,

      I'm Canadian working at CIS here in Singapore.

      (also, to open a Vicker's accn't, do you recommend going in person or doing it online- should the Vicker's be better than the e-indexes with TD that is)

      Thanks for your time,

      Kyle

  21. Kyle says:

    Thanks Andrew,

    Yeah… probably better safe than sorry, especially as I don't see myself returning to Canada any time soon.

    Thoughts on Friends Provident? Are they allowed to return a surrender value less than the principal invested amount (given that the current total value now is about 6 or 7 thousand above the principal investment- i.e they can grab that profit and let me leave with what i put in…)?

    Thanks,

    Kyle

  22. Hi Scott,

    XIN has a hidden cost associated with it, unfortunately. It is hedged to the Canadian dollar, and this will cost it roughly 1% extra per year in hidden opportunity losses from bid/ask exchange rate differences over time—not every year, but over the long haul. I have recently written an article about it for the Globe and Mail, which should come out within a week or two.

    When Vanguard comes out with a non-hedged international ETF that trades on the TSX (and it should be coming) then switch to that one.

    Cheers,

    Andrew

  23. Hi Kyle,

    I believe you will have to go in person to finish the application. If you decide to keep your money in Canada, there are cheaper options than the e-Series funds. Exchange traded funds are even cheaper, due to even lower expense ratios.

    Andrew

    • Hi Shane,

      I've heard that Saxo is a good option. You may want to ask Tony Noto, the financial advisor I interviewed a couple of months ago. Scroll through some of my older posts for the interview. He lives in Shanghai. He's a great guy, and may give you a solid suggestion on a brokerage you could use to invest on your own (via a Shanghai brokerage). He may even suggest something better than Saxo. It doesn't hurt to ask, and he knows a lot about the region's offerings.

      To answer your quetion about a TFSA account, yes, you had better wait until you reside in Canada again before opening it.

      Cheers,

      Andrew

  24. Steven says:

    Hi Andrew,

    I have been reading lots of posts on DBS Vickers and other brokerages around China. I am trying to consider what brokerage to open. I also have heard Interactive Brokers or Saxo Bank in Hong Kong are both good ones to try. I am currently living in Shanghai and would love to hear your opinion. Also, should I stay away from opening a TFSA in Canada if I'm going to be overseas for a long time?

    Thanks again for everything, you are a god sent from heaven!!!!!!

    • Hi Steven,

      I’ve heard that Saxo is a good option. You may want to ask Tony Noto, the financial advisor I interviewed a couple of months ago. Scroll through some of my older posts for the interview. He lives in Shanghai. He’s a great guy, and may give you a solid suggestion on a brokerage you could use to invest on your own (via a Shanghai brokerage). He may even suggest something better than Saxo. It doesn’t hurt to ask, and he knows a lot about the region’s offerings.

      To answer your quetion about a TFSA account, yes, you had better wait until you reside in Canada again before opening it.

      Cheers,

      Andrew

  25. Mark says:

    Hey Steve! I've done it through Saxo Bank. Send me a message via FB for details.

    Mark

  26. Mark says:

    So it's been almost 2 months since I opened my account through Saxo. Things have been going well, particularly all the stock ETFs I invested so far (up 4.63% since Nov) but my bonds have taken a bit of a hit (-0.97%).

    My portfolio so far is:

    21.67% Vanguard MSCI Can ETF (VCE.TO)

    21.67% Vanguard Europe Pacific (VEA)

    21.67% Vanguard Total Stock ETF (VTI)

    10% Vanguard Can Short Term Bond Index (VSB.TO)

    20% iShares CND Bond Index (XBB.TO)

    7.5% Vanguard Total Bond Index (BND)

    One thing that I have noticed is that if you buy CDN stocks/bonds, you pay double the price which equates to about $27.95 per opening trade (and closing trade). Thus, I have been only buying in large quantities. Anything bought via the NYSE is half the price.

    My total account is in USD. The one thing that I noticed is that Saxo does charge you a currency conversion fee of 0.5% which I think is pretty substantial. They say it is worked into the currency conversion rate but when I look at my profit/loss in USD, it is considerably less.

    When I asked Saxo about this, they said I would qualify for a premium account which means that I could open up a secondary account in CDN to avoid these fees. However, I'm not sure it would be worth it or not. Any thoughts on this Andrew?

    Now I am not so sure I want to have a lot of my bonds in CDN (since my acct is in USD) as the currency rates do fluctuate. I tried to balance my account out as best as I could which is why I bought some BND from the US.

    • Hi Mark,

      Now that you have investments with transparent hoods, you can see the inner workings of the banking engine. All investments (mutual funds, unit trusts, individual stock purchases) will have currency spread differentials when buying in a different currency. There's no way around that and it's one scam we can't really avoid: the price of doing business with banks. Currency fluctuations themselves are never the issue. But the bid/ask spread will cost you money when you buy and sell. It just won't be on the statement. For example, when you look at a bank's exchange rate and it says that it "buys" a currency for a set amount, and "sells" a currency for a slightly different amount. This is called the spread. And few investors know much about how it effects their purchases. The actual spread you are paying for purchases of $10,000 or less is going to be roughly 1.4%. As mentioned, even if you were buying mutual funds in a different currency, you would have the same kind of bill. In this case, you wouldn't be able to see under the hood, however. As such, the commission itself is the smallest part of the transaction fee; the spread is the larger of the two. Some brokerages have wider spreads than others (I can virtually guarantee that your spread is more than 0.5%). Fortunately, this is not a fee that drags on like an expense ration. You pay once, when you make a transaction, and never again… until you sell. As for fluctuating currencies in a portfolio….they are a good thing. Sometimes you will "win" while your international index increases (due to the Euro rising) and sometimes the opposite will happen. If your portfolio is fully diversified, you will be owning multiple currencies, even though the prices of the products may be denominated only in U.S. dollars.

      Cheers,

      Andrew

    • One other thing to add Mark. If you are below the age of 55, you should be disappointed that the markets have pushed your investments up at all since you recently opened this account. You realize how important it is to think like this, right?

      You are now a collector. And as a collector, you don't want to see the prices of the items you are collecting to rise in price until you are nearly ready to sell them: age 55+

      Cheers,

      Andrew

      • Mark says:

        Yes you are totally right about not wanting the price to rise but since I was just starting out, there was something self-satisfying about knowing that my investments did make some money initially. I really underestimated how hard it would be psychologically and emotionally to see the prices go down because in my head, part of me was screaming, "Nooo, I'm losing money!" but then I had to stop and think, "hang on, this is what I want, this means prices are cheaper for next time".

        I know you will scold me for this but around New Year's when all the hype was going on about the fiscal cliff (I know, I know, ignore the noise), I waited to buy in as I thought stock markets would crash and I would get cheap prices. And as you know, nothing happened. In fact, the the reverse happened as a short term deal was made!

        It was a good lesson to remember about investing, ignore the news and whenever you have money to invest, make sure you invest it. The other lesson which I know you wrote in your book, is don't try and time the markets. Perhaps I just needed to experience this first-hand to really understand it.

        • Unfortunately Mark, if your "timing" had worked out, you would have tried again. The worst thing for a casino rookie to experience is a win on their first day out. When that happens, they're hooked for life, and destined to lose to the casino. Same thing with investing.

          Good luck controlling your emotions. It is, by far, the most difficult part of investing…..but it's the most important part to master.

          One person could buy expensive unit trusts (mutual funds) and the other investor could be an index investor. But if the mutual fund investor keeps his/her head and celebrates falling markets, there's no doubt who would make more money in my mind, if the index investor is emotionally drawn to speculate. Hands down, the emotionally evolved investor will easily win. We are very primitive creatures by nature. And we can't let that hard-wiring mess with our wealth.

          Cheers,

          Andrew

  27. Mark says:

    Also, thanks for the info about the currencies. Much appreciated.

  28. Kyle says:

    Just an FYI…

    As per Friends Provident and my 22 year plan (diversified portfolio), of the $28,000 at its present market value (growth from the 22,000 invested…1000/month over 22 months), I would only be able to get back 9,000!!!! So, I will opt for lowering the monthly investment from my part to 150 (I think that would save me more than loosing nearly 19,000 in one hit!)….

    Live n' learn.

    Cheers,

    Kyle

    • Call Friends Provident directly Kyle. You would be able to recover more than this. IFA Abroad (who posts comments regularly on my Friends Provident blog) has found that the numbers advisors give here aren't always fair and accurate. You need to check this out. Otherwise (by staying in based on a false premise) you will lose far more money in lost opportunity compounding costs over the term of the plan.

  29. Jon says:

    Andrew,

    I just opened a DBS Vickers account 5 days ago and put $100,000 into VCI (20%), VSB (40%), VEA (20%), VCE (20%).

    Because of market fluctuations, I am negative $182 in USD and received an email from DBS Vickers saying that I have to transfer that money within two days or they will automatically force sell.

    Due to the cost of transferring funds I am thinking that having them force sell is probably the best idea but how do I avoid this in the future?

    How much cash should I keep in my trading account so that this doesn't happen again?

    Thanks,

    Jon

    P.S. I opened this account from Japan. They allowed me to do so without visiting Singapore as long as I was not going to trade on the SGX and not open a Singaporean bank account.

    • Jon,

      I'm really glad to hear that you were able to open your account from Japan. Well done! You don't know how much they will sell, so perhaps you could sell some shares yourself. Yeah, it's going to cost you about $30 to make a sale of about $200 (that's their minimum charge) but you don't want them deciding how much to sell, and from which index to sell from. If some fool at DBS sells a heck of a lot, you will pay higher commissions.

      When I make my purchases, I always buy less than I can, just in case the markets rise. For example, if the price is $35.50 per share, I see how many shares I could buy if the price were $36.50 ish. This will be a good strategy for you, going forward.

      On another note, if you have a bit of time….I would love to get a story from you that I could post on this blog. Your journey towards opening this account, and describing how you opened it from Japan would help plenty of people. Could you consider it?

      Thanks!

      Andrew

  30. Rob says:

    Hi Kyle, Andrew, and all,

    I'm also a non-resident Canadian (currently in Qatar) looking to get going with passive investing (sounds like an oxymoron).

    Similarly to Kyle, I've been told by a tax accountant in Canada, and a financial planner, both of whom specialize in non-resident clients, that it is safe for me to invest in Canada through a Canadian institution/account, so long as the account is set up as a non-resident investor. Their opinion is that as long as my family and I reside overseas and do not enjoy any benefits of residency in Canada (medical coverage, etc.), we'll maintain our non-residency.

    Further, while I've been overseas, and been non-resident since 1996, I currently work for a Canadian employer and get paid in my RBC account in Canada. My employer required a recent adjudication from CRA stating my non-res status so they could forego taxes on my salary. I was nervous due to the additional ties of getting paid in Canada, by a Canadian employer, but I was affirmed to be non-resident for tax purposes. Further, the letter from CRA stated that the only taxes I was liable for, in their opinion, would be 25% withholding tax on any income – rent, dividends, interest, etc. – accrued in Canada.

    So, while I do get conflicting opinions about this, the preponderance of 'in the know' advice would seem to suggest I can still invest in Canada, through my Canadian account. Or, is it just too risky and should I go for DBS Vickers in Sing and put up with the wire transfer fees, more accounts to manage and incur fees from, and currency spread losses?

    What do you think?

    Rob in Qatar

    • Hi Rob,

      I'm under the impression that you would also pay a 25% tax on the account's realized capital gains. This is the rate for non residents. It's the same capital gain rate I had to pay on my Canadian property when I sold it in 2007, based on the fact that I bought it in 2003 and it had gained significantly since then. It's also the same tax rate you would pay if, as a non resident, you liquidated your RRSPs. If I could legally invest my equities in Canada, avoid the capital gains for non residents, and not harm my residency status, I would certainly push all of my money into a Canadian brokerage account. But I've been told this isn't possible. Have you heard anything to the contrary of what I've written above?

      As it stands, with a local brokerage here in Singapore, I don't pay capital gains taxes on my investments.

      • Yet…I did see some conflicting information at this RBC tax site: .

        It suggests that realized capital gains are not subject to Canadian tax if they include the sale of equities or funds.

        This is certainly worth looking into.

        Thanks Rob,

        Andrew

      • Rob says:

        Hi Andrew,

        According to the tax specialist: as long as the account in Canada is set up as owned by a non-resident, there should not be an issue. As well, any capital gains are not subject to tax in Canada because you are a non-resident and gains are sourced to the country of residence.

        This is someone who helped a colleague, with a very complicated residency situation (briefly returned to Canada and worked for a few months before moving to Qatar, has a wife seeking citizenship, etc.), overturn a CRA decision that he was taxable.

        Also, my own CRA decision letter states: As a non-resident, you may be subject to a non-resident withholding tax on interest, dividend, rental, and pension income received from a Canadian source.

        The letter explicitly states the withholding tax is 25% and mentions no liability for capital gains.

        So, my only real fear is, could setting up the investment account (with RBC or TD for example) be the straw that puts me over the top with regards to 'ties to Canada'. Tax guy says no. Financial planner says no. Okay, one other source of fear, I very much want this to be true, so I'm worried I'm missing something due to that desire.

        • I have the same fear Rob. I just emailed my accountant, who specializes in non-residency tax filings, to see what he thinks. He was the one who suggested that I keep all of my money out of Canada in the first place. But I linked the RBC tax document and highlighted the quote.

          I would prefer to have my money in a Canadian brokerage if I could. It would cost me some money to wire the proceeds, but here are the advantages:

          1. Purchase commissions are lower

          2. I could buy everything off the TSX, avoiding any possibility of U.S. estate tax upon my death. Or maybe I shouldn't worry about that!

          I just paid $55 USD in commissions this morning for a $21,000 USD order. I could likely get that down to $9.99 if my account were in Canada. DBS Vickers also skims money off my dividends as a processing fee. It's not a lot, but it's more than they deserve.

          This is worth exploring deeply for all expats. My publisher has asked me to write a book for expat investors—because nothing currently exists. I said no because the market was too small. But I can also see how it would be useful to many people. And I would turn over every stone possible when researching it.

          Cheers,

          Andrew

        • Rob says:

          I emailed 'my guy' again, too, just to be absolutely sure there is no factor I'm misunderstanding or bit of information he could be missing in considering my situation.

          One other fear I thought of, though: having to file tax returns in Canada again. Yuck. One of the great pleasures of being a non-resident Canadian, especially when you live in a nation that has no (personal) tax or filing requirements!

      • Rob says:

        Hi Andrew,

        So, my guy assures me an investment account in Canada, set up as a non-resident, would not tip the scales against me and get me looked upon as a tax resident. I will be just another non-resident (i.e. 'foreign') investor.

        If I want to be extra cautious, though, and I do, he said I could drop one or more of my current secondary ties to Canada. (I don't have any property, dependents, health care coverage, etc. back home.)

        Most current ties I can't get rid of. I need the checking account for salary. I need the drivers license to get a new license in any new country I might move to (I have moved about every 2 to 3 years in my career so far). I obviously want to keep the Canadian employer, which means getting paid in Canada as well. The only thing I could drop is the credit card attached to my Canadian bank. However, I need a credit card of some sort, and getting them here in Qatar, if you're not paid locally, means having an equivalent amount ' blocked out' and untouchable in a local bank account. So, if I want a $5000 credit card limit, I need $5000 collecting dust in a local account. Doable but not desirable.

        So… do I feel comfortable enough with this expert opinion, the statement from CRA saying I'm a non-res as I am now, and maybe dropping one more secondary tie to Canada, to start up an investment account and buying assets back home?

        I'm leaning towards yes, but would appreciate other insights and information. Any word from your guy?

        Rob

        PS: I would buy the expat investor book, and so would about 2-dozen expat Canadians at my university!

  31. Harold says:

    Hi Andrew,

    Well after several months I finally have my DBS Vickers Account up and running with security key and all.

    Now that I'm about to make my purchases and reviewing the notes I had from a blog entry you had Sept. 29, 2010 I had a question.

    I figured I needed to have both USD and CAD to do the trades for the ETF's you had suggested and so I transferred both USD and CAD funds into my account. Now that I'm reviewing my notes it seems that all the ETF's are traded on the Toronto Stock exchange with the ".TO" attached to them.

    So if this is correct do I just trade all of the ETF's (VCE.TO, VTI.TO, VEA.TO and VSB.TO) on the Canadian Exchange with CAD dollars to make things simple? Or rather than convert my USD to CAD dollars should I trade the VTI and VEA on the US stock exchange and purchase with USD.

    Not sure if that makes any sense. Ultimately I'm wondering if I just buy and sell in once currency or both CAD and USD.

    Thanks in advance for your input before I push the button!

    H

    • Hi Harold,

      Of the ETFs you listed above, some trade on the Toronto market, and some don't. Here are your Canadian ETFs: VSB and VCE. The others you listed will need to be traded on the U.S. market, because they are American ETFs.

      Cheers,

      Andrew

  32. Seb says:

    Hi Rob,

    Same situation as you except I'm self-employed (freelancer) in Asia (working in Thailand, Vietnam and Indo).

    Got the TD account and credit card + driver's licence, neither of which I'm ready to let go. Other than that, no Canadian employer, dependent, property, you name it.

    .. and also wondering if I should invest with TD e-series, or via Singapore…

    Just curious. IN the end, what did you do? TD or overseas?

    Cheers,

    Seb

    • Rob says:

      Hi Seb,

      I'm going to be back in Canada this summer to visit relatives, and the plan at the moment is (unless I hear enough to convince me otherwise) to open the non-resident investment account with RBC or TD while I am there. I'm going to keep the one checking account, one credit card, and DL, as my advisor thinks that would be safe to hold on to. I'll prune anything else I can think of.

      Hopefully, we'll hear something back from Andrew and others who come to the blog with their perceptions, experiences, and advice they might have gotten.

      Fingers crossed it all points to non-res, tax-free (minus withholding) investing through Canadian banks. It will save me a lot of hassle, fees, and currency spread losses.

      I would think that you would be relatively safe, considering you're in the same boat, minus the Canadian employer.

      Good luck!

      Rob

      • Mark says:

        I am very interested in this topic as well and avoided investing through Canadian banks for this exact reason.

        The problem is that tax laws change. So what might be okay now might not necessarily be the case 10, 20, or 30 years from now.

        I guess like all long-term investment, you want to reduce as much risk as possible. I am willing to pay slightly higher commission fees and spreads for peace of mind.

      • Seb says:

        Thanks for the info Rob, and yep, I would think I'm safe, though I've only researched online and not talked to anyone about it. Looks like a credit card + bank account + driver's licence falls in the vague category of "may affect non-residency". Seeing I have no property there, nor dependants, nor am I covered by health care (all things that DO affect non-residency), overall it's quite provable I haven't been mooching off Canada 😉 Except for the driver's licence.. but hey, I paid for that, right!

        .. ah but of course I could be all wrong.

        I suppose my next step is to figure out which is easier, I guess..

        Cheers,

        Seb

      • Kevin says:

        Hi Rob,

        I tried to find some information concerning your question…

        Withholding taxes

        Under the Canada/U.S. Tax Treaty, a former resident of Canada who generates Canadian source investment income such as interest or Canadian dividend income is only subject to Canadian non-resident withholding taxes. Under the Treaty, interest income is no longer subject to withholding tax; however, Canadian source dividends are subject to a 15% withholding tax.

        If a former Canadian maintains a non-registered investment account in Canada that distributes Canadian source dividends, he should file a Part XIII letter to the CRA along with payment of the 15% tax that should have been withheld at source. This would confirm to CRA that although he maintains a nonregistered account in Canada, he is at least complying with the Canadian tax rules through the payment of non-resident withholding tax. Failure to do so could be sufficient evidence to suggest your client is still maintaining Canadian tax residency and is therefore subject to tax on worldwide income.

        http://www.advisor.ca/tax/tax-news/advising-non-r… (Source)

        15% sounds quite significant. I have just opened up a DBS Vickers account so I am interested to hear if their is a way around the 15% tax on dividends.

        Thanks,

        Kevin

        • Kevin,

          A 15% withholding tax on dividends and 0% capital gains tax could be the best investment deal in the world. Consider gross investment profits of 10%. Consider 8% of that from capital gain and 2% from dividends. After paying 15% tax on the dividends, you would net 9.7% from the gross 10% overall investment profit. And when you sell, you wouldn't pay any tax, no matter how much money you gained (via capital gains). This is even better than a RRSP.

          Cheers,

          Andrew

      • Adam says:

        Hi Everyone,

        My wife and I opened a TD Waterhouse account for non-residents in the summer and have since bought three ETFs: VAB; XIC; XWD. We're charged a 25% withholding fee as the ETFs are considered giving a trust income rather than a dividend, which according to the Canada-China (where I live) tax treaty would only then have been 10%. My understanding is that I don’t pay capital gains and that Canada is encouraging non-residents and foreigners to invest in Canada. Since 2009, interest on Canadian sourced income is no longer taxed. For example, I didn’t pay tax on the GIC I had in 2011-12. I cleared 1.85%! Woohoo! And the March 4th, 2010-changes appears to relax the requirements further (see the withholding tax guide that Andrew posted and check section 5).

        I think the issue of residency concerns other ties (ie/not equity investments). Residency concerns are largely offset if there’s a tax-treaty between Canada and the country you reside anyway. In the case of China, there’s a “centre of vital interests test” that prevents one from being a resident of two countries at the same time and allows you to have significant ties to Canada so long as you have more ties in the country that you live abroad.

        I’ve really enjoyed reading the discussion in this blog and hopefully, Andrew, you will write that book on expat investing. I’ll certainly purchase it. I’ve learned so much from Millionaire Teacher.

        Best wishes,

        Adam

  33. Duncan says:

    Rob and/or Andrew,

    Is there a way to pass on the people you use as your tax consultants in Canada? I've been finding it tough to find an expat tax expert in Canada.

    Rob – your colleague who is dealing with Citizenship issues and tax things with Canada is very similar to my situation currently – could you perhaps find me on twitter duncanmacleod86 and DM me the lawyer/accountant your colleague is using? It would be SUPER helpful.

  34. Kevin says:

    Hi Andrew,

    Even though I have just received my login and password for my DBS Vickers account I am now on the fence about where I should start investing after all this discussion about TD Waterhouse etc.

    I've tried to convince myself that the cost difference between commission prices in Canada and here in Singapore would be offset by the withholding tax, paying an account and the hassle of filing back in Canada. How great of an impact will the currency spread here, have on investing in Singapore compared to investing in Canada? Is there any benefit in opening a Canadian and an American currency account with DBS to minimize some of the exchange costs after selling then buying?

    Thanks again.

    Kevin

  35. Michelle Ahoy says:

    Hi Andrew

    Thanks for the advice in the book – just wrapping my head around it all…

    Couple of basic questions that I have and I hope you – or anybody else can help.

    Currently I am Canadian and live in Bangkok, Thailand (I work at ISB). I have way too much money in funds, that are slowly coming to term in the next year or two. I have a Friends Provident that I am going to pull out of but now I am figuring out next steps…

    1. We (my husband and I) want to buy property in the next 5 years. We are going to let all the investments come to term (which would be ample amount of cash) – so that we have the cash to buy without mortgaging.

    2. I want to create a portfolio of 40% bond index funds, 30% worldwide index and 30% home country funds – should that be in Canada or in Thailand or in SG?

    3. There is a DBS Vickers in Thailand – but I am charged income tax – should I open it in Singapore?

    4. Should I use the money that is coming to terms to start my investment portfolio? How do I cash in so that I can have the available funds for purchasing property?

    We easily save one salary so we're thinking that 50% goes to saving to invest in property and 50% into the portfolio on a monthly basis.

    Thanks for any info and advice!

    Michelle

  36. Kelly says:

    Hi Andrew,

    I am a non-resident Canadian expatriate married to an American expatriate, living in Saudi Arabia, and I am new to this whole game. Where should I start investing? DBS Vickers in Singapore? Vanguard in the US? Where is the best place for us to begin our index-investment journey?

    Thanks!

    • Hi Kelly,

      If you lived in a place like Singapore or Hong Kong, I would recommend you opening an account in one of those countries, and buying exchange traded (index) funds from there. It would likely be a pain to travel to Singapore to do this from Saudi.

      Your husband, however, could open an account with Vangaurd and the two of you could invest through that account. He could open

      the account online, but make sure your husband gives them a U.S. address or the application will be rejected. If you have $50,000 or more, he could

      also try Assetbuilder http://www.assetbuilder.com

      Cheers,

      Andrew

  37. Hi Michelle,

    I'm terribly sorry for missing your question. Some of them, unfortunately, get buried on the blog.

    I'm curious about your 4th question above. You stated:

    4. Should I use the money that is coming to terms to start my investment portfolio? How do I cash in so that I can have the available funds for purchasing property?

    Forgive me if I'm misunderstanding, but I'll answer this as I interpret it. You shouldn't invest anything in the stock market that you will be needing during the next five years. Short term (and five years is a very short term) markets are unpredictable.

    If you get in touch with Brenda Perkins (at ISB) she can probably give you info on opening an account with DBS Vickers, in Singapore, via Bangkok. She did it about a year ago.

    Again, my apologies for not seeing your question sooner.

    Cheers,

    Andrew

    • Michelle Ahoy says:

      Thanks Andrew! And thanks for the video – very helpful. I'll be sure to get in touch with Brenda (my husband taught her son) and there are a couple of other teachers who have given me some info.

      The plan is to hopefully buy some land on Vancouver Island within the next 5 years… so it is good to know that putting some money aside until we're ready to buy is the way to go…

      Looking forward to being in Vancouver for a bit this summer. Have a great rest of your year!

      Michelle

  38. Thanks Michelle,

    I'll cross my fingers and hope for a reduction in Vancouver Island real estate prices. It's frustrating to see what our American friends are paying for great homes south of the border.

    Cheers,

    Andrew

  39. David says:

    Hi Andrew,

    Thank you for your advice on the website and in the book.

    I am in a similar situation – a Canadian living in Singapore. I am looking to follow the same investing strategies as you, but I wonder what is your plan for an eventual return to Canada? Do you leave the investments as is with DBS Vickers, or do they get transferred?

    On an unrelated topic, I am curious about your current views on the Singapore real estate market, and it’s viability as an investment opportunity.

    Regards,
    David

  40. Mitesh says:

    Hi Andrew,

    I have been following your blog for sometime and the information you provide is truly self-less. Thank you. I got hooked to your post after reading your book last year and that got me thinking why I didnt think about this 13 years ago when I truly started investing. I am extremely thankful to you because had it not been for this one book, I wouldnt have been able to move to indexing. I am a Canadian currently living in Singapore. I have lived in India and have investments there as well.

    I had invested all my RRSP money with Scotia Bank Aggressive mutual fund and was duped by the so called “investment advisor” but I have since de-hooked myself and my money from their prying eyes. I now have my RRSP money in Canada in TD E-series funds. I also have DRIP set up for couple of companies each month. I have a few questions since you probably have researched this as a Canadian:

    1. Is there a resource that you fall back for advise about re-patriating your investments back to Canada and tax implications? or can you recommend someone who specializes in non-resident affairs and who thinks like you – in the best interest of the clients.
    2. Just like we have RRSP which grows tax-free and also provides tax shelter each year, in Singapore, one can put money in SRS which saves tax as well. I have opened account with DBS Vickers but I realize that for SRS, you can only buy STI and Singapore Bond Index. SRS account doesnt allow investment in US/Canadian/International indexes. Do you have idea if investing outside SRS and foregoing tax benefits would outweigh investing in SRS in STI and Bond index?
    3. Assuming that foregoing benefits of tax benefits of SRS investing outweighs, how does one re-patriate investments made in indexes suggested in your blogs for Canadians? What are the tax implications.

    I know there are many questions and hope you can shed some light on these. I am assuming that I am the only one caught like a deer in the headlight and every other Canadian living in Singapore has figured these out :-). Thank you so much.

    • Hi Mitesh,

      You won’t have to pay taxes when repatriating foreign funds.

      If you are investing with Canadian domiciled ETFs via DBS Vickers, you won’t have to pay any capital gains taxes, and you’ll have just 15% tax removed (at source) from dividends. As such, you won’t have to file anything.

  41. Dianne says:

    Dear Andrew,

    I’m a Canadian now living in SG. I have recently “seen the light” and have set up a DBS Vickers account, decided on my percentages for investing, and am ready to choose my funds. I’m looking at Vanguard (why stray from the master?) but am unclear as to whether I should buy via US or Cdn markets? Now that Vanguard has ETFs available in Canada, should I go with them? Or is it sometimes hard to invest in canadian markets depending where you live? Might it be easier to go via US markets? I’m not clear on the pros and cons of each. Any advice much appreciated.

    I wish you new book on investing for expats was already out … but one can’t afford to wait!

    many thanks
    Dianne

  42. Chris says:

    This post is about taxes for expatriate Canadians.

    I just wanted to post a few basic things I’ve learned that might be helpful to others. I am a Canadian citizen resident of China that opened an account with DBS Vickers by visiting Singapore in person. (I also bought Andrew’s book as a thank you, although everything I needed to know was available free on this site.)

    I’ve waffled over my first few purchases – currently have holdings in VTI, VXUS, VSB and BND. I found considerations about asset allocations to be straight-forward but found myself thinking alot about how much of my portfolio should be denominated in C$ vs. US$. Ultimately, that’s why I recently purchase BND to beef up my bond holdings after already owning VSB.

    What I’ve discovered after reading through my statements is that my dividends on VSB are being taxed at only 15% while my dividends for all the US holdings (including VTI, VXUS, and BND) are being taxed at 30%. I think there’s no real reason to hold BND at all and all of my bond holdings from now on should be in Canadian listed ETFs.

    Further, because of this I am definitely planning to add a position in VCN although the Canadian market represents about 5% of VXUS – simply because of the savings in investment dividends.

  43. Chris says:

    Thank you Andrew. That’s an interesting post.

    For an expatriate Canadian (i.e. non-resident) investing in Singapore, could I summarize the tax situation in the following way:

    1) US listed ETFs (e.g. VTI, VXUS, BND, etc) 0% capital gains tax, 30% dividends/interest tax. Lowest MERs but not enough to offset tax savings if using 2 below.

    2) Canadian listed ETFs (e.g. VUN, VDU, VCN, VSB, etc) 0% capital gains tax, 15% dividends/interest tax. Slightly higher MERs than above but tax savings more than offset this.

    3) Canadian listed swap based ETFs (HXT, HXS) )% capital gains and dividends/interest tax. MERs comparable to 2 above, some counter-party risk introduced.

    From this, it would seem that the most tax efficient portfolio would be to hold US and CDN market holdings in HXT/HXS, bond holdings in a Canadian listed ETF such as VSB, and only to hold US listed ETFs when there is no comparable product in Canada (e.g. you want the developing world exposure of VXUS that is not included in VDU).

    Anyone can point out any problems with this?

    • Chris,

      One thing: if you buy a Toronto trading U.S. stock market ETF, you will ultimately pay more than 15% withholding. True, that’s all you see. But behind the scenes, you will have paid roughly the same to the U.S. government. YOu just wouldn’t see it. So….you would actually pay withholding tax of roughly 29% on the Canadian domiciled U.S. ETF. Now that you are able to look under the hood, I figured I would point out something hidden deeply beneath. Keep in mind, all funds (active as well) have the same hidden pieces….although, of course, they have many many expensive others as well. Just thought I would let you know that.

      As for those Horizon products, they are worth considering. Can’t beat the tax freedom with those things. And there’s a bond index available now as well.

      • Chris says:

        Incredible the quality of responses that you provide on here Andrew. This blog is truly a great service.

        A general principle could be: To minimize withholding taxes, wherever possible buy the index on the market where the underlying shares are domiciled.

        Of course there can be good reasons for exceptions – you’d never be able to get the diversification and total global exposure of VXUS by buying up smaller indexes in Europe, South America and Asia. But in general, I can’t see any benefit to ever buying VUN on the TSX if I had access to the NYSE and could buy VTI. Doing so would essentially amount to voluntarily paying 15% more tax on any dividends earned, in addition to any MER premium on that product. The only time I could see a potential argument for this situation would be if someone had taken the decision to currency hedge and hence wanted to buy VUS on TSX.

        • Hi Chris,

          I’m glad you’re finding the blog useful.

          This isn’t quite the case here: “But in general, I can’t see any benefit to ever buying VUN on the TSX if I had access to the NYSE and could buy VTI. Doing so would essentially amount to voluntarily paying 15% more tax on any dividends earned”

          If you buy off the New York exchange, your heirs will pay U.S. estate taxes (if you’re an expat and the money is outside of a RRSP). Also, total dividend withholding taxes would be identical for the U.S. and non U.S. domiciled product. It would look like you would pay 15% for the CDN domiciled, and 30% for the U.S. domiciled, but there would be 15% taken off the top (before you can see it) on the U.S. end.

          So….you shouldn’t buy a U.S. domiciled ETF at all if you’re an expat. I went to great lengths (and paid high commissions) to dump all of my U.S. domiciled ETFs, and I suggest all expats do the same.

          Cheers,
          Andrew

        • And just to clarify further. Owning U.S. domiciled ETFs or stocks as a non American expatriate invites a hefty death tax. It can be avoided if the investor ensures they have less than $60,000 invested in U.S. domiciled products. But for sums greater, it would be open season for the IRS.

          As for me mentioning the hidden dividend taxes for Canadian domiciled U.S. stock ETFs, it’s a little known fact affecting non RRSP accounts….not even one I mentioned in my latest book. And why would I? It’s a tax nobody will ever see. Besides, Canadian expats should avoid U.S. domiciled ETFs as much as possible. There’s no logical sense to buy them.

          Cheers,
          Andrew

          • Jerry says:

            Enjoy your new freedom and thanks for everything.

            There are a large number of posts on your site from Canadian expats wondering where to hold their Canadian securities accounts. Might there not be value in wrapping that matter up with a conclusive post from yourself? The matter seems quite clear. Either:

            -open an onshore account in Canada and ensure it generates annual NR4s. There is no need to report the income. Enjoy tax-free capital gains on sales of Canadian securities, tax-free interest in cash accounts, and minimal tax on the balance. Sleep well knowing it’s all there waiting for you when you get back, free and clear.

            or

            -open a TD Direct Investing account in Luxembourg. No advantage to the above other than assuaging any residual CCRA paranoia and you will have to close the account once resident in Canada as they are legally prevented from dealing with residents. When you close it, where will you move the holdings? Probably back to a resident brokerage account in Canada so why not just begin with the first choice?

  44. Vig Lacera says:

    Jerry, I know many Canadian expats who aren’t EVER planning to return to Canada. In which case it seems to make sense to hold all investment accounts outside of Canada (this also eases the paranoia about CCRA going after non-residents who open Canadian brokerage accounts, as you mentioned).

  45. Micheal says:

    I having problems identifying my current Canadian Residency Status. As a teacher currently in Peru, and moving to Azerbaijan in August, I have and will get residency status for work purposes. So right now I’m considered a resident of Peru for work and pay Peruvian income tax. I have a resident card, and take advantage of being a resident like buying cheaper flight compared to tourists. Canada has a tax treaty with both Peru and Azerbaijan, so wouldn’t this make me a deemed non resident of Canada? If so, how does this affect my ability to open an account with an investment brokerage in Canada?

  46. Kaitlyn says:

    Hi Andrew,

    I read both of your books and I absolutely loved them! I’m a complete novice but I really wanted to start investing in some indexes. I’m a Canadian currently working in Hong Kong. I’m looking to set up a DBS vickers account and I see an option for a Singapore and a Hong Kong account. I was reading the suggested post on opening up a Singaporean account and just wanted to know whether there is a different between both accounts.

    Thanks!

    • Hi Kaitlyn,

      To my knowledge, DBS Vickers won’t let you set up an account from Hong Kong. Based on a quick online glance, I once thought that investors could do that as well. Please correct me if they have changed their policy and now allow this.

      Saxo Capital Markets, however, is set up to do business in Hong Kong. If you want that convenience, go for it. Keep in mind, however, that TD Direct International (also mentioned in my book) has a simpler platform. It’s cheaper (after recently lowering costs) and as a Canadian, they may make you feel more comfortable.

      Let me know what you decide.

      Cheers,
      Andrew

  47. Vig Lacera says:

    Hi everyone,
    Currently I have an investment account with Saxo in Singapore. I’ve asked them repeatedly to reduce the amount of tax they’re withholding on my dividends payouts. They’re taking 25% when they should be taking 15%. First they avoided the question. Then they said I will need to hire a third party (and pay them, of course) to claim the overtax amounts on my behalf. I predict that I won’t be a Saxo client for the long term.
    Anyway — to cut this pathetic story to the quick: Does anyone know if TD International in Luxembourg charges 15% withholding tax on dividends for non-resident Canadians? I’m thinking I’d like to play there in the future. Thanks ; )

    • Yes, Vig, TD Direct International will just charge 15% withholding dividend taxes for Canadian domiciled ETFs. Saxo needs to get with the program, or investors will run elsewhere. DBS Vickers also has the tax situation sorted out.

      Cheers,
      Andrew

  48. Vig Lacera says:

    Andrew, thanks for your reply. Appreciate it as always. You’re right: It would be in Saxo’s best interest to get with it. Because if not, this investor IS going to run elsewhere ; )

  49. S Marsden says:

    If i open a DBS vickers account will it allow me to trade all of the ETFS in canada as i would like some of BMO ETFS?

    Thanks

  50. Darien says:

    Hi Andrew,

    Much thanks for your continued support for the expat community. You should have sold a few more books in Dubai this past month as a half dozen of my friends have bought your book locally.

    I do have a question on dividends. I have a Saxo account and hold VWRD and IGLO as well as an Old Mutual account (locked in for 3.5 more years) that is now using Fundamental and regular ETF’s.

    My question is around dividend payments. They seem to be MUCH lower than they should be. Providing I am doing the maths.

    On my VWRD, I received $392.73 in dividends. At the time I owned 776 shares at a price around $70 per share. Later in the year I received $347.25 with 1076 shares.

    Do these amount look correct and is there an easy way to calculate what the payment should be?

    Much thanks again, Darien

    • Darien,

      Dividend yields are currently near historic lows. The 12 month yield for the global index that you own was 1.99% over the past 12 months. Deduct a 20% UK withholding tax, and that leaves a net yield of about 1.59% per year. You also need to hold all shares during a specific point in time, when dividends are determined. For example, if the dividend payout for your index were 1 month from today, and I bought a million shares of your index, I may not receive any dividends one month from today, when everybody else does. I would, however, receive dividends during the company’s next dividend payout date. That isn’t a con. It’s the same with individual stocks. There’s a set date from which you will be eligible for new dividends. So just because you may have added new shares fairly recently,doesn’t mean you are fully eligible for those dividends yet. On the flipside, you could end up selling all of your shares, and 3 months after you sold, you could receive a nice dividend payout for shares that you no longer own, because you did own them on a specifically determined pre-dividend payout date.

      Cheers,
      Andrew

  51. S Marsden says:

    Hi

    I have just ordered your book its on its way but i was just wondering
    With the Fed about to raise interest rates how do you see that affecting Canadian EFTs, Which one do you see being the least affected by this and what would you strategy be now

    Thanks
    S Marsden

    • S Marsden,

      It’s my opinion that thinking of such things isn’t productive. What’s more productive is figuring out how to save and invest as much as possible, ensure that our portfolios are diversified, low cost, and that we rebalance once a year.

      Cheers,
      Andrew

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