Investing strategy and broker selection when moving abroad

#1

Hi all!

I’m a newcomer to the mustachian world but very motivated to start. I have some cash sleeping on a saving account (CHF ~30k) that I would like to use to start mustachian investment in a simple portofolio made of ETFs for the long term (>= 10 years), probably something similar to a Bogleheads three-fund portfolio.

I am 33 years old swiss citizen and currently living in Switzerland but I am moving to Belgium at the end of the year where I will work and have my official domicile. I plan to stay there a few years and come back to Switzerland, but I don’t really know what will happen for sure. I might stay in Belgium or move to another country for some time before coming back to Switzerland. Ideally, I would like to retire in Switzerland.

I was wondering if you had some advices concerning my situation. I’ve read a lot on this blog and forum, but there is still a lot of parameters I don’t understand very well.

I am hesitating between Corner Trade, Interactive Brokers or going with a Belgian broker (Keytrade?).
CT seems best suited for the amount I want to start with (<100k), but reading this forum, it looks like IB would be better for exchanging CHF to EUR, which might be important.

It is my understanding that I will be taxed in Belgium and not in Switzerland, so I should optimize my ETFs selection based on that. Apparently, non-registered accumulating ETFs domiciled in Ireland are the best solution in this case (https://www.bogleheads.org/wiki/Investing_from_Belgium).
However, I am wondering if It would be better to keep a swiss bias with swiss ETFs in CHF?
But that may not be ideal tax-wise…
I am a bit reluctant to change all my CHFs in EURs since I would like to eventually come back in Switzerland.

If you have some experience with moving country or just advices regarding my situation, I would be very pleased to hear them!

Thanks

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#2

Hi axal,

Welcome to the forum!

I have found this document which adds more details to the picture of moving to Belgium as an investor.
Deloitte Taxation in Investment in Belgium 2016

Some ideas for your scenario:

  • You did not state how much volatility you can digest (e.g. minus 50-80% is always a possibility for a 100% stock allocation), this is important to define your asset allocation.
  • You did not say what you would do with your investment in 10 years. Maybe your investment horizon is shorter/longer than you think.
  • With no taxation on accumulating funds (re-invested dividends), you can save money on taxes vs investing as a Swiss resident. If you use this however, you can rule-out cheap US based funds which must distribute dividends by law.
  • Regarding which currency you invest in, with a 10 years horizon, using CHF hedged ETF investing in other currencies might cost you an arm. If you invest in a way that protects you against inflation, Forex volatility should be transparent on the mid/long term.
  • A globally diversified ETF holds assets in multiple currencies, hedging you against Forex volatility.
  • Investing in ETFs at the SIX exchange is usually more expensive (commission, spread & liquidity, stamp tax) than using larger exchanges.
  • Your proposed bias for Swiss based assets is a risky bet. Swiss economy is made of ca. 50% exportation. What if EU re-negotiates its trade agreement with Switzerland? In the FTSE Global All Cap index, Switzerland weights 2.64 %.

If I were you, with your listed constraints and to start investing now, I would do the following:
1- Open an account with Interactive Brokers where the 10 USD monthly fees are used as credits for commissions.
This also motivates you to reach 100k in investments.
2- Resign myself to use USD or EUR in the next 10 years
3- Calculate how much you save in Tax between a US based fund distributing dividends and a IE/LU based fund accumulating dividends (variables to use: Commission to buy said ETF, spread, TER, L1 Tax (what the fund loses when paying tax to foreign countries), L2 Tax (what you are losing by paying taxes to the country where the fund is based), is the ETF able to closely follow its index, is the fund big enough that it will not close soon and force you to move money to another one, for a distributing ETF do you need to convert the money to another currency before to use it or re-invest it)
4- Invest the stock percentage of your portfolio based on your existing 30k in a globally diversified ETF (if possible including emerging markets, small caps etc.) and keep adding your new EURs to it.
5- Figure what uncorrelated asset you can use to smooth volatility of your stock ETF. Keep it in CHF cash in the meantime.
6- Keep a large enough emergency fund until you are eligible to unemployment benefits, squeeze it a bit after.
7- Few years before you decide to move back to Switzerland, evaluate if you can afford Forex volatility on your passive income or if some of your assets should progressively move to CHF based funds yielding CHF.

All the best in your new adventure ! Let us know if their chocolate is as good as here :slight_smile:

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#3

Hi T78a!

Thanks a lot for your detailed answer. This gives me a lot to think about. :slight_smile:

You are probably right that I should resign myself to use USD or EUR for now.

I was thinking to invest around 70% of my portfolio in diversified ETFs (using a value averaging plan over one year) and keep the rest in a free saving account in CHF for the moment (change to bonds if/when their returns become positive).

The thing I need to figure out, is how to rebalance my portfolio if stocks and bonds/cash are not in the same currency. This means that the exchange rate would be taken into account at each rebalancing. Not sure if it’s a good idea.
Is there a “standard” method in this case? Or would it be better to have everything in the same currency?

Thanks!

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Value Averaging
split this topic #4

10 posts were merged into an existing topic: Value Averaging

#14

This conversation is very interesting but not really on topic.

@_MP or @Julianek Could we maybe move the value averaging conversation to the corresponding thread?

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#15

Done. The conversation has been moved to the value averaging thread.

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