Investing in Irish domicile ETFs

[thenoble]

Hi r/MalaysianPF, I’m a uni student who is wanting to put my savings into Irish domicile ETF’s for growth since the money is just sitting in my savings account.

I would personally be using IBKR and was wondering if it is worth it to just invest small amounts (ie rm1k on quarterly basis) as I am aware of the fees and I am still a student so I do not have that much money. I would be investing my scholarship allowances for those wondering.I would be holding for at least 5 years down the road.

Thanks in advance!

 

[georgiew]

@thenoble It is more convenient for you to invest via Stashaway Flexible Portfolio if your total portfolio size isn't big. Just make a 1-fund portfolio and DCA into it. Once you've accumulated a big enough portfolio that makes the 0.8% p.a. that Stashaway leeches away from you look like an eyesore, withdraw and rebuy on IBKR.

 

[corey3518]

@georgiew isnt stashaway a trading bot actually, not an etf? from what ive heard it regularly loses money

 

[georgiew]

@corey3518

it regularly loses money

Everything that touches equities lost money in 2022.

isnt stashaway a trading bot

The Flexible Portfolio that I mentioned is a self-directed portfolio, where you dictate the portfolio construction and allocation, SA just buys and holds it for you with no additional "intelligent" input or interference (they claim to only rebalance once the asset allocations deviate by 30%). It's about as close as it gets to buying ETF by yourself without the trouble of forex, remittance, order placement, etc (all bundled in the fee SA takes monthly).

 

[corey3518]

@georgiew Right, was genuinely asking cos of what I heard about it. Thanks for the info

 

[carmen2569]

@georgiew And also, there is no management fee until June 2023 for fresh deposits. Essentially fractional shares. But for now, only VT is available. No VWRA or any Irish domiciled ETF.

 

[georgiew]

@carmen2569 For a few extra steps, you too can do the 1-fund portfolio with VWRA. Just head to Syfe Singapore and make sure you have a Singapore bank account (apparently you can deposit to Syfe directly using Wise too).

SA is allergic to accumulating funds for some reason, despite their Blackrock portfolios featuring them extensively.

 

[frogi76]

@georgiew What do you mean by SA being allergic to accumulating funds?

 

[georgiew]

@frogi76 This was their justification article of going with US-listed ETFs instead of UCITS: https://www.stashaway.sg/r/etf-taxes-returns-and-tracking-errors

 

[thenoble]

@georgiew Thanks I’ll look into this particular option.

 

[cataline]

@thenoble Assuming you have some fundamentals in investment, a good question to ask are what are your better alternatives. In terms of processing fees/entry, IBKR has one of the best rates at this moment.

 

[thenoble]

@cataline Regarding that, I am still researching in this field as it is quite new to me. Would take some time and try not to FOMO. Would appreciate all the tips I can get!

 

[ream]

@thenoble If i may suggest, dont over complicate things.

Unless your savings is >=50K, i'd suggest staying around the "starter-pool" vs non-MY accounts & other stuff.

In addition, if U don't have 6 months' expenses saved up separately as emergency piggy bank, also better not, especially if no active income (i'm assuming, my bad if U do).

also, 5 years ISN'T long term IMHO.

As a tertiary student on scholarship allowance, i'd already have a separate emergency fund, then the excess:

a. if lump sump available: assuming not needed for 10 years or more, take 2/3 then divide it to put into equities within 3-4 years, every 6 months same amount. DCA over time + basket of equities like StashAway's equities only portfolio. The 1/3 hold for opportunities / kaka to happen and buy deep value lelong.

Why 3-4 years to finish up the lump sum? So i wont experience the pain of -60% or more & swear off equities & average downturns' recovery is about 2-4 years.

Why 1/3 to hold in money market or FD - coz on average, about 30% of the time, markets go down. By how much, no idea XD - google stats for the market downs, dont take my word for it.

b. if excess is streaming in monthly (nearly for sure): same ratio of 2/3 & 1/3 but DCA monthly, quarterly or half-yearly..

DCA into what? If transactional amount is small, ie. less than MYR1.5K per transaction, go with stuff like UTs or StashAway. If per transaction amount is >=MYR1.8K then ETFs listed on Bursa. If >=MYR20K per transaction, then only look at SG/US. Reason = cost per transaction and setup/maintenance/hassles like W8BEN forms & whatnots/etc.

Just thinking out loud above ya - not financial advice from a pro. Just an ex-iKuli luckily lean FI/REd at 49yo.

 

[thenoble]

@ream This gave me a lot of insight thanks

 

[bigjake803]

@thenoble

I’m a uni student who is wanting to put my savings into Irish domicile ETF’s for growth since the money is just sitting in my savings account.

I generally don't recommend uni students start investing, since investment can go up/down for a few years, and it's likely you'll need those monies in the near future when you start working.

I would be investing my scholarship allowances for those wondering. I would be holding for at least 5 years down the road.

What if the economy tanks in the next 5 years, and you have difficulty finding a job then?

Do you have an emergency fund? If not I'd prioritize setting that up first before jumping into investment. This is important to avoid pulling out your investment (selling) when economy goes down.

Common recommendation is 3 to 6 months of your monthly expense. Those with less stable income or more responsibility (young children, mortgage, supporting elder parents) should lean towards larger safety net.

In your case, you may want to set aside some for rental/utilities deposits, first month rent, vehicle down payments, etc. for when you start working.

 

[thenoble]

@bigjake803 I have a bond with the company currently providing the scholarship so job security should be fine. And yes I do have emergency funds as the money allocated to my investments I view as money I’m willing to lose already.

 

[eng]

@thenoble Per transaction is 1.91 USD give or take. Perhaps cheaper now due to strengthening USD to GBP.

1k MYR probably gets you around 2.5 shares of VWRA.

2 USD fee for a 220 USD investment is 0.9% fee.

Not worth it imo.

 

[russman]

@eng Still worth it for the diversification purposes, as it is still way cheaper than most unit trusts, especially if you plan to hold for decades. Even if the initial cost might be slightly more expensive, it's worth it because the difference is management fees, 0.22% vs 1% compounded is massive in the long run

 

[andrusjarv]

@eng Do your research before commenting mate.

How are IBKR fees $1.91 per transaction??

It's ONLY $0.005 per share, min. $1, max. 1% of trade value.

Get your facts right before misleading others.

Reference: https://www.interactivebrokers.com/en/index.php?f=49637

 

[eng]

@andrusjarv

1. I’ve bought VWRA shares myself and the cost was 1.9 USD or 1 GBP per transaction.
2. Irish domiciled ETF that I bought was VWRA and It is listed under Europe as it doesn’t trade on the American Market.

https://www.interactivebrokers.com/en/pricing/commissions-stocks-europe.php

Click on the above link and scroll down to Europe.