The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: DaKini on April 12, 2014, 01:33:04 PM
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Hi there, i currently mainly invest in iShares ETFs and i wonder if its a real problem to only invest with one or two big companys.
I understand thatbmy investments are not at ridks as they are shielded in case Blackrock goes bankrupt. A problem however would be that in such a case most of their etfs will be liquidatef, causing a hefty tax load.
What do you think of this (also for vanguard i think this may be a concern)?
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The thing is, for us Europeans, there are very few companies that offer good ETF's.
As you will know, the US Domiciled ETFs carry a 30% withholding tax on dividends, which sucks.
I am personally invested in iShares and UK Vangaurd.
I would estimate the chance of both of them liquidating in the next few years is low enough for me to not have to worry about it any time soon ;).
..Aber als Berliner ick werde sowas sorgenlos denken, wa? :P
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I personally have diversified ETF companies for pretty much the reason you specify -- I don't like having more than half of my money controlled by any single company, no matter how trustworthy I think they are. Finding good alternatives for popular ETFs through Vanguard/StateStreet(SPDR)/Schwab/etc. is pretty easy for a US investor. And don't forget to look at index mutual funds, as that opens up even more options at places like Fidelity.
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is pretty easy for a US investor.
Bingo.
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As you will know, the US Domiciled ETFs carry a 30% withholding tax on dividends, which sucks.
I think this varies from country to country, it should depend on the double-taxation agreement between your country and the US.
For me (Czech Republic), the tax on dividends should be just 15%. But I guess I'll find out once me first dividends arrive and I file the tax.
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As you will know, the US Domiciled ETFs carry a 30% withholding tax on dividends, which sucks.
I think this varies from country to country, it should depend on the double-taxation agreement between your country and the US.
True, with my country of residence there is no agreement so it is 30%.
But the problem with US domiciled funds is that this tax will be applied to the fund dividends AFAIK.
So a Fund that is US domiciled, but tracks EU stocks, would pay 30% withholding tax on the dividends from that fund even though the dividends were paid by EU companies and would not be taxed had you been in them directly.