Author Topic: Looking for advice  (Read 4000 times)

Kaminoge

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Looking for advice
« on: June 10, 2016, 09:21:01 AM »
Greetings all.

I'm after advice/suggestions on the following situation.

I'm a career expat (teaching, so not big bucks) who got interested in this site a few years back. After hanging around, reading etc I got all excited about the idea of buying into an index fund.

A small amount of research and I hit a problem. No one would sell to me. I'm Australian but a non-resident. I have temporary residence wherever I live (currently Bulgaria, before that Japan) but no permanent residence anywhere. Now of course I could simply not tell people I was a non-resident and invest  through something like Vanguard Australia but that seems like a bad idea given that the tax department knows I'm not a resident.

So I've been trying to find some way to buy into stocks or bonds and I've now found a company that I could deal with (http://www.globalindexinternational.com). They are recommending two options to me.

1. Royal London - an account where you pay in every month. Hideously high fees (6%) on money paid in for the first 18 months and that money is locked in there for 15 years. Money added after that is charged at 1.5%. You can switch funds as much as you like with no entrance/exit fees.

2. Gravitas Finance - This would be a lump sum initial investment and then you pay 1% per year plus whatever you choose to buy you pay a % on (the percentage depends on what it is that you're buying).

My gut feeling is that number 1 sounds like a horrible idea just because it seems so locked up but since I really don't know what I'm doing I might just be missing the point.

Current financial situation is that everything is invested in property in Australia. Currently I'm paying in about $2000 a month to that but I want to drop that to $1000 (which will cover the mortgages) and invest $1000 into something else (hence the searching around). I'm 42.

I really don't know what to do. I don't want to get myself into some situation where I end up being charged high fees and I'm stuck there because I didn't understand what I signed up for BUT I really want to diversify out of the Australian property market simply because I have no particular plan to live there again in the near future (or maybe ever) and I can't really sell what I do have unless I want to lose a large chunk of money to capital gains tax.

Advice? Thoughts? Questions I should be asking the financial people before I even consider signing up for anything?

DrF

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Re: Looking for advice
« Reply #1 on: June 10, 2016, 09:23:18 AM »

Kaminoge

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Re: Looking for advice
« Reply #2 on: June 10, 2016, 10:56:17 AM »
Thank you so much! Information like that is exactly why I came and asked the question here.

DrF

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Re: Looking for advice
« Reply #3 on: June 10, 2016, 11:44:03 AM »
If I were you, I'd contact a financial accountant/lawyer that specifically deals with expatriates from Australia. Pay them some hourly fees for their advice, then do a shitload of your own research. Seems like a murky world out there for expatriate investment options.

Also, delve into the Australian investing thread. It's pretty huge. Ask around, get involved. I'm sure you're not the only one in this category.

Kaminoge

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Re: Looking for advice
« Reply #4 on: June 10, 2016, 11:55:11 AM »
Thanks for the suggestions. Looking for a company that specifically deals with Australian ex-pats is how I ended up with global index in the first place. If anyone has any suggestions I'd love to hear them - I will definitely look into the Australian investing thread too.

hodor

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Re: Looking for advice
« Reply #5 on: June 10, 2016, 04:46:47 PM »
The ATO doesn't seem to have an issue with an Australian who is a non-resident for tax purposes investing (you already have investment property in Australia so you should already be doing a tax return anyway, easier to do with shares).

Check out below and have a look around
https://www.ato.gov.au/individuals/international-tax-for-individuals/going-overseas/lodging-your-tax-return/how-residency-affects-your-tax-return/
https://www.ato.gov.au/individuals/international-tax-for-individuals/investing-in-australia/

I am assuming you still have bank accounts in Australia. The big four all have online trading accounts that are easy to use from anywhere and can be opened online, just send the $'s to your Australian account (like you do for the properties) and then invest from there.

Here's the Australian Vanguard ETFs

https://www.vanguardinvestments.com.au/retail/jsp/investments/all-products#/etf


I am no expert, but there doesn't seem to be any barriers. I lived and worked in Japan for a while and lodged an online tax return for my Australian shares while doing so.

Good luck

Kaminoge

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Re: Looking for advice
« Reply #6 on: June 11, 2016, 03:27:05 AM »
Hi,

Thanks for that. I will check out the links (and yes I do a tax return). I'll look into Vanguard again but when I contacted them last time they told me no. If I could invest through them it would be ideal. I already have a large chunk of my pay transferred to an Australian bank account every month so if I could just use that to invest it would be ideal.

One interesting thing from reading the other thread was people mentioning that Andrew Hallam has really been anti the RL company. And yet it was from his book that I got the contact details of the company (which he especially recommended for Australian expats) who tried to get me to invest in the product. I need to go back to his book and try and figure out if I accidentally contacted the wrong company or something. It seems odd.

Mr FrugalNL

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Re: Looking for advice
« Reply #7 on: June 11, 2016, 06:30:23 AM »
Thanks for the suggestions. Looking for a company that specifically deals with Australian ex-pats is how I ended up with global index in the first place. If anyone has any suggestions I'd love to hear them - I will definitely look into the Australian investing thread too.

You could try https://www.meesman.nl/

They do not cater to Australians specifically, but they do accept clients irrespective of their nationality (with the exception of 'US persons' as defined under the Foreign Account Tax Compliance Act, that is). Meesman's basically an intermediary between you and Vanguard/Northern Trust/Dimensional. They offer access to four index funds (MSCI World, MSCI Emerging Markets, MSCI Europe, European bonds) and one regular mutual fund (global bonds). The annual costs are 0.5% and there's a transaction fee of 0.25% on the amount of every purchase/redemption order. I give them some of my business.

The big disadvantage, however, is that their website is completely in Dutch so you'd have to rely on Google translate or some such to find your way around.

---

Alternatively, why not open an account with a broker and buy ETFs? It's what many European mustachians are doing because of the limited availability of index funds here.

Kaminoge

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Re: Looking for advice
« Reply #8 on: June 11, 2016, 11:32:12 AM »
Thanks for the suggestions. I'll look into the site.

I couldn't get a broker to deal with me when I tried (although admittedly I only tried Australian ones).

hodor

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Re: Looking for advice
« Reply #9 on: June 11, 2016, 03:39:38 PM »
You only need an online broker, you can open these online when logged into your net bank account.

You then can buy ETFs through that, no need to deal with any people directly, ETFs have the cheapest management expenses too. The online platforms are easy to use.

Kaminoge

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Re: Looking for advice
« Reply #10 on: June 11, 2016, 11:29:15 PM »
Thanks hodor.

By the way I went and looked at Vanguard again but they https://www.vanguardinvestments.com.au/retail/ret/invest-with-us/offer-documents.jsp say right at the top of the application page that it's not for people outside Australia. When I looked into this before I actually contacted them to make sure and they said no. But on the other hand they have a question asking if you're a resident for tax purposes on the application so maybe I'll just try putting in an application and see what happens (last time I just took no for an answer). It can't be done until I'm in Australia though so that will have to wait at least a year.

hodor

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Re: Looking for advice
« Reply #11 on: June 12, 2016, 12:21:44 AM »
The retail/Wholesale funds may have different conditions than the ETFs (Exchange Traded Funds), the Retail/Wholesale funds you purchase directly from Vanguard. I don't use the retail/wholesale funds as they have higher expense ratios for effectively the same product.

ETFs you purchase through a broker (Such as commsec, etrade, NAB Broker etc) just like shares in individual companies and you won't be dealing with Vanguard directly (there is no reason to ever speak with them), you purchase through your online broker and ongoing management such as where dividends are paid or if you use dividend reinvestment etc is through the share registry (Such as link market services - can't remember who Vanguard uses specifically) . You can use online brokers such as commsec as a non-resident, they even have FAQs to help such customers out. You can likely set up an online brokerage account with your current bank completely online (I have done this with a new account recently)

With ETFs you pay brokerage whenever you trade (Buy or Sell) which varies, from memory about $15-$20 allows a trade around $5,000 or $10,000 (Larger amounts get cheaper from there) you can't set up automatic monthly payments however.

A simple 3 fund solution with Vanguard with Australian bias is something like,

VAS - Australian Shares (ASX300)
VGS - International Shares - which is currently 60% US. Some prefer VEU (world Ex-US) and VTS (total US market) to control the balance between US and rest of the world, I don't see any benefit in.
VAF or VGB - Bonds (if you are inclined to hold bonds, I don't)

Here is some general information on ETFs and a video
https://www.commsec.com.au/products/exchange-traded-funds.html

I am certainly no expert, however there are no barriers to investing in ETFs through a broker from everything I have read. If you can setup an online brokerage account through your Australian bank you'll be able to buy ETFs. All the big four (CBA, ANZ, WBC, NAB - others probably do too) provide online trading accounts for free.

One thing I definitely would NOT be doing is altering my details on the application to get a retail managed fund through Vanguard.

Kaminoge

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Re: Looking for advice
« Reply #12 on: June 12, 2016, 02:17:05 AM »
Thank you again for all your helpful suggestions. This stuff might seem really obvious but despite all the books I've read it's hard to wrap my head around.

I can't believe I never realised I could just trade through my bank. I got it set up and have put a buy order on a few Vanguard shares just to check it out (I realize this is not the most cost effective way to go about things but I figured I'd do an initial trade just so I can see how the process works). Setting up the account was super easy - they asked no questions so I didn't need to worry about answering any.

I am so so glad I posted this thread before getting involved with any finance companies. Now I can do a lot more research. Spend more time reading through the Australian Investment Thread (I've made a start but that sucker is long!) and start to divert some of my money out of property and into other options.

hodor

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Re: Looking for advice
« Reply #13 on: June 12, 2016, 05:13:08 AM »
Glad I could help. Lots of stuff seems easy in hind sight. If you don't know where to start it is tough and confusing, there were no silly questions that's for sure. I think things are different in the US enough that it confuses us Aussie investors.

Most new accounts come with a certain amount of free trades to start with so you may not be out of pocket at all even with some smaller trades.

Good luck with it all. Give everyone an update some time on how you get on and what you decide on it you can. Always interested on people's asset allocations.

Kaminoge

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Re: Looking for advice
« Reply #14 on: June 13, 2016, 02:41:12 AM »
I'll definitely be back. Probably with lots more questions.

For now I'm just waiting to find out if my first attempted buy goes through without any hassles. Turns out today is a holiday (Queen's Birthday) so I'll have to wait a bit longer. I'm interested in the mechanics of how it all works. Hopefully they don't sms me for any confirmation since they won't allow me to change the number linked to my account.

travelr

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Re: Looking for advice
« Reply #15 on: October 25, 2016, 10:18:56 AM »
Sorry for reviving this somewhat old thread, but I'm in the exact same situation.

I'm also a career expat, also living in Bulgaria, also Australian (though this is my second citizenship, my first one is French), I would also like to invest in Vanguard funds, and like you, all the brokers I have contacted so far told me they wouldn't deal with me.

Since I'm looking to stay in Bulgaria for the foreseeable future, I would ideally find a broker that would accept Bulgarian residents as customers.

Kaminoge, would you care to share what you discovered since you last posted here?

I also still have a NAB bank account in Australia, from back when I lived there. Did you have any success investing through the Australian banks?
Could you invest in euros? or in Australian dollars?

Since I left Australia a few years ago, this doesn't sound like the best option for me because:
 - I no longer lodge tax returns there (I have no other property/investments in Australia)
 - I get paid in euros and may not live in Australia ever again so I would rather keep my investments in euros

Also, I don't know what that would mean in terms of taxes. I would much rather pay the taxes in Bulgaria, since their tax rate is very low.

However, for lack of better options, I will still consider this one.

Any advice you could give me?

Thanks

Minion

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Re: Looking for advice
« Reply #16 on: March 19, 2018, 08:32:14 AM »
Thread bump - I'm in the same situation, Australian and non-resident. Any advice appreciated :)