Index Investing in Singapore For Expat New Zealanders

andrew hallam

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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10 Responses

  1. Drizzt says:

    Hi Andrew,

    I was wondering. US have a 30% withholding tax but UK do not have withholding tax. So if the expense ratio is not that high and liquidity is better, perhaps we can use standard chartered trading to buy UK ETFs?

    Drizzt

  2. Rockhiker says:

    Hi Andrew, some questions on the above.

    1. I had thought the likes of Bernstein recommended that bonds be that of your home country as opposed to overseas bonds , so as to minimise the associated currency risk. Is there any reason a NZ investor would not have NZ bonds comprising 20% plus of their portfolio?

    2. The bond composition in the above is all via treasuries as opposed to including corporate bonds as part of the mix. I realise that treasures are technically safer due to governments being able to print money so are less likely to default, but is there a reason that you do not advocate corporate bonds as being a suitable component of the bond component of the portfolio?

    3. I have noticed from your earlier posts that your own portfolio has it 's share component based on the US as opposed to Canada where are you from. In what circumstances is it prudent for an investor to forego their own countries sharemarket exposure and have a heavy focus on the US?

    Look forward to clarification

  3. Toby says:

    I am from New Zealand and hold the following ETFs:

    VTI – Vanguard Total Stock Market. 30%
    VEA – Vanguard First World. 30%
    BSV – Vanguard Short Term Bond. 40%

    I add to my portfolio as regularly as I can. I am a citizen of the world and I am not sure where I will retire and this portfolio will suit me fine wherever I end up living in the future. I don’t know if I will end up in New Zealand or not. Because of this I decided not to include a New Zealand index in my portfolio. I prefer the global approach without the emerging market component. That is why I chose VEA rather than VEU or VXUS or VWO. I keep thinking about changing the bond ETF to the iShares International government short term bond ETF – ISHG. I think I will make that change in the future after investigating the fees involved). ISHG makes more sense to me than including a New Zealand bond index.

    Three ETFs is enough to keep track off in my portfolio. I try to add monthly to my portfolio and if I had more than three ETFs it would take a lot of work to keep it all in balance at the designated percentage weightings. I prefer owning VEA and VTI rather than VT and ENZL. Over the long term I don’t think it makes that much difference which indexes are chosen provided they represent the sizes of the various capital markets. Investing over the long term is made successful by living below ones means, keeping fees low and rebalancing dispassionately (not making predictions about the future direction of the market i.e. market timing) rather than trying to second guess the market.

    I react dispassionately to market movements. I ignore predictions and I ignore the financial media. If I am allowed one thought about the future of the stock market it would be that I hope for a big drop in the market in the near future. The bigger the better. I know how I will react to that. I will buy as much as I can of the equity indexes while they are cheap. This will serve me very well over the long term.

    All the best with your investing.

    Toby

  4. Toby says:

    As a New Zealander in Korea, I am considering changing my US domiciled ETFs. After researching I found that iShares have many ETFs domiciled in Canada and Ireland which are denominated in US dollars. I can buy these through TD Direct Investing International.

    Would these be a suitable choice to build a portfolio to avoid US estate taxes without adding other taxes?

    Toby

    • They absolutely would be Toby. For your U.S. exposure, you may consider a Swap Based ETF through Horizon, which trades on the Toronto exchange. Buying this would also eliminate any dividend taxes you would need to pay, and although there’s a third party involved, that third party is the National Bank of Canada. So risks are minimal.

      Cheers,

      Andrew

  5. Michael says:

    Hi Andrew,

    I am a New Zealander of 28yrs living in Abu Dhabi in the UAE. I signed up with Friends Provident in the Isle of Man through a financial adviser here, and was set to start paying into the scheme when stumbled across your website….Thank God I have not put a penny into it and I have since cancelled the contract. Thank you very much for sharing your knowledge with people like myself who have very limited financial know-how.

    I would like to follow your tactics of passive index investing and was wondering if you had any tips for myself being based here in the UAE?

    I plan to retire back in NZ but will be staying in the UAE for the next few years most certainly. Do you know of any trustworthy advisers out here that might help me set up a portfolio as I don’t have the know-how or confidence at this stage to do it myself.
    Also, what kind of sample portfolio spread would you recommend for someone in my situation with future NZ retirement plans.

    Best regards and thanks once again for the effort and info you share!
    Michael.

    • Hi Michael,

      Doing it yourself is quite easy. To get a grip on the general philosophy, check out one of the books under my “resource” section. Then check out my article on legally dodging U.S. estate taxes (use Google) and open an account with Saxo Bank. Building a portfolio of low cost index funds is very very easy.

      Andrew

  6. Tim says:

    Hi Andrew

    I have stumbled across your website and have thoroughly enjoyed reading all the information about investing. I too am a teacher and have been investing for a number of years. I have wasted a lot of time reading broker reports etc about the next best stock. I do like the core and satellite approach with most of your money in index funds and depending on your level of interest some monies (small allocation) allocated to direct stocks.
    My question is how do I invest in index funds from NZ. Via my broker will cost 1.5% plus custodial annual fees. It is not a good idea to hold certificates in your own name. A number of indexes are available via the Australian stock market. Should one use a discount broker and access these. eg ETF SP500 is available from ishare on the ASX at an MER of 0.07%. Buffett does recommend this index. Your thoughts appreciated. Also New Zealand shares do pay high dividends, could this be taken as a replacement for bonds.
    Thanks for your highly educational site.

  7. Wayne says:

    Hi Andrew

    I thoroughly enjoyed your book, thank you. I have been a Barefoot follower for some years, but becoming an expat (I am South Africa) has presented new investing challenges, and your insight has taken us to the next level. Being married to a Kiwi and our kids having been born and raised in China, we have absolutely no clue where we want to “settle” suffice to say we intend taking advantage of the expat privilege as long as we can which brings me to my questions:

    1. It seems from HK and China, the only option for index funds is through brokers, and we have been advised that Interactive Brokers has be the best fee offering. Should we be happy with an ER of around 0.35% after commissions (this is calculated adding the ER of the underlying index/ ETF to the commissions on a monthly purchase)?

    2. Taxes: If I understand your comments above, as an non-US expat, we should seek out index funds that are not domiciled in the US to reduce any withholding taxes on dividends?

    Thanks again
    Cheers
    Wayne

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