In an effort to diversify my future portfolio, I am planning to have a portion of it invested in US. One of the easiest ways to diversify it seems is to purchase mutual funds or Exchange-Traded-Funds (ETFs). Historically, mutual funds have been underperforming the index. The evidence appears compelling enough. With that in mind, I've decided to build my portfolio around index trackers.
I'm still somewhat undecided between index funds and ETFs. The prime advantage of an ETF is its low expense ratio. However, some index funds in the US also come with comparable expense ratios and more importantly, no sales commission whereas ETFs incur brokerage fees. It also appears that Vanguard Index funds are performing slightly better compared to ETFs because they use "futures to boost their returns".
Acting towards that goal, I was thinking of starting an online investment account with about 10k to purchase ETFs in US. These are long term investments to be kept for at least 10~15 years. Need to keep in mind that 30% of any dividends that I receive from US shares will be withheld and paid to the IRS. If possible, I would really prefer non-dividend paying funds since capital gains are not taxed. Don't think it's quite possible though.
Since I'll be leaving the US in a couple of months, I'm trying to make sure everything will go smoothly. One of the things I have to consider is the cost of transferring the equity from US to Singapore. I would have to transfer the stock to a Depository Trust Company (DTC) and then to the Central Depository in Singapore which then transfers it to my Singapore broker (which I still have to shop around for when I get back)
Or I could keep the online US account, which would give me the freedom to trade US shares without going through a Singapore broker which charges significantly more.
Under consideration:
My only consolation is that even the "experts" are not really that much better off. They too do not know if their decisions are right. Need to learn more. Fast.
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I'm still somewhat undecided between index funds and ETFs. The prime advantage of an ETF is its low expense ratio. However, some index funds in the US also come with comparable expense ratios and more importantly, no sales commission whereas ETFs incur brokerage fees. It also appears that Vanguard Index funds are performing slightly better compared to ETFs because they use "futures to boost their returns".
Acting towards that goal, I was thinking of starting an online investment account with about 10k to purchase ETFs in US. These are long term investments to be kept for at least 10~15 years. Need to keep in mind that 30% of any dividends that I receive from US shares will be withheld and paid to the IRS. If possible, I would really prefer non-dividend paying funds since capital gains are not taxed. Don't think it's quite possible though.
Since I'll be leaving the US in a couple of months, I'm trying to make sure everything will go smoothly. One of the things I have to consider is the cost of transferring the equity from US to Singapore. I would have to transfer the stock to a Depository Trust Company (DTC) and then to the Central Depository in Singapore which then transfers it to my Singapore broker (which I still have to shop around for when I get back)
Or I could keep the online US account, which would give me the freedom to trade US shares without going through a Singapore broker which charges significantly more.
Under consideration:
Ameritrade - $5 per trade, $25 transfer to DTCThe very thought of purchasing shares with my own money makes me nervous. But I figure if I'm going to make mistakes, I should do it when I still can. It's frightening but also exciting to be taking charge of my own finances. I do wish I have somebody knowledgeable I can confer with though. Learning it by myself is pretty rough. I don't really have confidence.
Free Trade - Free first 20 trades, $50 brokerage transfer
Scottrade - $7 per trade, free 3 trade from referral, appears to have no transfer fee but I'll need to check.
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My only consolation is that even the "experts" are not really that much better off. They too do not know if their decisions are right. Need to learn more. Fast.
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