Author Topic: Living off US portfolio while living abroad?  (Read 1868 times)

vagavince

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Living off US portfolio while living abroad?
« on: December 19, 2021, 09:00:30 PM »
Hello

I'm planning to fire to asia but my portfolio is US based

I'm hoping to hear from people experience on how to manage my living expenses in this situation. Target location is Taiwan, Japan, Singapore.

I plan to use US credit card as much as possible. Then I can pay it off from my US account

But I'm not sure how to deal with local expenses. I still need some local currency to pay for rent and other expenses. I'm planning to wire cash from US to local account. The exchange fee seems steep, are there any alternative?

missundecided

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Re: Living off US portfolio while living abroad?
« Reply #1 on: December 19, 2021, 09:15:14 PM »
Scwab and I think Fidelity have a checking account in which you can withdraw from foreign ATMs without fees, foreign exchange or otherwise.

Paul der Krake

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Re: Living off US portfolio while living abroad?
« Reply #2 on: December 19, 2021, 11:49:14 PM »
Interactive Brokers is known for having rock bottom FX pricing and accepts Americans virtually anywhere in the world. But really, any brokerage that lets you house your stonks and do FX on the cheap would work too. Schwab is another popular option.

Just convert whatever you need every week/month/quarter into a bank account in your local currency and you're done. Sometimes you'll do well on the FX rate, sometimes you won't, nobody knows anything in terms of long term trends so don't sweat it.

djadziadax

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Re: Living off US portfolio while living abroad?
« Reply #3 on: January 19, 2022, 03:22:49 PM »
Would it not make sense to have a US bank account and regularly withdraw cash form an ATM at the foreign country. Are there any restrictions I am not thinking about? I have done that when traveling abroad, although the exchange rate and fees are not great. But it seems a simple way to get cash in local currency.

Would not another way be to do a wire transfers regularly to a non-US based bank? Are there any limits on doing that?

I do see that Schwab does offer a Visa debit card and refunds the fees, so that would also work, but would you not want a local bank account and a local debit card?




DaTrill

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Re: Living off US portfolio while living abroad?
« Reply #4 on: January 19, 2022, 06:16:24 PM »
Very complex question and can change with domestic and foreign banking rules and financial institutions policies at any time.  I've lived in a few different countries and make decisions based on current policies.  I would not link or establish a financial life in a foreign country (credit card, bank account, other) if possible as it could complicate taxes costing thousands. 

Schwab ATM card works in most countries and removes the need to have any local bank accounts.  Look into cell phone payment system rather than having a credit card, every country has their own systems and can usually provide cash to "top up" like Uber in the US, but payments are accepted everywhere.  I'm keep as much of a firewall between financial lives outside of the US as possible.       

elysianfields

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Re: Living off US portfolio while living abroad?
« Reply #5 on: January 20, 2022, 06:50:57 AM »
Hello

I'm planning to fire to asia but my portfolio is US based

I'm hoping to hear from people experience on how to manage my living expenses in this situation. Target location is Taiwan, Japan, Singapore.

I plan to use US credit card as much as possible. Then I can pay it off from my US account

But I'm not sure how to deal with local expenses. I still need some local currency to pay for rent and other expenses. I'm planning to wire cash from US to local account. The exchange fee seems steep, are there any alternative?

You should discuss these questions with @Go Curry Cracker if he's still on the forums, or visit his website at gocurrycracker.com.  He and his family lived in Taiwan for several years and discussed many of these issues.

Rdy2Fire

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Re: Living off US portfolio while living abroad?
« Reply #6 on: January 20, 2022, 09:08:55 AM »
Not sure if this still exists but when I was living in Asia, I had a Citi Private Banking account. My boss (in Asia) who was living there told me to look into it as it was what he had.

The benefit of this account was you could have your $$ in 3 currencies at a time and could change it. So I had mine in US Dollars, Singapore and Euro (which I would change when I traveled). There were no fees to withdraw from Citi and, if I recall correctly, no fees for 3 non citi withdrawals a month. It made living in a foreign country easier IMO and sounds like it might be useful for you.

The only caveat to this account was it had to maintain a 10K balance which wasn't an issue. Again not sure these accounts still exist but imagine there must be something similar. I only closed mine because I was consolidating other things and was no longer living overseas but wish I kept it open actually and plan to look into it again at some point. Hope the info helps

ROF Expat

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Re: Living off US portfolio while living abroad?
« Reply #7 on: January 20, 2022, 09:39:38 AM »
The answers to your questions are likely to be very country specific.  In my experience, if you have any local income, it makes sense to open a local bank account to cover local expenses.  Transferring significant amounts of money (buying a car, making rental deposits) tends to be expensive, whether or not you have a local account.  If you don't want to open local accounts, cash from ATMs, phone banking and other services can be very useful, but they may not cover all your needs.   

The one thing I would advise is to be very careful about using a credit card or ATM card or funds transfers linked in any way to your investment accounts.  An investment account-linked atm card like Schwab's is probably great for use when traveling, even for long periods, but I wouldn't take the risk if I were actually residing outside the US (I am).  US citizens who are residents in foreign countries aren't supposed to be able to buy mutual funds and also bring other potential legal liabilities.  There are some legal workarounds (like buying ETFs), but a lot of finance companies don't want the hassle.  I think there used to be a sort of "don't ask, don't tell" policy, and having a US address was good enough.  But now, many companies are actively looking for evidence that their customers are living abroad and simply closing their accounts.  In my experience, they are using software that looks for long-term credit card and atm card use abroad. 

Here's a link to an article that discusses some of the issues. 

https://www.americansabroad.org/mutual-fund-restrictions/




ROF Expat

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Re: Living off US portfolio while living abroad?
« Reply #8 on: January 20, 2022, 09:59:08 AM »

The only caveat to this account was it had to maintain a 10K balance which wasn't an issue. Again not sure these accounts still exist but imagine there must be something similar. I only closed mine because I was consolidating other things and was no longer living overseas but wish I kept it open actually and plan to look into it again at some point. Hope the info helps

I'm pretty sure the minimum is far beyond $10k now. 

Private banking provides a lot of great services, but usually they are part of the package for high net worth individuals who have bank or investment accounts large enough to far outweigh the cost of the benefits.  My guess is that these days, banks expect to get more than $10,000 in fees annually from their private banking clients.   

Rdy2Fire

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Re: Living off US portfolio while living abroad?
« Reply #9 on: January 21, 2022, 08:12:31 PM »

The only caveat to this account was it had to maintain a 10K balance which wasn't an issue. Again not sure these accounts still exist but imagine there must be something similar. I only closed mine because I was consolidating other things and was no longer living overseas but wish I kept it open actually and plan to look into it again at some point. Hope the info helps

I'm pretty sure the minimum is far beyond $10k now. 

Private banking provides a lot of great services, but usually they are part of the package for high net worth individuals who have bank or investment accounts large enough to far outweigh the cost of the benefits.  My guess is that these days, banks expect to get more than $10,000 in fees annually from their private banking clients.

Yeah I am not sure now but Citi in Singapore it WAS 10K USD. I should note, it wasn't a full private banking account like for millionaires with wealth advisors etc. They did however call it a private bank account and it was different then my regular account
« Last Edit: January 21, 2022, 08:16:19 PM by Rdy2Fire »

The 585

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Re: Living off US portfolio while living abroad?
« Reply #10 on: January 22, 2022, 08:58:19 AM »
Posting to follow... I'm interested in a similar situation but maybe in Italy or somewhere else in Europe. It'll be good to know well in advance if I should tranfer my brokerage/IRA/401k out of Vanguard and into something more international friendly such as Schwab or Interactive Brokers.

Scandium

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Re: Living off US portfolio while living abroad?
« Reply #11 on: April 06, 2022, 12:04:05 PM »
The one thing I would advise is to be very careful about using a credit card or ATM card or funds transfers linked in any way to your investment accounts.  An investment account-linked atm card like Schwab's is probably great for use when traveling, even for long periods, but I wouldn't take the risk if I were actually residing outside the US (I am).  US citizens who are residents in foreign countries aren't supposed to be able to buy mutual funds and also bring other potential legal liabilities.  There are some legal workarounds (like buying ETFs), but a lot of finance companies don't want the hassle.  I think there used to be a sort of "don't ask, don't tell" policy, and having a US address was good enough.  But now, many companies are actively looking for evidence that their customers are living abroad and simply closing their accounts.  In my experience, they are using software that looks for long-term credit card and atm card use abroad. 

Here's a link to an article that discusses some of the issues. 

https://www.americansabroad.org/mutual-fund-restrictions/

Wow, that article was eye-opening. That's a major issue for anyone thinking for living abroad, from the US, at all! It doesn't quite clarify what "living overseas" means either. Local residency? Long-term traveling?

Since these articles are dated 2021 - 2022 this seems to be an issues all the "FIRE Traveling" blogs from just a few years ago have not dealt with!

It sounds like options is to
1) turn off reinvest distributions (and use that for expenses)
2) convert all Vanguard funds to ETFs, which apparently don't have this issue? Thankfully that's also possible in a taxable account without selling.

edit: though it appears even ETF reinvestments are blocked if you reside in the EU. So forget about long-term living in Slovenia off your vanguard account..
https://creativeplanning.com/insights/why-us-brokerage-accounts-of-american-expats-are-being-closed/
I don't know if hiring a vanguard advisor could get around this?
Quote
However, some U.S. brokers continue to allow the distribution of ETFs to EU residents where the funds are managed by a U.S. Registered Investment Advisor.
« Last Edit: April 06, 2022, 12:48:09 PM by Scandium »

Catbert

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Re: Living off US portfolio while living abroad?
« Reply #12 on: April 06, 2022, 12:32:10 PM »
Scwab and I think Fidelity have a checking account in which you can withdraw from foreign ATMs without fees, foreign exchange or otherwise.

I can confirm that Fidelity does have debit card that you can use without any fees.  Good exchange rate also.

Look around Go Curry Cracker blog.  They traveled full-time for several years, lived in Taiwan for a couple and are now back in the US.  I believe this issue was discussed at some point on the blog.

ROF Expat

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Re: Living off US portfolio while living abroad?
« Reply #13 on: April 06, 2022, 01:34:25 PM »

[/quote]

Wow, that article was eye-opening. That's a major issue for anyone thinking for living abroad, from the US, at all! It doesn't quite clarify what "living overseas" means either. Local residency? Long-term traveling?

Since these articles are dated 2021 - 2022 this seems to be an issues all the "FIRE Traveling" blogs from just a few years ago have not dealt with!

It sounds like options is to
1) turn off reinvest distributions (and use that for expenses)
2) convert all Vanguard funds to ETFs, which apparently don't have this issue? Thankfully that's also possible in a taxable account without selling.

edit: though it appears even ETF reinvestments are blocked if you reside in the EU. So forget about long-term living in Slovenia off your vanguard account..
https://creativeplanning.com/insights/why-us-brokerage-accounts-of-american-expats-are-being-closed/
I don't know if hiring a vanguard advisor could get around this?
Quote
However, some U.S. brokers continue to allow the distribution of ETFs to EU residents where the funds are managed by a U.S. Registered Investment Advisor.
[/quote]

I don't know where Vanguard stands on expatriate clients.  In theory, they should be able to make things work by limiting your investments to ETFs or individual stocks.  In practice, it seems that a lot of the big players just don't want to take any risks and find it easier to close accounts.  In my experience, there are  smaller fee-based financial advisors that are willing to work with people living overseas, but they cost much more than a Vanguard or Schwab account. 

As far as what it means to be "living overseas," let me start out by saying that I am not a lawyer and nothing I say should be construed as legal advice.  That said, IMHO, the issue isn't just about how much time you spend overseas, but what your tax and residence status is in another country.  If you are an American living long-term in a foreign country with legal residency, working and earning money in that foreign country, I think you have probably become a foreign resident.  If you are paying tax on your income to the foreign country and therefore not paying tax on it in the US, or claiming the Foreign Earned Income exclusion to avoid paying US tax on it, I think you are probably a foreign resident.  On the other hand, if you are slow traveling around the world, but not formally working, not legally resident in any other country, not spending too much time in any one country, and not taking advantage of the "benefits" available to non-residents like the Foreign Earned Income exclusion, I think you have a very good argument that you are not a foreign resident even if you are spending a lot of time outside the US.  For example, military and US Government personnel assigned overseas don't get considered foreign residents for investment and tax purposes even if they live outside of the US for years.  But they still have to pay full US taxes. 

I do think people considering living overseas would be well advised to consult with a good lawyer and/or accountant regarding their own tax and investment situations.