Hello all,
I just discovered this forum/thread, and first would like to thank all for the invaluable discussions. Best Thread Ever. :-)
Having read the entire 300+ post thread from 2014 carefully, I have a some questions for the collective wisdom here, given my slightly different situation:
I'm a Swiss citizen (I also hold a few other passports), but I left Switzerland about a decade ago, so not a Swiss-resident currently. Currently residing in Kenya, which means most Swiss (and other OECD-based) banks/brokerage accounts won't have me as a client (deemed too risky compliance-wise or whatever), and those that do, charge insanely high custody and other fees - in the many thousands per year just to have the privilege of being able to by stocks/ETFs.
It now seems that through Soliswiss (the swiss aborad group), I can open an account with Swissquote (Yay!). Through this thread I *think* learned a few valuable nuggets of information to make the process most cost and tax efficient for my case:
1. I want to avoid the Swiss (or any country) withholding tax. Since I am not a Swiss-resident, I will not be able to offset this 35% witholding, so a clear tax for me. (Incidentally, I am legally not a tax resident of any country, since in the only place I meet residency requirements, currently Kenya, I am exempt from tax due to my employer's host country agreement, so no scope for claiming back under a double taxation treaty). If I understood correctly, this means that if I purchase ETFs that are domiciled in Ireland or Luxembourg I can avoid this withholding?
2. I am looking for a simple solution. My (financial) life is already very complicated. I am diversified through investments in real-estate, and my ETF investing horizon is around 25 years, so am not too concerned at this stage with balancing a portfolio with too many ETFs, currencies, or a balance of equity and bonds. I further believe (perhaps wrongly, happy to hear views) that today's financial markets are highly correlated, so if a major crash happens in the US (e.g. S&P 500 crashes), then all OECD markets (and even BRICS etc.) would be similarly affected. There are of course frontier markets that are less correlated, but again, too complicated (and anyway hard to find on OECD platforms) for me at this stage, and again, looking for simplicity.
3. I am not clear about other taxes involved. I am particularly thinking about the US Estate tax (which applies to US equities, and foreigners are subject to 40% Estate Tax when they pass away after only $60k - as opposed to $5m for US citizens). I assume that buying a Irish domiciled ETF that tracks S&P 500 would NOT be considered a US equity and therefore not subject to US Estate tax - does anyone know whether this is a correct assumption?
In light of the above, my current thinking is to buy a single ETF such as: iShares Core S&P 500 UCITS ETF (Acc) // ISIN IE00B5BMR087, Valor Number 10737041
I am thinking about buying around $200k worth of this ETF, and adding another $25k or so every year after that. Given that it has a TER of 0.07% and having consulted the list of ETFs available in the 'Dynamic savings ETF' of swissquote, I think I'd prefer to have the normal account, which means 0.1% more per year (initially, will decrease as I pass the $200k level), as this seems a better fit for what I'm after and even with the custody fees comes to a lower effective annual TER (0.17% and dropping as portfolio grows) for me than the funds I see in the available list elsewhere.
Any views on this? Thanks very much in advance for any insights you can offer with regard to the strategy and particularly the total cost and tax elements.
