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The Unbiased Guide to Offshore Investing for Expats

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Expat Saving & Investing workshops 101 & 102 – learn everything you need to know to invest sensibly and start making your money work hard for you.
“Every attendee that I’ve spoken to has loved Steve’s workshop.” – Andrew Hallam, author of Millionaire Expat
“Probably the most important workshop of my life.” – Julian, Dubai
Next workshop: Dubai – 27/28 September then 11/12 October

If this looks complicated, don’t worry – once it’s set up, it is actually quite quick and painless. No techie skills required. Don’t let someone take a lifetime of fees from you – believe in yourself enough to fill in a few forms and learn some new concepts.

Investing as an expat is mysterious. It’s not easy to find out how to do it. Everyone is either clueless or trying to sell you some terrible investment plan that isn’t even legal in your home country.

Figuring out expat self-investing is absolutely worth it though. Let’s say you invest $2,000 monthly for 30 years. If you make an 8% average annual return from your sensible stock portfolio, then pay 1% per year for all investing costs, you’ll end up with $1,227,000. More than a million dollars – nice!

Paying just 1% extra in costs will lose you $218,000 of that (and most plans will charge you a lot more). If you want to make the most of being an expat, you must keep those investing fees as low as possible.

No financial company wants you to know this

Even when you hear about low-cost options like Vanguard or learn what an ETF is (see below), you can still hit a brick wall. Contact Vanguard and they will say nope, we only deal with residents. Anti-Money Laundering regulations making servicing expats a hassle.

I first learned about Vanguard in 2011. I sold alllll the random actively-managed funds in my old UK ISAs (tax-free savings accounts) and replaced them with just one fund – the Vanguard LifeStrategy 80/20 fund. I can’t stress enough how wonderful the LifeStrategy funds are for UK residents – literally all you need.

But, living in Dubai, nobody could tell me how to invest with Vanguard as an expat. I dug around, then life moved on and I accepted it wasn’t possible.  Only in 2016 did I come across an article explaining how to do it, and I immediately realised what a huge find this was. Unexpectedly, I got a bit emotional, because I knew then I could finally help people invest cheaply and sensibly. Here was my mission.

So here we go – I’m going to give you the keys to the expat investing kingdom. Where you live, no financial company wants you to know how to invest offshore cheaply, because they won’t make any significant money out of it.

This is how to invest in stocks and bonds as an expat, exactly how I do it myself. I’m going to use the UAE as an example, but the principles should work for most expats regardless of location and country of origin.

I’m also going to show you the exact companies I use to transfer my money and invest. I don’t make any commission from recommending these companies – I’m mentioning them because they get the job done.

Setting Up the Chain

There are five links in the expat investing chain – it’s easiest to work backwards:

1. Exchange-Traded Funds (ETFs)

Offshore Investing chain bank exchange brokerage fund manager ETF

Like most expats, you probably want to invest in a mix of stock and bond Exchange-Traded Funds (ETFs). Mutual funds (such as Vanguard LifeStrategy) popular with those back home aren’t easily available to expats, so we have to use ETFs. In fact, ETFs are so awesome they could stand for Expat Total Freedom. They are similar to mutual funds, but are traded more like an individual stock. This makes them easy to buy and sell.

Let’s say you want to invest in one stock ETF and one bond ETF, to keep things simple (which you should do). You settle on 80% in VWRD (the Vanguard FTSE All-World UCITS ETF in USD) and 20% in IGLO (the iShares Global Government Bond UCITS ETF in USD). Congratulate yourself for your incredibly smart fund choices, as these funds are cheap and well-diversified.

Unless you are a US citizen, you don’t want to invest in US-domiciled ETFs, i.e. those based in the US. These may be liable for estate tax if you die (up to 40% on amounts over $60,000) and a 30% withholding tax on dividends. Stick to ETFs domiciled in Europe (with ‘UCITS’ in their name) and you will be ok.

JustETF.com and Morningstar.com are great places to learn more about each ETF, including where they are domiciled, fees and what they invest in.

Find out more about VWRD here. Find out more about IGLO here. There are further thoughts on asset allocation and ETFs here or you can enquire here.

2. Fund Managers

Offshore Investing chain bank exchange brokerage fund manager ETF

Vanguard and iShares are highly-respected fund managers, managing literally trillions of dollars. Vanguard is especially awesome, as all profits go towards reducing your management fees (helping you grow your investments faster). It was founded by all-round hero Jack Bogle, who invented passive index funds.

Fund managers create mutual funds and ETFs, packaging together hundreds or even thousands of shares to create a fund with a single price. Without them, you’d have to buy all the shares in an index individually and you probably wouldn’t bother.

You can’t buy VWRD and IGLO direct from Vanguard and iShares as an expat, just as you don’t go direct to Chiquita to buy bananas. You access them via a broker, which is like a supermarket for funds.

Find out more about Vanguard here.

3. Offshore Brokerages

Offshore Investing chain bank exchange brokerage fund manager ETF

Most brokers in your home country won’t allow you to open an account with them if you aren’t a resident there. You need to find an offshore broker instead.

You send the broker money and tell them which ETFs you want to invest in. They will quote you a price, buy the shares and hold them for you. When you want to sell, they quote you a price, you click ‘Sell’ and should have the money within 3 days for transfer to your bank.

Most brokers have a website and a mobile app that allows you to easily track your investment performance, receive dividends, buy or sell ETFs and transfer money in or out.

Brokers are required by law to keep your money and investments separate from their own money, so your assets are protected if they go bust. If they have committed fraud and used clients’ money, then you are further protected (e.g. clients of US brokers are covered by the SIPC for up to $500,000 of stocks and bonds, and $250,000 of cash).

I use Interactive Brokers (IB), which is based in the US and is large, robust and cheap. They have a good mobile phone app for investing and tracking your portfolio. You won’t be liable for US estate tax as long as you don’t invest in US-domiciled ETFs and don’t have more than $60,000 sitting uninvested in your IB account.

Setting up an IB account requires you to fill in a few online forms and send them proof of identity online. You want an individual cash account (‘cash’ here means you will invest with your own money and not borrow money to invest). After that the setup is fairly quick. If you work for a Financial Services company, you may need to get a permission letter from them due to share trading restrictions.

To add money to your IB account (no minimum though account fees are cheaper once your account is above $2,000), you click on Transfer Funds (then Wire transfer) under Account Management. Enter an amount you want to transfer and IB gives you a code for the transaction.

Find out more about Interactive Brokers here.

4. Exchange Houses

Offshore Investing chain bank exchange brokerage fund manager ETF

You need to send money to your broker and probably need to change the currency as well. Brokers typically charge high rates for foreign exchange (FX) conversions, so it’s better to do it before it reaches your broker account.

You can use your bank to convert the money into the right currency and send it to the broker, but often their fees are high and exchange rates not very favourable.

Instead, you can use an online company like TransferWise.com or CurrencyFair.com. However, your broker may not like it if the money arrives from that company’s bank account rather than from your account. This can give them Anti-Money Laundering headaches, especially when you first open your account. Check with your broker or look for guidelines saying transfers must come from an account in your name.

As an alternative, exchange houses can offer good rates and help you through the transfer process, if they are familiar with sending money to your broker.

I use UAE Exchange in Dubai, who offer good rates and low charges for their Club Exclusive customers. They also know how to get money into your Interactive Brokers account efficiently and in your name.

When I want to make a transfer, I send them the transfer amount and transaction code I received from Interactive Brokers, then they let me know how much in local currency I need to transfer to them. This amount includes their exchange rate and transfer fee. I send them the money in AED from my local bank account and they pass it on to Interactive Brokers in USD within 24-48 hours.

Find out more about UAE Exchange here. To become a Club Exclusive member, which is free, send a message through our Contact page and request the details of the relationship manager.

5. Local Banks

Offshore Investing chain bank exchange brokerage fund manager ETF

Sending money to your broker is usually much cheaper via an intermediary (such as an exchange house or online transfer company) than direct from your bank, especially if a change of currency is involved. So if you are using an intermediary, you only need your local bank for transferring the local currency from your account to the exchange house’s local account.

Some banks offer free local transfers, which will reduce your costs even further.

Summary

This process may sound complicated but, once you have the accounts set up and have transferred money a couple of times, it becomes fairly straightforward. You should be aiming to invest monthly or at least quarterly – making a transfer shouldn’t take more than 15 minutes out of your day.

Now that you know how to become an offshore investor, just get started! You can practice with small amounts to build up your confidence. Don’t leave it 6 months or more before dipping your toe in!

Not enough expats know how to invest offshore without getting ripped off and this information is really hard to find anywhere. Please share this article with any expats you know!

Have you found any savvy tricks for investing offshore cheaply, quickly and sensibly? Or have you had problems trying to do this? Share your thoughts in the Comments section below…

 

Expat Saving & Investing workshops 101 & 102 – learn everything you need to know to invest sensibly and start making your money work hard for you.
“Every attendee that I’ve spoken to has loved Steve’s workshop.” – Andrew Hallam, author of Millionaire Expat
“Probably the most important workshop of my life.” – Julian, Dubai
Next workshop: Dubai – 27/28 September then 11/12 October

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73 thoughts on “The Unbiased Guide to Offshore Investing for Expats”

  1. Good read. I wish to purchase berkshire hathaway class b stocks for long term investment $200k (20years). Doing the above method through interactive brokers, the shares would be in the street name. It is not recommended for the said amount as the spic protection is only upto $500k. Compounding my initial investment will definitely cross the $500k mark in a couple of years.
    My question to you is, is it possible for a foreigner (non us citizen)(I’m in Indian citizen, Dubai resident) to hold the stock in direct registration system (Drs) format. If yes, how do I go about it? Do I need to register at the sec? As brk shares do not pay dividends. Im assuming I will be liable only for capital gains tax at the time of sale. Your views appreciated. Thanks. AJ

    1. Not sure why you would want to invest such a large amount in one stock, I prefer diversifying across more than one index. It will take a while for $200k to become $500k, by which time consumer protection rules and amounts may have changed. I would wait until your investments get closer to the $500k mark and then investigate your options.

  2. I have been looking for information about specifics on investing as an expat. Your blog is by far the best source I found. Please, keep the good work!

  3. Hi,
    this rule that we as expats non-US citizen should not invest on EFTs domiciled in US to avoid taxation is also valid for normal stocks traded in US?
    Thank you for the comprehensive guide.

    1. Yes that seems to be right for US stocks purchased in the US – you would be liable for estate tax. Please do your own research on this though if you have a large exposure to such stocks.

  4. Wonderful advice! This concurs with what I’ve been reading about estate taxes in the US, though I do get conflicting stories if you use a US broker even though the ETFs are Irish domiciled.

    Does Interactive Brokets charge custodian fees?

    We are waiting for the book! Perhaps more info in the future about the pros and cons of various international brokerages and safety of custodian arrangements

    1. Hi John, yes some people are wary of US brokers but from what I have researched the domicile of the fund determines the tax status rather than the broker location. IB does not charge separate custody fees. I think IB are safe though if you wanted to be more cautious you could divide your investment across two or more brokerages. IB offers a stock lending program to make a bit more money but that could go a bit pear-shaped in a big crunch, so you could avoid that feature.

  5. Thank you for the great guide. I was looking for such guide to start my ETFs investing journey. The question I have How easy to take money out from my Portfolio in IB ? I am a non US expat I hold a Jordanina Passport

    1. Hi Mahmoud. Glad it’s been helpful for you! It should be as easy as putting money in… You arrange for the ETFs to be sold through your IB mobile app and then transfer the funds back to your bank account. Might be good to set up a USD bank account in your home country, so you have more control over exchange rates.

  6. Great information thank you SS. I found your blog via Millennial Revolution. I am currently in China and sending money back home to invest through my brokerage thats in my home country. It works, but I would like something more international also. Maybe we can work together on a post for expats from China to get money out to invest. China is a different beast for getting money out of.

    Cheers,
    Colby @ That Charles Life

    1. Hi Colby, I hope life is good in China. Yes I would be interested to hear how you get money out of China and into USD/CAD. Once it’s out, I imagine everything is fairly straightforward again.

  7. As a Dubai expat. This is literally the gold mine I was looking for. I am concerned about the currency rates though. Do you have any particular positive experience with any particular bank?

      1. Hi Smart Skeleton. Thanks for all the good info. I’m looking for some details in using UAE Exchange for transferring funds from the UAE to my IBKR account. I’ve set up my UAE exchange account and it’s been activated. My IBKR account is ready to receive funds (as their friendly emails keep reminding me). I’m ready to pull the trigger. However, after looking at the options on the UAE Exchange app for transferring funds and the IBKR app for receiving funds, I’m a little confused about which process is best to use. I’m just not sure where the process begins for an initial deposit into my IBKR investment account. Do I start with the option to deposit funds with the IBKR app? If so, am I opting for electronic/direct transfer? Connect my bank account? Bank wire? Sorry if I’m overcomplicating things here. I just don’t want to have to pay more than I need to on a 5-figure transfer. Thanks for your help.

        1. In IB Account Management, select Wire Transfer and enter your bank details (not UAE Exchange). Best to use UAE Exchange CLub Exclusive if you can. Email the details Ib provides at the end of the wire transfer set up and then they will let you know to proceed (sending AED to their local account).

  8. Great article.
    Do you also use an exchange house when transferring the funds from your brokerage account to your bank account?

    1. Thanks Keni. You should set up a local bank account in the same currency as your IB account. You can then send money directly from IB to that account. When/if you want to use the money locally, you can use a local exchange house to convert the money into local currency (likely to be cheaper than your bank, even after transfer fees but do check this first).

  9. Is it necessary to buy the funds in dollars, or is it possible to buy the funds in pounds (British expat) through interactive brokers ? Also how would you rate the IB platform for ease of use , it appears complex.

    1. You can buy the funds in pounds e.g. VWRL instead of VWRD through Interactive Brokers, especially if you set up your account as a GBP account in the first place. If you are earning in AED or USD though, I would recommend investing in USD unless you are moving back to the UK in a year or two. For stocks it doesn’t matter which currency you invest in, as the currency sensitivity is driven by the income of the underlying companies rather than the currency the ETF is priced in.

      I use the IB mobile app – it is much easier to use than the desktop version, which I would avoid. I use the Order Wheel on the app to make trades.

  10. Thanks for the feedback. Does IB charge custodial fees? If so can you outline the rates and any other issues for a buy and hold investor?

    Also do they need a tax file number when applying?

    Thanks in advance

    1. They charge a platform fee of $120 but that absorbs any trading commission up to $120 per year. They don’t charge custody fees. You will need to provide a tax number if you are resident in a country which has issued you a tax number or you are a US citizen.

  11. Smart S.
    This info is gold. I am a F.I.R.E fan and Chautaqua participant and cannot thank you enough for the info.
    I have been struggling with the investments and even made the mistake of opening an account with one of the friendly UAE brokers through an online broker and will be locked there for years….
    The good thing is that I have selected my own funds to a 60% Stocks -40% bonds with the lowest fee and will revisit in a few years
    As MMM follower , I have been trying to join Vanguard Spain, with no success( I am Spanish) and doing most of my FI investments through Reals State, so now a new era starts.
    I would love to catch up with you one day in Dubai.
    Cheers

    1. Hi Gonzalo

      Unfortunately you will probably still be better off getting out of the savings plan now, taking the hit and then reinvesting your money yourself. Otherwise the high fees will destroy your potential gains. If you are earning in AED, you might as well invest in USD via Interactive Brokers for now – the global stock market is mostly $-denominated anyway. Yes let’s swap Chautauqua stories! Steve

  12. Thanks Steve, I was chewing over the different ETFs and decided to go with the ones you suggested as they were in USD. Now I can forget about it for a while! Thanks for all your advice, really all your help.

      1. Hi Steve

        Thanks so much for that article. It is really hard to find some decent information on how to invest from abroad. I am new to investing so this was helpful. Do you know where I can find information about how taxing works in different countries when investing? At the moment I am living in France (as a German passport holder) but that will change to the (most likely) US, Canada or UK soon. My husbands work will decide where we are going. Will the ETFs you suggested work while switching between countries? And what are your thoughts on using http://www.ig.com as an interactive broker? I do not need all of this information for free so simply drop me an email about private coaching if you want to. Thank you!

        1. Tax systems shift all the time so I would wait until you have a clearer idea of where you will go before digging into the details. The ETFs are fine but if you go to one of those countries (and start paying tax) you might want to consider selling your investments and rebuying in that country, especially opening a tax-free account for savings. The platforms in these countries tend to be easier and cheaper to deal with than sending money overseas. IG is significantly more expensive. You’re welcome to get in touch if you would like private coaching on assesing your financials, saving & investing.

  13. Dear All

    Is there a consensus about the ‘best’ ex-pat international broker. I’ve looked into IB , Saxo, Internaxx etc

    My main concern is security of title of my share portfolio. I realise in many of these accounts I’m the beneficial owner but I read that under these omnibus accounts the broker is the ‘owner’

    Little is written about the safety of various custodial arrangements

    1. You are protected with IB by the SIPC up to $500k in stocks/bonds. That’s good enough for me. Saxo charges extra for custody if that gives you additional comfort. No harm in splitting your portfolio across multiple brokers. I like IB because they are large and cheap, easy to open an account with and don’t block inward payments for no reason. I don’t include DEGIRO in my recommended list because of various whisperings of corner-cutting and not being straightforward. Such remours may well be unsubstantiated but why bother when there are decent alternatives.

  14. Thanks. I’m eagerly awaiting your book in which you ‘flesh out’ all your thoughts on this niche area of investing

    Thanks again

  15. Hey Steve, thanks for the great article. I am a huge fan of your work! You mentioned that the ETF should have UCITS in the name to avoid tax in the US. So, is it better to invest in S&P 500 UCITS ETF (VUSA) rather than S&P 500 ETF (VOO)? Also, with the brexit issue going on, is it safe to invest in ETF traded on the UK stock market (as returns would be impacted by gbp to usd ratio). Thanks a lot!

    1. Thanks Mohit! Yes UCITS ETFs are much better for expats. ETFs traded on the London Stock Exchange can also be in USD and they can cover US stocks or UK stocks – those ETFs without UK exposure would be completely unaffected by Brexit, other than impacts on global share prices.

      I prefer a broader diversification and having fewer ETFs, which is why I like VWRD so much.

  16. Hey Steve, waw finally am so relieved when I read this information, I’ve been searching for precise and clear information for expats living in UAE and thank u for this. However my question is I’m an African passport holder and opened an account in IB just yesterday and planning to wire some money soon. Am devoting to invest $500 every month expecting compounding and growth for the next 20 years may be, can u pls guide me which ETF is best for me and where can I find it on the IB platform and how to buy it. Or else expecting ur suggestions. Thank you.

    1. Sounds like a good plan Abraham. I use VWRD and IGLO, as they are globally diversified and low cost. I run private coaching sessions and workshops on these topics if you need to dig into all the details. Use the IBKR mobile app to invest in ETFs and add the ETFs to your watchlist.

  17. Hi Steve,

    Can you please give some feedback on IB versus TD Direct International as the brokerage houses? TD Direct is in Luxembourg which probably is a more neutral location rather than US, however appreciate your inputs?

    1. TDDI is now Internaxx which has been bought by SwissQuote. They are significantly more expensive than IB, especially if you have >$100k. Not sure what you mean by neutral location, US has excellent legal framework and asset protection from the SIPC.

  18. Hi Steve,
    You have the perfect info on this blog that I was looking for. If I open an account with IB and invest in USD. What will be your advice? To invest lumpsump in one go or to go for monthly investments. Do monthly investments incur more charges than one time lumpsump on the broker or the fund side?

    Also I came up with a company called Sarwa here in UAE which is also allowing to invest in the funds thru IB. have you compared their costs. Are they similar? looking forward to your advice.

    Thanks

    1. Hi Peeyush, it is always statistically better to invest a lump sum and you will have lower trading costs as a result. However, it is psychologically harder than dripping it into the market, so really it comes down to what you can handle.

      Sarwa is a decent company. Below about $26,000 they are cheaper than managing your own money but if you figure out how to do things by yourself then you may like the extra feeling of control that gives you.

  19. Hi Steve,
    For the “40% in bonds” strategy, what’s your take on Franklin Templeton emerging mkts bond fund (TEMEAUS:LX).. I know you prefer the IGLO for broader diversification (I was at the Dubai College seminar – great one btw and thank you for sharing so much).
    Kind regards,
    Ravi

    1. Emerging markets bonds are risky because the countries (and companies?) are more likely to default on their debt e.g. Argentina. So a fund like this does not perform the role you need in your portfolio of downside protection – gaining in value during a downturn. That’s why IGLO is good. A fund like TEMEAUS is for fun money really – it’s risky. Take your risk in equities instead.

  20. Thank you Smart skeleton for sharing this and for the priceless info. I believe that who is smart enough to follow your advice will become rich eventually.
    I have a question concerning your experience with the applicability of the 1% stamp taxes while investing in an Irish domiciled stock? (it’s mentioned on IB’s website that “Stamp taxes (UK=0.5%, Ireland=1%) are directly passed through to the clients.” ) I would appreciate your feedback.

  21. Hello Steve, below extract from your article:
    “Unless you are a US citizen, you don’t want to invest in US-domiciled ETFs, i.e. those based in the US. These may be liable for estate tax if you die (up to 40% on amounts over $60,000) and a 30% withholding tax on dividends. Stick to ETFs domiciled in Europe (with ‘UCITS’ in their name) and you will be ok.”.
    If we use IBKR or Internaxx (non resident Indian nationals in UAE), will the Quarterly dividend of VWRD, IGLO and other non-US domicile ETFs come into our USD brokerage account without any 30% deduction?
    Your guidance is appreciated. Thank you!

    1. Irish-domiciled ETFs have to pay 15% withholding tax on the dividends from shares within them (certainly the US shares). As a non-resident you don’t have to pay any further tax on your dividend income.

  22. Paul_crawfs

    Great article thank you. I have read Hallam’s ‘Millionaire Expat’ and this detail ties up many loose ends I had

  23. Hello Steve,
    Any guidance for Indian expats with IBKR offshore trading accounts? In a probate scenario, how can the next of kin get ownership of VWRD & IGLO UCITS units in a single-named IBKR trading account? Does IBKR recognize a UAE-registered Will?
    Thank you,
    Ravi

  24. Hello. Really appreciate the info in the article. I’ve set up an IBKR account and a UAE Exchange account as well. I’ve read through the comments, but I don’t see any info regarding US passport holders residing in the UAE. Do you know off hand or could you point me to information regarding what taxes I would incur, if any, for investing in non-US domiciled EFTs? I’m not looking to gain income, but rather reinvest any gains and keep it in for the long term. I’d likely start with about 10k USD, but would be willing to dump more in if I know I’m not getting taxed out the wazoo. Thanks again.

    1. If you’re a US citizen then you are subject to different taxes and estate tax isn’t nearly so bad. So for you I would recommend investing in US-domiciled ETFs like VT or VTI – they are cheaper also.

  25. Hi Steve,

    Thanks for such a clear and thorough article. Which broker would you recommend for investing a lump sum GBP 100k into the vanguard lifestrategy 80/20? All going well I will continue to top up with regular monthly/quarterly amounts too. NB. I’m a British expat in the Middle East. Thanks, Dan

    1. Hi Dan, Swissquote offers expats access to LifeStrategy though it’s not a particularly cheap platform. You need £100k minimum. Alternatively you can replicate it using e.g. VWRD + IGLO through IB or Saxo.

  26. I wanted to thank you again for the blog and your continued correspondence. So…I’ve managed to get everything set up and have sent my initial investment to IBKR. Now…which ETFs to buy? I know you suggested in the article an 80/20 in VWRD and IGLO. I really would like to keep it as simple as possible, but have seen some other more diverse options that look appealing. If I were to create a more diverse package of ETFs, what percentage of each of the following would you recommend?
    1. A total market U.S. core index (iShares Core S&P Total U.S. Stock Market ETF for example)
    2. A mid-cap value index (Vanguard Mid-cap Value ETF perhaps)
    3. A small-cap value index (Vanguard Small-cap Value ETF maybe)
    4. An international ex-US index (like FTSE All-World ex-UD Index ETF)
    5. An international small-cap index (like SPDR S&P Small Cap International ETF)
    6. A short term bond ETF (like Vanguard Short Term Bond ETF)

    Also, is there anything particularly wrong with any of the above ETFs? Any recommendations that could replace them?

    I’m a US citizen living in Dubai and only interested in long term investing for the goal of retirement (20 years or so).

    Thank you agian!
    Chris

    1. Every ETF that you add increases your hassle factor almost exponentially. You have to rebalance, you have to buy each one, there are extra trading fees. And the gains are likely to be minimal. You will also be tempted to tinker endlessly. Something like VWRD+IGLO will include all of those components except small caps. So you could allocate say 20% of your equity portion to small caps if you wanted, but remember small caps are volatile. Maybe allow yourself to add small caps as a reward in 3-5 years time for having invested consistently every month/quarter and not freaked out in downturns. Investing is one area where you really do gain from simplicity.

      1. Thanks for the useful article.Already set up the ibkr account and made the first investment through UAE exchange. How to register my bank account with them. Dividend date is due.
        Regards

        1. Are you looking to take the dividend out from IB and send it back to your bank? I would question why you want to do this unless you are retired. Better to reinvest your dividends. You can register your bank account in the Customer Portal of IB.

      2. Thank you so much for getting back to me and I really appreciate the advice which I will heed. Keep it simple, silly is not lost on me. I’ll revisit my options after I’ve kept some skin in the game for a while. All the best and thanks again.

  27. Richard Stacey

    Hi Steve- I just called the UAE exchange. The club exclusive program is only if you have transferred 300,000 AED plus in a certain time period- so not really free.. and certainly not for those on very high incomes.

    Are there any alternatives you could recommend?? Thanks Rich

    1. Talk to Rizwan, the Club Exclusive relationship manager – I’ll send you his details. Should be fine. If not, you could try Al Ansari, GCEN or just a direct transfer with your bank and try to haggle the fees or rate down.

  28. Smart Skeleton, thank for this valuable information.
    is possible to open an account in Vanguard directly and avoid the IB account? I am US residence card holder, working in UAE .

    1. Only if you pretended you were still living in the US. They would still charge you a platform fee anyway probably, so it’s probably almost as cheap to go with IB.

  29. Hi Steve,

    Thanks for your excellent article, I am a British Expat in Dubai and will follow your advice and also try and attend your upcoming seminar!

    I have a few questions in regards to IB’s monthly fees, you mentioned to trade monthly or quarterly. However if trading quarterly would I receive the monthly inactivity fee?

    “Monthly Activity Fee = 0 if monthly commissions are equal to or greater than USD 10.

    If monthly commissions are less than USD 10,
    Standard Activity Fee = USD 10 – commissions.”

    I am assuming the term commissions means each individual trade?

    Thanks

    Ben

    1. Hi Ben, yes commission is the fee you pay to trade. It is netted off the monthly platform fee, so all in all a passive investor should expect to pay about $10 per month whether they invest that month or not. Then when your portfolio gets bigger, you don’t pay the platform fee for portfolios above $100k.

      If you want to sign up for July’s workshop you had better be quick as we are running out of spaces!

      Thanks
      Steve

  30. Some very sound advice, Steve. Thanks. Expats living in the Gulf really need this sort of detailed, well-informed financial advice, especially with so many unscrupulous financial advisors out there. I myself got rooked by a charming-seeming fellow Englishman in the UAE. He gets by selling grossly overpriced insurance policies as investment vehicles. In the 1990s and early 2000s, when the stock market was roaring with record highs, the insurance policy he sold me was only earning 7 per cent! This character, later on, branched out and started getting the international teachers who largely made up his clientele mired in an elaborate pyramid scheme. Fortunately, I started doing my own research, got out of my insurance policy, and opened an account with a reputable brokerage. No doubt, he continues to mislead trusting expats.

  31. Hi Steve,

    Thank you very much for the valuable info you put out here. As I am searching my options to build a stock portfolio, can i use the same method, using my IB account to buy and hold/trade US individual stocks that would be returning dividends quarterly ??

    Appreciate your input
    Regards,
    Shay

    1. Hi Shay, yes you can but I wouldn’t make them a large part of your portfolio. Your US stocks will be subject to 30% withholding tax and if you have more than $60,000 (including any cash in the US) then they will be subject to 40% estate tax.

  32. Hi Steve,
    thanks for summarising this information here, It’s worth is more than Gold(Even if you compare with today’s rate).

    Although you have provided enough information on Taxation, I just wanted to clarify that I am India expat living in UAE, for me to avoid Taxation in the USA, I need to buy ETF’s not domiciled in the USA(Broker house location does not matter)?? Those ETFs could be taxed internally(means them selling/buying stocks, I can’t control that anyway, can I??)

    Thanks
    SG

    1. If you are living in the UAE and not a US resident then you will be taxed on non-US domiciled (e.g. Irish) ETFs only with a 15% withholding tax on dividends. That’s it. Broker location does not matter, unless you are holding lots of cash in your brokerage account, which you shouldn’t anyway.

  33. Hi SS,

    Great Blog. I have just set up an IBKR account and purchased my first ETF’s in line with your recommendation here. I have a question about the nature of withholding taxes. Assuming I will be resident in the UK in 3 years with a personal marginal tax rate of 40%, would I be liable to pay any additional tax on my dividends(over & above the 15% withholding tax), or does HM Gov feel that I have paid my dues?

    1. Hi Kenny, yes you would have to pay income tax on your dividends. You can probably avoid that if you automatically reinvest them (accumulation version of the ETF e.g. VWRA (USD) or VWRP (GBP)). Tax rules change regularly though so you would need to check that independently. If you move to the UK you might be better off selling your ETFs in the tax year before you move and then investing in Vanguard LifeStrategy once you are back in the UK.

  34. I want to add my thanks to everyone else’s. Brilliant resource for guidance. I’ve signed up for UAE Exchange and IBKR accounts and will be doing my first transfer/purchase soon.

    But I have also come across Sarwa.co. They seem to be offering a service to automate the investment process on IBKR. Couple of questions around this:
    1. Is their margin worth it? Or better to just do it yourself on IBKR?
    2. Can I invest both through Sarwa and direct to IBKR at the same time?

    1. Sarwa are great if you don’t feel confident managing your own money, or you want to start with a low amount and don’t see it going above $30k anytime soon. But if you a confident enough to buy a couple of ETFs yourself then you can just use IB and DIY.

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