Hello community,
it would be great to receive some advise on my somewhat exotic situation.
Originally from Germany I have established base in Chile, and finally got to the point where I can save some money. So far so good. But I am really lost when it comes to how to invest it. Not being a US-Citizen, I have no access to MMM´s usual recommendations like Betterment or Vanguard, and even if I could transfer money to Germany (and possible German alternatives), as an expat I would have to pay 25% tax on interests (I think) and bringing money into/ out of Chile is neither easy nor cheap.
By the way, I will not receive anything from the German pension system. I pay into the Chilean system, but the returns are hopeless. Anyway, I might retire in Chile, but then again, I might not.
Given that I am really not a finance person, and all the international complications are way over my head, I went to see an international finance advisor here in Santiago. Let´s call him Anton. He seems trustworthy as he was repeatedly and highly recommended by different friends all over the expat community here. Anton offered me a 25-year-plan by a prestigious company, with an annual cost of an estimated 1.80% investing 500$ monthly (no trading fees, no charge on automatic payment via credit card). Of course, the idea is to save more with time, but I got to start somewhere. On the up side, the money will grow somewhere tax-free, is not tied to Chile if I decide to move and is on the safe side as the company has strong investor protection. Also, with Anton´s help I could eventually take my money out of the Chilean pension system, and invest that money somewhere wiser.
This last bit is quite valuable, as the pension system in Chile is terribly useless and returns are low. On the other hand, as long as I plan to stay in the system, the state allows for voluntary additional savings and as an incentive you receive an additionaly 15% (once) on every Peso you save from the state. Sounds great, but only if I retire here and don´t want or need my money before I am 65. Also, there are strict regulations for the management of these additional savings: an important percentage must be invested in national assets, and Chile is not doing well at the moment.
But Anton´s plan also has a downside, the cost. Assuming a return of 7%, 3% would account for inflation and additionally, 1,8% are taken to pay the Anton, so my “Safe Withdrawal Rate” would sink to 2,2% - correct? Which is a bit disencouraging, but given the benefits and the fact that I don´t understand tax issues etc. involved – I might easily loose 1,8% somehow in national or international taxes and transfer fees just because I don´t know what I am doing.
And I haven´t really found any alternatives available in Chile. There is one Chilean startup, Fintual.com, which charges 1,19% annually of the invested amount. They compare themselves to Betterment. But, that fee is not so terribly far from Anton´s, and I am a bit worried about security. Fintual only started out in 2018, and while they say that the money is safe even if the company goes bust – who knows. Also, remember that I have no Social Security to fall back on. My official pension in Chile – if I decide to stay in the system – will not feed me.
I know most of you folks are from the US and my situation is probably somewhat unique – but I would appreciate any thoughts! I don´t want to tie my money – and myself! - up in an (too) expensive plan. But right now it is lying around in a savings account, clearly the worst choice of all.
Thank you for reading! Any thoughts? Any fellow Mustachians in Chile? Anybody has recommendations of a non-us robot advisor that caters to Chile (apart from Fintual)?
Cheers
M.
