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Stocks Part XXI: Investing With Vanguard

For Europeans
by jlcollinsnh 141 Comments
Who knew?
Certainly not I.
This all started when I wrote a series of letters to my daughter about financial stuff I felt was
important for her to understand. Stuff she wasnt yet ready to or interested in hearing. (Im stil
waiting, Sweetie.)
I mentioned this to a couple of friends and, at their request, shared the letters. They encourage
me to put them on a blog as posts so my family and the rest of my friends might read it. An
so they could more easily pass it on to theirs. One of them pointed me to WordPress.
I simply never dreamed an audience would develop beyond my little circle of friends and famil
Thats not false modesty. I quite literally had no idea blogs could or did have larger readership
When I started this one, I barely knew what a blog was. In fact, the first blog post I ever read w
my own. Then I began reading James Altucher, one of the first people to encourage me on this
path. It was probably six months or so later before I stumbled on ERE. And then MMM
then, and then, and then
So as you might imagine, it really rather stunned me to see jlcollinsnh develop an

international readership. Boy howdy! Given my love of travel, this remains quite the thrill.
first noticed it about ten months in and shared my discovery with the post Where in the World
are You.
So far this month, there have been 85,706 page views and of those, fully 12,006 are outside the
USA. Collectively, the countries of Europe are the second largest market.
But for these readers, the information here tended to come up short. The problem is, the
investment tools we have so easily available here in the USA are either very costly or simply
unavailable to the rest of the world. And since I know nothing about the specifics of what is
available in the rest of the world, other than the core principles of investing described in this
Stock Series, there was little here to help.
Not to say I didnt try. The second half of the post What if you cant buy Vanguard addresses it
bit. And I am very pleased to see the comments section of that post has become a sort of Forum
where my international readers have posted their own experiences and questions.
Fortunately, Mrs. EconoWiser of the Netherlands is here to help. As you might guess from the
name of her blog, she writes about living and spending efficiently. But around about March of
last year she began reading jlcollinsnh. And she noticed the woeful lack of specific guidance a
to how to implement the ideas here. But rather than throw up her hands, she set about figuring
it out.
Shes done a brilliant job and, if her name

sounds familiar, it might just be because Ive
had the frequent occasion to link to several o
her posts in helping my European readers.
Her research and insights are that impressiv
So much so, in fact, Ive come to think of
EconoWiser as the European division of
jlcollinsnh International. Egotistical and
presumptuous on my part perhaps, but there
you have it.
With all this in mind, about a month ago I

asked her to write this guest post summarizing her low-cost index investing strategies for
Europeans.
If you live in Europe, this is a must read.
If you live in another part of the world, maybe it will inspire you to follow her lead and
figure it out for where you are. (And Ill have another guest poster!)
If you live here in the USA, read it and appreciate just how easy and inexpensive the
options we have here are.
But wherever in the world you are: Enjoy!.

Its an honour to write a guest post for this wonderful blog. My uncle J., as I like to
affectionately call him, has taught me so many things about life and index investing. As a newb
on the index investing topic I decided to check out how this works for Europeans. As Im a
Dutchie myself, I was eager to find out how to make this index investing miracle work for the
Dutch and consequently my fellow Europeans. This post will provide a rather general overview
of my findings so far.
The Strategy
You should be familiar with Js strategy if youve read the stock series on this magnificent blog
(If you havent, you should read the series first and read this blog post afterwards) A summary
1. If you can do business with Vanguard, do so as they are the only investment company ou
there that puts the interests of their customers first
2. Buy broad-based index funds
3. Costs matter hugely
4. Keep it simple
And Ive got some good news for you: we can apply the jlcollinsnh index investing strategy in
Europe as well! Yay!
Investing With Vanguard In Euros
Unfortunately, you cant open an account with Vanguard in Europe as a private investor. Unles
you have 500,000 ready to invest (in which case: well done you!), youll have to go through a
broker. Yes, lets envy the American index investors who are able to open an account with
Vanguard directly for a moment here and then let it go.
Vanguard Europe currently holds offices in seven European countries. You can contact your
Vanguard office in: Denmark, France, Germany, The Netherlands, Sweden, Switzerland
United Kingdom. Staff are very friendly and helpful, you can ask all sorts of questions about
their products. However, they wont give you investment advice. If Vanguard doesnt hold an
office in your country I suggest you go to the Vanguard global portal and click on the United
Kingdom. Click on individual investors and then exchange-traded funds or mutual funds (I wil
explain the difference shortly). You will find all the information youll need. I am referring to
the British Vanguard website ,even though all European Vanguard website content is in Englis
Disclaimer: please bear in mind that when investing with Vanguard Europe you are NOT
investing with the American cooperative non-profit organisation. Vanguard Europe is an
independent subsidiary. In my humble opinion their philosophy matches the American parent
company exactly. However, it is not a cooperative non-profit organisation in and of itself.
Lets do something useful with our euros instead. http://www.megagadgets.nl/en/euro-toilet

papier.html
Vanguard Mutual Funds Vs. Vanguard ETFs
First things first, you need to decide whether you want to invest in mutual funds or ETFs
(Exchange Traded Funds). In this article I will assume that you want to invest in Vanguard
ETFs. The reason for my assumption is that ETFs are index funds that trade on the major stock
exchanges and are traded like stocks. Mutual funds might be a bit more difficult to buy for som
Europeans. Vanguard ETFs have lower expense ratios compared to the Vanguard mutual fund
They can be bought and sold throughout the day instead of once a day at closing prices. As we
not have IRAs or 401(k) plans to take into consideration, ETFs are a great option for European
investors. ETFs pay out all dividends which you will need to reinvest yourself, whereas a mutu
fund automatically reinvests the dividend for you. However, transaction costs might be lower f
mutual funds if you can obtain these through a broker specialised in index investing.
An overview:
Vanguard Mutual Funds Vanguard ETFs

Higher total expense ratio Lower total expense ratio
Can be bought and sold once a day at closing Can be bought and sold throughout the day like
prices regular stocks
Might be a bit more difficult to buy Accessible to all Europeans
Option to automatically reinvest dividend Dividend is paid out, which you might want to
reinvest yourself
Transaction costs might be lower through a Regular broker fees apply, however there are
broker specialized in index investing cheap ones out there
Very interesting for smaller amounts of The higher the amount you want to invest, the
money on a monthly basis due to brokerage more interesting concerning brokerage
commissions (if available) commissions, great for lump sums
In this blog post Ill focus on stocks-only. The same strategy applies to bonds (and REITs if
youre investing in dollars).
Heres the Vanguard ETF selection you, as a European, are able to choose from:
Vanguard exchange-traded funds TER Available ISIN

currencies
Vanguard FTSE All-World UCITS ETF 0.25%USD/GBP/EUR/CHF IE00B3RBWM
Vanguard FTSE All-World High Dividend Yield 0.29%USD/GBP/EUR/CHF IE00B8GKDB1

UCITS ETF
Vanguard FTSE Dev. Asia Pac. Ex Japan ETF 0.22%USD/GBP/EUR/CHF IE00B9F5YL18
Vanguard FTSE Developed Europe UCITS ETF 0.15% GBP/EUR/CHF IE00B945VV12
Vanguard FTSE Emerging Markets ETF 0.29%USD/GBP/EUR/CHF IE00B3VVMM
Vanguard FTSE Japan UCITS ETF 0.19% USD/GBP/EUR/CHF IE00B95PGT31

Vanguard S&P500 ETF 0.09%USD/GBP/EUR/CHF IE00B3XXRP0
Vanguard FTSE 100 UCITS ETF 0.10% GBP IE00B810Q511
Vanguard Government Bond UCITS ETF 0.12% GBP IE00B42WWV
All hyperlinks link to U.K. factsheets. However, the facts are similar for all European countries
(even if there isnt a Vanguard office in your country).
Obviously, were investing in a European currency here. I will discuss investing with dollars lat
on in this article.
Buy Broad Based Index Funds
If you check out the different prospectuses youll quickly come to realise that theres a one-stop
shopping option for all your diversification needs. That would be the Vanguard FTSE All-Worl
ETF at 0.25% TER. Through this fund youre investing in 2,900 holdings in nearly 47 countrie
including both developed and emerging markets. The fund covers more than 90% of the globa
investable market capitalisation. This way theres no need to mix U.S., European and emerging
markets yourself as the fund has already done this for you. Unfortunately, it doesnt include
small cap. Im not telling you what to invest in here, do whatever floats your (Vanguard) boat.
Floating boat. Not photo shopped, the water in Greece is just that clear.
http://www.mymodernmet.com/profiles/blogs/magical-boat-floating-on-water
Heres the lowdown on the fund:
Vanguard FTSE All-World UCITS ETF
ISIN IE00B3RBWM25
Greater Europe 27.36%

Greater America52.25%
Greater Asia 20.39%
TER 0.25%
Find a broker costs matter hugely
Now that youve checked out the different options in mutual funds and ETFs youre going to fin
yourself a broker. Youll need to invest a couple of hours of your time to find out which one sui
your needs best. Google is your friend. Obviously, costs are very important. In The Netherland
we have many wonderful online brokers now, which offer accounts at rock bottom costs and w
only charge transaction fees. Check out and compare transaction fees, custody fees, membersh
fees, and service fees. If youre not charged for opening an account, why not open several
accounts with different brokers so that you can also check out their interface and what not? Oh
and phone them. Ask them lots and lots of questions.
Before We KISS, Theres The Tax Thing
Theres this thing called the dividend leakage, and its a pain in the backside for investors.
Unfortunately, its a significant cost for investors. As most of the European Vanguard funds are
domiciled in Ireland you need to be aware of the Irish double taxation agreement. A (non-Irish
European investor is charged dividend withholding tax by the Irish government. Whereas the
Irish investor can claim this dividend withholding tax back from their government, the rest of
(in most cases) cant. You can ask your national tax department on your countrys dividend tax
treaty with Ireland. The EU does not approve of this tax, but there is nothing you can do about
it. You might want to check out investing with Vanguard in dollars. Hey, what a coincidence. I
go through that option in a minute. If not, youre just going to have to suck this one up.
Lets Keep It Simple, Sweetheart!
If you follow these steps you will have identified which fund(s) you are willing to throw your
cash at (on a monthly basis?), have found the best and cheapest broker because costs matter
hugely and you will have accepted the fact that there is a dividend leakage (or have tried to wor
your way around itor have given up on investing after alldont!).
Yes, butwhat about the dollar version? Oh, so you dont want to KISS just yet? Okay, here we
go!
No thanks. http://www.theguardian.com/music/2011/aug/16/michael-jackson-kiss-tribute-
concert
Investing With Vanguard In Dollars
Again, you want to buy broad based index funds. Of the many Vanguard funds you will be able
to choose from through your broker (which well select later on) I chose two different options t
illustrate how to go about investing with Vanguard in dollars. You can also buy bonds and REI
through your broker specialised in international stocks. However, for simplicitys sake Im
referring to stocks-only here. Oh, and make sure you check out Morningstar when comparing
funds.
Vanguard Total Stock Market ETFVanguard Total World Stock Index ETF
Ticker VTI VT
ISIN US9229087690 US9220427424
U.S. 98.35% 53.38%
Greater Europe 1.56% 26.63%

Greater Asia 0.10% 19.99%
Amount of stocks3609 5109
TER 0.05% 0.18%
Option number one is the Vanguard Total Stock Market ETF, which is as close to Js favoured
VTSAX as we can get. However, as a European investor youd be investing almost entirely in
U.S. stocks. Option number two is the Vanguard Total World Stock Index ETF. This will give
you a one-stop shopping experience and all the diversification youll need over all markets.
(Also recommended by Malkiel and Ellis in The Elements Of Investing, p. 122)
Again, Find Your Broker
Youll want to do another research on finding the best and cheapest broker for your dollar
stocks. It could just so happen that the best and cheapest broker for your transactions in euros
does not fit the requirements for your dollar transactions. Google is your friend, once again.
Check out and compare transaction fees, currency exchange fees (very important in this case!)
custody fees, membership fees, and service fees. You also want to inquire after the brokers
custodian, which might not find itself in your home country. This shouldnt be a problem, you
just want to know where your stocks are if ever you need to reclaim them if your broker goes
bankrupt.
Will LTC Bankrupt the Nation?

Not Another Tax Thingy?!
Yep, another tax thingy. See, the U.S. government will charge up to 30% dividend withholding
tax. However, that depends on your countrys dividend tax treaty with the U.S. My country has
cool deal with the U.S. and thus my dividends will be charged with a 15% withholding tax
instead of 30%. The remaining 15% withholding tax can be reclaimed by filling in a W-8BEN
form. You should renew this every three years. If youve found yourself a broker specialised in
investing in dollars, theyll probably know how to handle this. Ask them about the form. My
broker will automatically send me a new form every three years which I can sign online. No
biggie. You could also contact your national tax department in order to require after the rules
that apply to your specific situation.
Currency Risk
You probably guessed that youll need dollars in order to invest in dollars. Its important that
you find a broker who will exchange your euros for dollars at rock bottom costs. However, you
also need to bear currency risk in mind. As you live in Europe, youll probably want to cash out
in euros someday. If the dollar has devaluated strongly against the euro at that point in time,
you might be disappointed. Consequently, if the dollar thrives and the euro doesnt, you could
be in for a windfall. Who knows? Maybe its also not all bad news when thinking about long-
term investors. Come to think of it, when investing in euros your cash is also transferred into
dollars but you just dont see that happening. The base currency of the index will be in dollars
anyway. Investing in euros in international stocks does not totally protect you against currency
risk either.
Scary stuff, right? Now, theres a way to sort of insure yourself against this currency risk. Its
called hedging, it doesnt come cheap (thats an understatement) and my guess is uncle J.
probably wont be a huge fan either. It sort of comes down to you adding euros to your
brokerage account. Instead of transferring your euros into dollars, youre borrowing dollars
against a certain rate. Youd then be paying interest on that loan. As were long-term investors
this would destroy our profits. So lets just forget about it. Ive mentioned it, and thats that.
http://www.colordarcy.com/wordpress/currency-risk-%E2%80%93-should-property-
investors-worry/1919/
KISS
Now that you have investigated the different options for investing with Vanguard in euros and
dollars you can make your own risk analysis. Take into account things such as currency risk,
costs, dividend leakage and broker bankruptcy risk (custodian is important here). Choose your
strategy and stay the course for the next thirty odd years or so.
Youve solved the index investing in euros puzzle! http://www.financialdirector.co.uk/financia

director/research/2201152/rel-working-capital-survey-2012
Or the dollar version! http://www.bestsmallbizhelp.com/2011/08/small-business-funding-tip
borrowing-from-banks/dollar-puzzle/
Good luck!
Love,
Mrs EconoWiser
Disclaimer: I am not a professional investor or financial adviser nor do I claim to be one. You
are solely responsible for your own financial investment choices. I am not responsible for
inaccurate information in this blog post. I am merely sharing ideas and findings of my very
amateurish investigation in index investing for Europeans.
Addendum: Want to translate this blog from English to another language? Google Translate
makes it easy. Just click on the link, type in jlcollinsnh.com and choose the language you prefe
Click on the link for that language and youre done!
NOTE:
Be sure to read the comments to this post. There is a wealth of additional information in them.
My thanks to those who have contributed!
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Comments
Rob says
January 27, 2014 at 6:22 pm
Thanks Mrs EconoWiser and jlc for the article. All good stuff, though UK readers might wan
to note the situation for us is better than the Dutch situation in the article. Some points to
note:
Youll need 100k per fund to invest directly with Vanguard (rules most of us out, but still
lower than 500k for rest of EU mention in the article!).
Therefore most will need to a broker the excellent Monevator has a cost-based
comparison table indicating which brokers have Vanguard mutual funds.
If you stick with mutual funds theres no witholding tax. Likewise for UK or Irish listed
ETFs*, but you pay trading fees.
Generally youll want to stick with an ISA no capital gains or dividend taxes (for the non-
UK readers, an ISA is a type of tax-free account with an annual contribution limit).
* Those really interested in such things (!) should check out this article, but personally I stick
with the mutual funds for an easy life.
Reply
Mrs EconoWiser says

January 28, 2014 at 8:15 am
You lucky UK bastards!
Reply
theFIREstarter says
February 13, 2014 at 2:05 pm
Great article Mrs EconoWiser!

There isnt much info about for European and UK vanguard investors out there (on
blogs at least) so good job.
@Rob what funds are you investing in just out of interest? Ive just opened up an ISA
with best invest and put a small chunk into the 80% stocks life strategy fund. Would be
very interested to see what other UK investors are picking, and with what broker (and
why)
Cheers!
Reply
Mrs EconoWiser says

February 17, 2014 at 3:10 am
Ah, thanks!
Reply
Adam says
December 9, 2014 at 12:04 am
Hi Rob / Mrs EconoWiser / others,
Im UK-based and looking into the Vanguard funds rather than ETFs too (the funds
being cheaper than the ETF with its 0.25% charge). Have you come up with a good way
of emulating the All World ETF with funds? I was thinking something like:
FTSE U.K. All Share Index Unit Trust TER 0.08% more than 50% of this
FTSE Developed World ex-U.K. Equity Index Fund TER 0.15% a lot of this
OR
U.S. Equity Index Fund (S&P Total Market) TER 0.10% for the lower TER but probably
overlaps will the FTSE All share fund more.
And then maybe a little of the MSCI Small Cap and/or Emerging Market funds:
Emerging Markets Stock Index Fund TER 0.27%
Global Small-Cap Index Fund TER TER 0.37%
The last two are domiciled in Ireland, Im not sure what effect that has.
Im considering a simple combination of the FTSE All Share and U.S. Equity Index
funds although Ive not decided on a good ratio yet.
This Monevator post also lists some interesting combinations (updated in 2013 despite
the URL):
http://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/
What are your thoughts?
Reply
Adam says
January 23, 2015 at 11:19 pm
At Jims request Im posting a follow-up.
I decided to stick to funds with a focus on keeping costs down. The UK Index
tracker is the cheapest, but I didnt think it was diverse enough to warrant being
50% of the investment as I planned above, so I eventually decided on this
allocation:
70% Vanguard US Equity Index Fund Acc (0.10%)
15% Vanguard FTSE All Share Index Fund Acc (0.08%)
10% Vanguard FTSE Dvp Europe ex UK Eq Index Fund Acc (0.12%)
05% Vanguard Japan Stock Index Fund GBP Acc (0.23%)
By choosing these funds over the World ETF, Im sacrificing some diversification
over keeping the costs down. The US weighting is higher than the real world
market (about 50%), but I couldnt resist the low cost (plus, Jims comments
regarding 100% US portfolios for US residents had some influence). Likewise for
the UK having such a high percentage its just because its so cheap. There is also
a Pacific Ex-Japan fund that I like the look of, except it also costs 0.23%, and I
decided Im already paying enough diversification penalty for the Japan fund.
I chose an ISA account at Charles Stanley Direct as the broker, who at the moment
dont charge for fund trading, but charge a 0.25% platform fee. The best place to
invest depends on how much you will have invested, and whether itll be ETFs or
Funds, the Monevator broker comparison posted by Rob above is kept up to date
and is very useful.
One thing Im curious about, although nowhere near having to worry about yet, is
once a fund reaches 100,000 you can go direct with Vanguard. But they currently
dont offer ISA accounts and Ive wondered about, but not calculated, the
implications of being taxed vs. not having to pay platform fees. Ive not been able
to find anybody discuss this specific case online so far.
Anyway Im just getting started so I may adjust as I learn, but thought Id post my
decision here for any UK readers thinking of doing something similar.
Reply
jlcollinsnh says
January 23, 2015 at 11:25 pm
Thanks, Adam, for the follow-up report.

Great info to add to the conversation!
Reply
Gwynster says
March 9, 2017 at 9:09 pm
Adam,
If you are an expat living in Japan Andrew Hallam is worth looking up.
Investing your money offshore, if eligible could save you on capital gains.
Depends how long you will be away for I suppose.
Just a thought.
theFIREstarter says
Hey Adam
Sounds like a pretty good allocation if a little US heavy. Im no expert but is

there not some sort of currency risk with that, I vaguely remember reading
something on Monevator about it, might be worth doing a bit more digging
before fully committing to such a large US allocation (or maybe Jim can
clarify There is every chance I am spouting manure).
ISAs vs lower Vanguard fees is a non contest for me, although again Ive never
read anything on it or done the proper calculations myself
Im simply going on the fact that tax on dividends and capital gains is order of
magnitudes higher than platform fees (~20% vs ~0.2%) so surely you are
much better off being within a tax wrapper at all costs, whether that be SIPP
or ISA.
Saying that, there is a tax free allowance on CGT and Divs per year isnt there,
so maybe the optimum strategy would be to have some portion of a larger
portfolio directly with Vanguard, but only once youve maxed out your ISA
and SIPP allowance. Were talking mega bucks income levels here so it is
something Ill never have to think about that is for sure
Reply
jlcollinsnh says
January 25, 2015 at 11:04 pm
Hi FireS
Good point on the currency risk. Im not familiar with the Vanguard US
Equity Index Fund as available in the UK, assuming it is dollar based,
having 70% in it does tie Adams fortunes to the US dollar rather than the
Pound.
Being US based myself, I tend not to see this as an issue. But were the
roles reversed and my investments tied me to the Pound it would give me
pause.
Of course, while the dollar has been exceptionally strong of late, no one
really knows how it will fair against the Pound going forward. And thats
the risk.
However, heres another way to think about it. In owning Vanguard US

Equity Index Fund you own a piece of lots of business and your fortunes
will be tied to their performance over time. Pounds and dollars are
simply measuring sticks, kinda like kilos and pounds.
At the end of the day, those businesses will have whatever value their
enterprising success creates. What measure you use for it seems to me
secondary.
Not being one, Im not sure how economists would think of this concept.
But perhaps it is something to consider.
Adam says
Youre too late! I already invested. Hehe. In terms of currency risk, its
true its a risk but meh, Id rather have the diversification provided by the
international stocks than only investing in the UK in GBP. If you think
about it, *anything* outside the UK is currency risk, and if the pound is
strong when you want to cash-in, then you shouldve invested stronger in
the UK anyway because thats where the value is. Plus, Im not bound to a
country I guess if youve got the cash most places will have you so you
can go to where the currency benefits you if you have to.
Im currently living in Japan and earning my salary in Yen. The Yen is

weak, the pound is strong. So Im doing it backwards, but if I worried too
much about the risk I wouldnt have taken the opportunity to get the life
experience, which is a far greater loss than a percentage of my net worth!
Similar with investing, I had already spent far too long in analysis-
paralysis so at least I got started with something that looks not-too-bad.
Maybe Im being a bit gung-ho but Im just starting and will adjust as I
learn, so good to think about.
In terms of tax, the reason Im not sure is that tax is on gains and income
whereas the platform charges are on the entire portfolio. Given how
unintuitive tax and interest are, Im not making any assumptions until
Ive ran the numbers and had them double-checked. Ive got until I own
more than 100k in a single Vanguard fund to figure that out
SR says
In the country I live in (Finland) I am able to buy a European Index fund with an expense
ratio of 0,45% and a North American Index fund with an expense ratio of 0,43%. For both,
youd pay an additional 0,1% when you buy the fund and 0,1% when you sell it. Divindends
are automatically reinvested. I invest quite small amounts every month. Would it be worth it
for me to switch to buying Vanguard mutual funds (or ETFs) through the UK site?
Reply
Mrs EconoWiser says

I dont know whether the same tax rules would apply to you as a non-UK resident?
Youll have to figure that one out first. Plus, you can only invest via Vanguard UK
directly if you have at least 100.000 pounds to invest
Reply
Leo says
Many, many thanks for that blogpost!

Best wishes from Austria!
Leo
Reply
jlcollinsnh says
Our pleasure, Leo
Thanks for checking in!
Reply
Faw says
January 29, 2014 at 10:13 am
Heya!
Its funny I think, as if the universe is telling me to do something. Ive always been frugal for
some reason and its not something I picked up from home. Even as a kid I was saving and
investing of sorts and realized saving was a good thing.
Coming across MMM and this blog a few months back I was really inspired to invest in
Vanguard and I found out about the ETFs. I live in Sweden so I cant really invest 500K
being the student that I am.
However I started investing every 3 months with Vanguard because of the transaction fees
and Im really glad I did. In addition to spreading my investments I feel like I can take a
bigger part of what is written here to heart. Sweden, too, has the arrangement for the 30%
tax back (15+15) so it comes in hand quite nicely.
However were very lucky to have a index fund with 0% fee that follows the SIX30RX. But
thank you for enlightening others and helping me pursue a friend to invest with Vanguard
too. I told him about it just last week and like a sign from above I get this!
Our fee is currently 0,05% for the Total Market ETF and Ill post a link for anyone Swedish
that might be reading this blog down below:
https://www.avanza.se/borshandlade-fonder/om-fonden.html/232136/vanguard-total-
stock-market-index-fund-etf
Thank you for the well written article and tips and I wish you the best in your future
endeavors!
Sincerely,
Faw
Reply
Mrs EconoWiser says

Hi Faw,
Thanks!
Lucky you, those fees sound awesome!
Reply
Simon P says
September 19, 2016 at 6:04 am
Two years after the comment, but in case other Swedes are reading this: As a Swede I
dont recommend investing with Vanguard. The costs just arent worth it. The sensible
Swedish investor will use an ISK account, since the tax advantages are major. Sure, if
you buy and hold and dont sell for something like 40 years, you might get an advantage
with a regular account, but for most people an ISK is the better deal.
However, an ISK cannot be denominated in Euros or Dollars. This means that when
youre buying an ETF denominated in Euros, youre paying an exchange fee. Then the
ETF pays a dividend, in Euros. You pay an exchange fee to convert it to SEK. Then you
reinvest that dividend, and pay an exchange fee again. Not to mention the money you
lose on the dividend tax. Even if you get it back, its still perhaps a year that this money
is out of the market before you get it back. That creates a drag.
Personally, I only invest in SEK denominated funds. as yong as you dont want to do
factor investing, we have plenty of good funds. I use Avanza Zero (0% ER),
Lnsfrskringar global index (0.2% ER) and Lnsfrskringar tillvxtmarknader index
(0.4% ER). SEK-weighted, I pay an ER of 0.16%, which is fine, and Im sure I save more
than if Id go for foreign ETF:s with lower ER:s.
Reply
Sensim says
September 25, 2016 at 12:14 pm
@Simon P
Do you know if there is a way to see how big the exchange fees are (for the ETF:s)
using Avanza or Nordnet?
I still would like to do the calculations before I rule out the obviously very good
Vanguard broad indexes.
Reply
Simon P says
Last I checked the spread was 0.5% on Avanza and Nordnet, meaning you pay
0.25% buying and another 0.25% selling. Since dividends are exchanged
twice, remove 0.5% from all dividend payments.
Actually, you might be right that its still worth it. Do share your calculations!
Reply
David says
Wow talk about perfect timing for this post.
.Ive been reading your blog for the last week. I am 30 years old, live in the UK, and have
120,000 in the bank, which is sitting doing nothing.
My friends and family are all telling me to buy a house; but for me the figures dont add up. I
currently rent an apartment for 550 a month; this price includes all rates and building
maintenance fees, and furniture. To buy an equivalent apartment would cost at least
130,000, and Id have to furnish it, and pay over 200 a month in combined rates,
maintenance fees, and other owner-related-costs.
Am I mad in thinking that the figures dont add up? Im seriously considering using
100,000 to invest in Vanguard directly (i.e. at lowest cost), and still have a 20,000 nest
egg. I currently live on about 60% of my wages, so can increase my savings every month.
Any opinions on this plan?.I guess the question is, which Vanguard fund to invest in?
David
Reply
jlcollinsnh says
Good to hear it, David
and glad you found your way here.
Since you are in the UK, Ill let Mrs.EW suggest the right Vanguard fund. But as for the
house
It is really pretty easy to run the numbers to see how a house stacks up against the
alternative. Heres how: http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-
home-opportunity-cost-and-running-some-numbers/
But even if the numbers look good for buying, consider these cautions first:
http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/
Good luck!
Reply
Mrs EconoWiser says

Dear David,
Well done you!
You might want to click on Robs suggested links.

As a non-UK resident, this one is difficult for me to answer.
Looking at the mutual funds (no withholding tax for you according to Rob) you might
consider a great percentage of the SRI Global Stock Fund (developed world) combined
with a small percentage of the Global Small-Cap Index fund and a small percentage of
the Emerging Markets Stock Index Fund in order to replicate the Total World Stock
ETF holdings (my absolute favourite, however only available in dollars). You should
also consider whether youd already want to buy bonds or not.
In the ETF department my absolute favourite is the FTSE All-World UCITS ETF, since
it is a one-stop shopping option for investors in Europe. Its not as diversified as the
Total World Stock ETF in dollars (5109 stocks), but youre in diversified in the US 53%,
Greater Europe 27% and Greater Asia (including Emerging) 20% investing in 2575
stocks.
Hope this helps?
Reply
Rob says
According to their site, going with Vanguard UK direct is for funds only. If you
want ETFs youll need to go via a broker (be careful to get one who doesnt charge
for holding ETFs, as some do).
Mrs EconoWisers choice of ETF VWRL is a good one if youre going the ETF
route. The closest fund equivalent is the LifeStrategy range which is similarly
globally diversified. Its a teensy bit more expensive than buying separate funds or
ETFs (annual charges, or OCF, of 0.29%), but it rebalances itself so is zero
maintenance (keeps roughly fixed percentages in each market as they fluctuate in
value, rather than doing it yourself with separate funds). If youre adding more
each month, then funds are usually better as they dont generally have transaction
fees like ETFs do.
VWRL is 100% in stocks. The LifeStrategy funds have a varying percentage in
stocks, 20-100%, depending on which version you pick (the rest being in bonds).
Higher percentage in stocks is considered higher risk with potentially higher
returns. Given youre age, Id stick with the 60, 80 or 100% in stocks depending on
your attitude to risk.
LifeStrategy funds are more heavily in UK stocks than VWRL. The advantage for
UK residents is reduced currency risk (the risk goes up in value, making the
majority of your portfolio, not priced in , worth less); the disadvantage (if you see
it that way) is youre more heavily exposed to the UK market.
One final thing to note is that if you go direct with Vanguard you cant use any tax
wrappers like an ISA youll be liable for capital gains tax when you sell and
income tax on dividends. If youre on higher or additional rate income tax this is a
big deal. If thats the case, consider using an ISA with a broker as well, transferring
up to the ISA limit each tax year from your taxable account.
Good luck and hope all that helps!
Reply
Mrs EconoWiser says

Ah, thanks Rob for your elaborate answer.
I noticed the LifeStrategy funds as well, but didnt know what to make of them
just yet. Thanks for your insight!
Reply
David says
Wow, thanks to all of you for your replies; plenty of food for thought
here. The tax thing is a big deal; Im not a higher rate tax payer yet but
Im hoping to be in the next few years; so it would appear that the best
idea would be to use my full ISA allowance (11,500) every year I guess.
Since Id be investing for the long term (were talking decades); I see over
exposure to the UK market as a disadvantage Id like exposure to as
large a number of companies in as many developed/emerging countries
as possible. Basically Id like to convert all my money from fiat currency
to real stuff; and the best way I can see to do that is as wide a range of
stocks as possible.
Rob; do you have any UK broker recommendations?
Rob says
Re: UK brokers bit a minefield at the moment. New regulations (called

the RDR) are coming in to force which aim to make costs more
transparent, but as a consequence brokers are having to change their
charges. Most have already changed but there are debates about the
sustainability of some of the cheaper brokers. If only life were simple eh!
For an at-a-glance summary of costs, check out the colour coded tables
here. Note that it makes assumptions about holding vs funds ETFs,
number of trades etc., but is good for getting a rough idea. A more
detailed listing is available at Monevator, which is the best source for UK
investing info IMO (check their search engine if you have specific
investing questions, very handy).
Mrs EconoWiser says
Yeah, probably the same new EU rules that are enforced here in The
Netherlands as well. Costs have to be completely transparent now.
theFIREstarter says
Rob great reply with extra info there!

Plus one for Monevator as well, that is a brilliant resource for UK investors
Reply
John Smith says

Amazing blog!
Quick question, As a UK investor can I simply do as you do and say that all I need for my
diversification needs is the S&P500 ETF. This has a TER of 0.09% whereas the world ETF is
0.25%.
What are the risks? (People have spoken about currency) I am not interested in bonds
mainly as at 25 this is money i have no need of now and will not be touching for 15 years
(hopefully my retirement date), also I want the most growth and as a teacher I am lucky
enough to also have a defined benefit pension which will cover my basic needs in retirement
even if I lost everything I had contributed to stocks.
Many thanks for any replies and for the excellent research. I have shown your website to my
students, we have had some excellent discussions on money and how we need to make it
work for us.
Best wishes
John
Reply
Mrs EconoWiser says

Hi John,
I am not a fan of only investing in the S&P500, especially for non-U.S. citizens. Youd be
investing in 500 American companies, and thats that. J. recommends VTSAX, which
diversifies his portfolio into investing in most publicly traded companies in the U.S. and
thats more than 3.000 of them.
As were in Europe, I decided not to invest in American companies only. Thats why I
love funds like the Vanguard Total World Stock ETF in dollars or the Vanguard All-
World ETF in euros.
It all depends on your world view, really.
Hope this helps!
Reply
John Smith says

Many thanks for the reply,
I thought that VTSAX was 70% made up of the SP500. Does the extra 30% make a
real difference?
The cost issue is quite important as 0.25 is nearly 3x as expensive as the sp500 etf
and as we know costs matter over time. Yet perhaps the extra diversity it provides
is worth it?
Best wishes
John
Reply
Mrs EconoWiser says

Hi John,
Yes, I do think it makes a real difference. What do you think, J.?
However, if you feel more comfortable with the S&P500 you should stick to
that. Whatever floats your boat. Its just not my preference.
You might want to check out this article by MMM:

http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-
the-stock-market/
(I am assuming youve read J.s stock series a couple of times already?)
Hope this helps!
Reply
jlcollinsnh says
Hi John
and welcome! Glad the blog(s) are helping you and your students.
You are correct in that VTSAX is ~70% large cap = to the S&P500. It also
slightly out performs the S&P500 over time due to the ~30 in mid-small caps
where frequently stranger growth potential lies.
You are also very correct to recognize the importance of fees.
If I understand correctly, the world ETF has a TER .16 higher than the
S&P500? If thats the case the question becomes is the broader world
coverage likely to outperform?
Thats very tough to predict, but clearly the broader coverage provides more
diversification.
No easy or right/wrong answers here, but were it my money Id likely go with

with the world ETF.
Good luck!
Reply
Mrs EconoWiser says

Me too, and thats exactly what Im doing with my money!

SU says
March 7, 2014 at 4:31 pm
Im an Australian, currently earning (but not living its complicated) in the UK. Ive spent
several hours on this blog and love how straightforward the advice is now I am trying to
apply it and aaagh! Im living in the Middle East so well leave that part out of it; Im just
trying to choose between investing in the UK or Australia. Vanguard Australia offers retail
managed funds starting at $5000
(https://www.vanguardinvestments.com.au/retail/ret/investments/managed-funds-
retail.jsp#fundstab), which is more manageable than the UKs GBP100,000 threshold. The
most obvious additional cost is the (relatively small) cost of repatriating the money to
Australia initially, but having read Mrs EconoWisers warnings about currency risk, costs,
dividend leakage and broker bankruptcy risk heading to a stock exchange and tax system I
am familiar with sounds like a bargain. I dont need the money in the foreseeable future and
in either case I would choose a Global equity fund. I have a property in Australia, with about
50% of the mortgage paid so I already have exposure to the Australian economy. My tax
liabilities in both countries are currently minimal, and Ill have about GBP 11,000 p.a. to
invest. Id be interested to hear others opinions about which country to base my
investments in (and no, I dont know which one Ill end up living in long term possibly
neither of them).
Secondly, if I did decide to keep the money in the UK, then is there any reason to choose
Vanguard ETFs over any of the other low cost options mentioned in this article:
http://www.morningstar.co.uk/uk/news/121355/price-competition-in-etf-market.aspx
Thanks!
SU
Reply
EconoWiser says
March 7, 2014 at 11:52 pm
Hi SU,
Wow! Thats a very interesting situation! However, I feel that my knowledge is not
extensive enough to help you out here.
Any Australians and Brits around here to help out? Rob & David?
Reply
FIRE Aussies says

March 8, 2014 at 4:44 am
We are also Australians & are not sure which Vanguard fund to choose, which is
closest to VTSAX? We have pretty much read the whole blog now! Wed love some
specific advice for Aussies.
From the link from SU above, which we had already been looking at, it looks like
we should choose the Vanguard Index International Shares Fund to match VTSAX
is that correct?
We hope to retire in 9 yrs @ 45, but are flexible with that, so a rough & wild ride is
fine! We also have real estate investments and a paid off primary residence (these
we had acquired before reading your blogwe may have made different decisions a
few years ago if wed had this to read, but are fortunate to fall into a particularly
generous government incentive scheme on rental houses which probably puts us a
little ahead!)
Thanks JL for how much effort you put into this blog, we found our way via MMM.
We have always saved a good bit of what we earn, now we are learning what to do
with it!! Your time and advice is greatly appreciated!
Reply
EconoWiser says
March 9, 2014 at 2:29 pm
Well done you!
Id say something that imitates/comes close to/or is VT (Vanguard Total

World Stock) would be your best option. About 50% in America, 20-25%
Europe, 20-25% Australiasia (developed) and a tiny bit of emerging.
Reply
FIRE Aussies says

March 12, 2014 at 2:27 am
Thanks for your reply!
I have done some more research. I can buy VTI (ETF version of VTSAX)
but I would need to buy through a share trading account through a
brokerage. That means $15 per trade but no other account keeping fees.
That will, obviously, increase my costs but as far as I an work out, in
Australia we cant deal directly with vanguard. Please correct me if Im
wrong anyone?
If I am putting in $12k per year, $1k 12 times, $15 fee each time that is
$180/$12,000 which adds to costs but not a huge percentage & the
0.05% vanguard fee is the lowest option here.
I would appreciate any feedback.
Thanks!
EconoWiser says
March 12, 2014 at 10:24 am
Here in Europe were stuck with the same problem. We cant invest with
Vanguard directly eithera VT transaction would amount to about the
same transaction costs for me. However, I do feel that the TER fees are
much more important to consider than transaction fees. Yes.fifteen
dollars hurt.but a much higher TER will hurt even more!
SU says
March 12, 2014 at 2:58 pm
Westpac has an offer at the moment, if you feel like doing some
paperwork in exchange for saving the $15 per transaction:
http://wib.westpac.com.au/onlineinvesting/experienced/?
CampaignCode=600WBC&FV=WPROD
BUT its not clear that you have to use a broker if you go with the
managed fund rather than ETF:
https://www.vanguardinvestments.com.au/retail/ret/investing-with-
us/transacting-with-us.jsp
I think you should have a look at the FAQs about transacting with
Vanguard. It sounds like you would be better off with a Retail Managed
Fund, not an ETF. Within that, theres an interesting decision to be made
about whether you want to go 100% into the global fund, which has no
Australian shares, or go partly global, partly ASX 300. Given the
volatility of the exchange rate, my (not-at-all-researched) opinion is
some Australian shares would be a good hedge.
Sebastien says
March 25, 2014 at 10:30 am
Thank you EconoWiser for this very good overview of the options for non-US investors.
I am myself of Belgian origin, currently living and working in the Middle East. I have started
reading MMM and jlcollinsh about a year ago and did my own research back then to apply
the same strategy outside of the US.
And I came (almost) to the same conclusions!

I am currently investing through a discount broker in Vanguard UK FTSE All World ETF in
US dollars. I also have a couple of global bonds ETF from iShare because it is not offered by
Vanguard UK at the moment (only UK bonds).
I am still working on my tax situation as I am not sure how things work between the the
UAE and Ireland.
The difference in my research is that I also looked at the estate tax in the US. If anything
unfortunate happens to you while your money is over there (in case of death in fact), the US
will tax on anything above 60,000 USD. (For US resident this limits jumps to 5.2 million!) I
could not find the %age of the tax though.
http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States#Non-residents
http://www.irs.gov/Individuals/International-Taxpayers/Some-Nonresidents-
with-U.S.-Assets-Must-File-Estate-Tax-Returns
As in the long term I expect my stash to grow bigger than that, this issue added to the 30%
on capital gains made me rule out investing on US stock exchanges. Trying to keep things
simple!
I am still not completely sure how all these tax issues work so any comments and
suggestions are very welcome!
Well done and keep up the good work!
Reply
DB says
April 22, 2014 at 1:43 pm
I am posting this as you suggested
DB
Posted April 6, 2014 at 5:24 am | Permalink
Dear mr. Collins,
Thanks for this wonderful site after discovering it a year ago my husband and I are debt
free and currently building a F-You stash.
I live in Denmark and have read all of your post regarding investing Europe. I found a
website with very low fees: Nordnet. The problem is they dont offer all the different options
as vanguard but its a bit more accessible for danes. (since i have a really fun demanding job,
I am willing to pay a bit more for less effort. :-))
My questions is as follows. our investing is for all our extra cash (meaning that we are all
ready saving for retirement, emergency funds etc). So we are not relying on this but just
want to have extra for retirement and of course F-you money. The money will probably be
invested for 15-20 yrs at least.
We have our stocks in 80% spar invest global atier min risk. (meaning global stocks
minimum risk) it focuses on stocks in MSCI World Minimum Volatility Index.
20 % are in Index C20 capped. As you can tell I am not a professional stockbroker are
these informations enough for you to determine anything? I read an article at
Johnnymoneyseed saying: just get started! figure it out as you go along, which is the
strategy :-). My question is if this is enough of a spread or I need to get to vanguard to get
more options.
Hope you can help. Thanks again for your amazing site.
Reply
jlcollinsnh
Posted April 6, 2014 at 8:47 am | Permalink
Welcome DB
Glad you are here and have found this site useful. Sounds like you are making great progress
and I agree with my friend Johnny Moneyseed, getting started is important.
I would urge you to post your comment/questions here:

http://jlcollinsnh.com/2014/01/27/stocks-part-xxi-investing-with-vanguard-for-
europeans/
This will give my European readers a chance to hear about your find in Nordnet and they
may have some thoghts on the two funds youve chosen. Unfortunately, I am not familiar
with either.
It sounds like you are on the right track with MSCI, assuming it is a low cost index fund
investing in stock markets around the world including the USA. My guess is C20 is a world
bond index fund? If so, this gives you an allocation of 80/20 which should serve you just
fine.
Held og lykke!
Reply
Joel says
June 1, 2014 at 4:24 pm
Hi there,
Jim, firstly Id like to thank you for creating such a great blog. Being completely new to
investing, Ive found your beginners guide to stocks really thought provoking.
As Ive decided I really need to start investing in my future, I have a few questions I hope you
and your readers will be able to help with.
A little bit about me: Im 30 years old, and from the UK. I currently have some savings
sitting in a bank not doing much. Out of that I have 2,000 I want to start investing (not
much I know). From now on, if I can afford it, I would like to continue to put 100-150 every
month into the investment fund.
Unfortunately as Im from the UK, I cant invest directly in Vanguard (being 98,000 short!)
and so Im weighing up the information in this great guest post to decide what to do.
In this post Mrs EconoWiser seems to prefer EFTs, although in another post Jim says I
tend to avoid ETFs (exchange traded funds) because with them you have the possibility of
sales commissions and/or spreads to consider. Also, in the comments Rob points out that
with mutual funds theres no withholding tax, and infers that mutual funds are easier to
manage. So, as a UK newbie starting out should I go for a mutual fund or EFT?
If I do go for an ISA and mutual fund (which allows an 11,800 investment per year), what
fund should I invest in to replicate the VTSAX? In an earlier comment Mrs EconoWiser
suggested a great percentage of the SRI Global Stock Fund (developed world) combined
with a small percentage of the Global Small-Cap Index fund and a small percentage of the
Emerging Markets Stock Index Fund in order to replicate the Total World Stock ETF
holdings. If these are the best funds, how would I allocate 2,000?
As far as brokers are concerned, checking out

http://langcatfinancial.co.uk/2014/01/fashionably-late-halifax-sharedealing-bestinvest-
slink-back/, it seems the best company for investments of less than 20,000 would be
Cavendish and IWeb. I prefer IWeb as it looks like they would be a good company even with
a larger portfolio.
Lastly, Mrs EconoWiser talks about investing in Euros and Dollars, which to be honest, is
something Im completely unsure about.
Im aware that no-one can tell me exactly what to do, but seeing as this 2,000 is my F-You
money (as Jim puts it!), Im completely open to being steered in the right direction regarding
the best broker, funds and currency to go for.
I apologise if my questions appear nave. I know I have a steep learning curve, but Im really
keen to start investing in my future.
Thanks in advance,
Joel
Reply
jlcollinsnh says
June 1, 2014 at 7:37 pm
You are very welcome Joel
and thank you for your kind words.
My European readers are best equipped to answer most of your questions with a much
deeper understanding of the issues in your part of the world. Ill leave it to them and
hope they weigh in.
When reading my posts, be aware that I come at investing with a very American-centric
perspective. One thing my international readers have taught me is that it aint the same
over there wherever there happens to be.
For instance, my preference for funds over ETFs is based on the cheap and easy
availability of funds here in the USA. Were I in your part of the world, like Mrs. EW Id
likely be using ETFs. What matters are the two key principles:
1. Dont trade
2. Look for the lowest expenses
Finally, congrats on getting started. Thats the hard part. Your 2000 will grow just fine
with regular feedings. If you get really lucky well have another crash and your
additional investments will be buying shares on sale!
Reply
Joel says
June 2, 2014 at 7:22 am
Thanks Jim!
While Im certainly keen to hear others opinions, after my initial research it seems
like the Vanguard Lifestrategy range may be a good place to get started.
The only thing Im not sure about though is whether to go for the Lifestrategy 80%
or 100% equity. I noticed in an earlier post you said As an aside, there are a few
studies that indicate that a 80%/20%, stock/bond mix will actually outperform,
very slightly, 100% stocks. It is also slightly less volatile. If you want to go that
route and take on the slightly more complicated process, youll get no argument
from me.
On the Monevator website they suggest lifestyling the investment by opening two
Lifestrategy funds and re-allocating your contributions into the more bond heavy
fund as you get older. http://monevator.com/lifestyle-vanguard-lifestrategy-
funds/. So should I start with Lifestrategy 100 and then open another fund in a few
years or stick stick with the Lifestrategy from the get-go?
Thanks in advance,
Joel
Reply
jlcollinsnh says
June 2, 2014 at 7:38 am
If you are willing to hold two funds, no big deal really, rather than two life
strategy funds why not just hold a stock fund and a bond fund? Then you can
adjust your allocation precisely as you wish, when you wish. In fact, thats
what I do, holding low cost total market funds, of course.
You might also be interested in a conversation I had just last night with a
friend. He was asking about Target Retirement Funds. This was my reply:
Im afraid I am unfamiliar with Mr. Piper (another blogger). But his advice to
chose VASGX is certainly more traditionally in line with the common wisdom
That fund holds 80/20 stocks/bonds and includes international in that mix:
1 Vanguard Total Stock Market Index Fund Investor Shares 55.9%

2 Vanguard Total International Stock Index Fund Investor Shares 24.1%
3 Vanguard Total Bond Market II Index Fund Investor Shares 16.0%
4 Vanguard Total International Bond Index Fund 4.0%
Total 100.0%
Characteristics as of 04/30/2014
VTSAX is the total US stock market index: 100% US stocks.
Holding VTSAX is very aggressive. Recommending it as a sole holding, as I

do, is very much an outlier concept. In fact I am aware of no other financial
writer who does. So Mr. Piper definitely has the majority opinion on his side.
Holding VASGX is also very aggressive at 80/20, but less so than VTSAX.
Moreover, it will become steadily more conservative adding more bonds
over the years. Thats the idea behind TRFs.
Thats also why, along with it being a fund of funds, the ER is a bit higher. You
are paying for that automatic rebalancing and the multiple fund
diversification..
It is certainly not a dumb choice.
As you know, personally my preference is VTSAX. But I am Very aggressive in

my investing and have proven my ability to stay the course during crashes.
Thats absolutely critical, with either of these actually.
Looking 20+ years out, VTSAX will very likely make you richer, unless we go
the way of Japan. But the race will be close and your savings rate will be the
more powerful element in the mix than your fund choice.
Hope this helps!
Heres more on my take regarding TRFs:

http://jlcollinsnh.com/2012/12/18/stocks-part-xv-target-retirement-funds-
the-simplest-path-to-wealth-of-all/
Reply
Joel says
June 3, 2014 at 6:25 am
Hey Jim,
I was actually more distracted by your motorcycle link on that page! Im a

passionate biker myself, and it was only the other day I walked past a
Triumph Scrambler wondering if it may be my next bike!
Thanks for the info re TRFs. They look interesting although I cant see
that Vanguard offer one here in the UK.?
Im not averse to holding two funds, although I would prefer to have one
which rebalances itself (while I find my feet with investing) rather than
doing all this myself with separate funds (as Mrs EconoWiser
recommends).
This is why Im drawn to Lifestrategy initially. Would it be an idea to go

for 100 Lifestrategy fund and then in a few years open a separate bond
fund?
Btw, here is a link to the Lifestrategy fund diversification. I think it has a
reasonable spread (although correct me if Im wrong!)
https://www.vanguard.co.uk/documents/portal/factsheets/lifeStrategy1
Cheers,
Joel
jlcollinsnh says
June 3, 2014 at 2:25 pm
Hi Joel
I am unfamiliar with that fund, as I am with most. There are thousands

of them, after all!
So I cant speak it is specifically. Perhaps one of my readers has some

experience with it?
LifeStrategy funds here in the USA typically have a bond component to

them, but this one appears not to.
If all stocks is what you are looking for it could work and, as you say, you
can add bonds later as you chose.
Not sure where you saw the Triumph, but I love mine. It doesnt have
particularly impressive specs, but I love the way it goes about its business
for me.
theFIREstarter says
June 5, 2014 at 3:19 am
Hi Joel,
Fellow UK reader here, Monevator reader, and Lifestrategy fund (novice)

investor.
The key things for me with these funds are:
Although their charges are slightly higher than making up your own
allocation, you will get stung by dealing fees each time you buy / sell /
rebalance if you are making up your own one. With a small portfolio (say, less
than 20,000) the dealing fees of 5 or even 1.50 per trade can absolutely
kill you, far more than the slight increases of the OCF/TER of 0.2% that you
will be looking at, compared to the cost of doing it manually and picking more
specific funds for each part of the asset allocation.
The automatic rebalancing of these funds ,and taking out the need to make
multiple purchases to get our asset allocation, is key, especially for the small
time investors such as you and I.
Also, lets face it, its all a bit confusing, so keeping it simple with just one fund
seems shrewd, until I learn a bit more about the whole darn thing.
For the record I chose the 80/20 split but this is in no way an endorsement, I
just thought it would be better than the 100% stocks. I have no real reasons
behind this though
Please do not take any of this as gospel but this is what I have found in my
research on Monevator and other sites, and by using the investment platform
I decided to use (AJ Bell/You Invest again, not saying I have picked the best
one here, but I am certain its not the worst which is something at least
I also put 2,000 in as my first lump sum and recently got paid out my first
lot of dividends, 30! Which was quite exciting!
All the best and good luck with your investments in the future, it would be
good to hear what you ended up doing as well!
Reply
Joel says
June 5, 2014 at 8:04 am
@Jim: The Lifestrategy range in the UK allows you to select a

equity/bond mix depending on your attitude to risk. As Im slightly late
to the game and dont mind being aggressive, I think Ill opt for 100%
equity.
I actually saw the scrambler in the UK. Im also looking at the Thruxton
as Ive always fancied a cafe racer. I might actually be over in the US
soon, so may see if I can get hold of something there.
@theFIREstarter: Thanks for your advice. Its nice to know that Im sort
of on the right track thinking about that fund. As I mentioned, I think Ill
go for 100% equity and add a bond fund in a few years when I need to
preserve my honey pot!
Ill certainly look at AJ Bell/You Invest. How did you find out that this
was a reasonable company in comparison to the rest? I couldnt seem to
see many indications on Monevator for the smaller investor. I was also
checking out IWeb because of this page, mentioned by Rob in the
previous comments: http://langcatfinancial.co.uk/2014/01/fashionably-
late-halifax-sharedealing-bestinvest-slink-back/.
Anyway, itll be interesting compare our results with these funds.
Thanks again!
Joel
theFIREstarter says
June 5, 2014 at 5:05 pm
Hi Joel,
I actually opened the youinvest account because they looked the best
value for smaller SIPPs, as detailed on that langcat website I do believe.
However I have since not actually set up the SIPP and havent topped up
the ISA for a while either due to moving house, so all spare cash is being
piled into that right now! Once the dust settles on all of that, and I start
investing again, I may well move platform. iWeb certainly does look like
a good deal simply on the platform holding costs.
You have to look at dealing costs as well though, figure out what you need
to buy (which you have done), how often you will buy, then you can work
out the total costs including dealing fees. Shouldnt be too hard with
yours/my simplified investing strategy. It must get awfully messy if you
trade a lot though which is another reason not to bother!
Mark says
July 2, 2014 at 3:37 pm
Hi, thanks for the enlightening post.
For the double taxation, the problem is, that the ETFs distribute the dividends, right? So, if I
find an ETF that accumulates rather than distributes, Id be golden (everything else equal).
Do I get that correctly?
Say, you take the Vanguard FTSE All-World UCITS ETF with an ER of 0.25%. Then, there is
iShares MSCI ACWI UCITS ETF, which is an accumulating ETF and would then mitigate the
problem. Though, the ER 0.60%. I have yet to look at other differences between the two
ETFs. Assuming everything else is equal, which one would be more advantageous? (I know it
will depend on the exact gains etc. because of the taxbut itd love to hear an educated
guess)
Greetings from Germany!
Reply
jlcollinsnh says
July 2, 2014 at 3:49 pm
Welcome Mark
Thanks for joining from Germany!
Ill leave the answer for some of our other European readers. But I can tell you, here in
the US, tax is due on any dividends your fund or ETF pays, regardless of whether you
have them reinvested in additional shares or take them in cash.
Because governments are all equally eager to tax us, my guess is it will be much the
same in Germany. But thats only my guess.
Cheers!
Reply
bb says
Marc (and other germans) it is the same.

Distributions are subject to income tax regardless of the type of distribution (eg.
Dividende vs Ausschttungsgleiche Ertrge).
If you have your holdings with an german located broker, the broker is forced to
withold any tax distributions it can get hands on; that is either germany domiciled
reinvesting funds or any distributing fund. If you have a accumulating fund that is
not domiciled in germany (like many iShares) you have to declare the
reinvestments in your Einkommensteuererklrung and thus pay tax on it. The
caveat is, that once you sell those shares your germany located broker is forced to
withold tax again double taxation. In the Einkommensteuereklrung you can
subtract those already taxed dividends from your taxable cost basis, effectively
regaining the tax already paid in former years. This will lower your tax and should
lead to a tax refund if the majority of income is capital based.
As far as i understood, all the proof you will need should be statet in the
Steuerbescheinigung of your broker for the year you selled already taxed shares.
Maybe you also need to supply your tax statements for the years, but im unsure
(and neither my broker nor my Finanzamt could clarify this!).
If you have your money invested abroad (e.g. with Vanguard germany which is
located in ireland) you also have to declare taxes yourself. Vanguard should
provide Steuerbescheinigungen for this purpose like your german broker.
This is one of the main reasons i mostly invest with distributing funds with iShares
for the moment. This way, i can buy foreign funds but have the majority of the
taxable dividends cashed out through my broker; this has the advantage that i can
reinvest the dividends according to my asset allocation (nad am not forced to
reinvest in the source fund) as well as that my broker handles most of my tax
issues.
My only rpoblem at selling time will be what was not distributed but reinvested
(iShares does sometimes create ausschttungsgleiche Ertrge in their
distributing funds, but thats only a fraction of all distributions.) i hope i will be
able to claim the already paid tax on this back some years in the future
So far i was not able to get any report how this exactly works and what statements
must be supplied to german tax authorities.
Reply
Peter says
October 25, 2017 at 3:37 pm
Depending on the county that you are living in:

1/ you might not be taxed on the dividends that are reinvested
2/ you might not be taxed on the capital gains of a funds
Either or both would improve your return for those countries
Reply
LyckligaFiskaren says
August 10, 2014 at 6:01 pm
Thank you for some really useful info! I live in Sweden and have been thinking alot about etf
investing. One problem is that either Avanza nor Nordnet (swedish brokers) seem to offer
europe domicile vanguard etfs. We need to buy in usd. Why is that?
For example, non of them has Vanguard FTSE All-World UCITS ETF.
They do however offer both VTI and VXUS. And that is what worries me. Me, like Sebastien
who commented on this post on March 25, 2014 and recieved no answer, are worried about
the estate tax in the U.S. Ill quote Sebastien;
The difference in my research is that I also looked at the estate tax in the US. If anything
unfortunate happens to you while your money is over there (in case of death in fact), the US
will tax on anything above 60,000 USD. (For US resident this limits jumps to 5.2 million!) I
could not find the %age of the tax though.
Can someone provide more info on this? If this is the case, then noone living in Europe, for
sure not me, should invest in Vanguard with dollars.
US/Sweden has no death tax convention, so if you want to buy vanguard in dollars, just
dont die!
Reply
Sebastien says
Hi LyckligaFiskaren,
To be more precise, you cannot invest in funds that are located in the US, but you can
still invest in US dollars. Thats what I do, I invest in VWRD in London in USD. You
need to choose your broker based on the funds you want to invest in (and on their
brokerage fees). There are some options in Luxembourg and Danemark that are open to
foreign investors. Look it up!
Note that some people (with no kids for example) still do invest directly in the US
despite the estate tax.
Cheers,
Sebastien
Reply
Wanja says
Im a Belgian student and would like to share with you my simple investment strategy:
100% iShares Core MSCI World UCITS ETF (EUR) | IWDA (TER of 0.20)
This is an accumulating fund which means that no Belgian tax will be witheld on dividends,
so basically I wont have to pay any taxes whatsoever. I buy the ETF for free through the
budget broker DeGiro.
Reply
jlcollinsnh says
Thanks for contributing, Wanja!
Reply
Wanja says
November 11, 2014 at 7:27 am
For fellow Belgians, my blog post on the subject might be interesting:

http://flightfulness.com/index-investing-in-belgium/
Reply
Guido says
How are you so sure that no dividend tax has to be paid in Belgium, as the
posts above suggest that dividendtax always has to be paid, regardless if the
funds is accumulating or distributing?
Reply
RD Portfolio says
Thanks a lot to JL and EconoWiser,
I have been looking for Vanguard ISIN codes all over the place. The simplest thing is simply
to call Vanguard. I called them yesterda, spoke to an actual person and sent her an email.
Within an hour I had all the ISIN codes I asked for.
This morning, I called my bank to place some orders but it seems that the issue is that
Vanguard nhas simply not registered the biug majority of its ETFs with the Dutch financial
authorities, so the ball is in Vanguards yard. As soon as they register, we can buy.
I have asked my contact person at Vanguard in NY and will upadte on any changes.
It might be bpossible to buy from local brokers anyway apparently, but they would be acting
against regulations so probably not entities you would want to place your money with
anyway.
Updates coming soon.
I am currently trying to build an investment portfolio based on Ray Dalios recommendation

but not having his scope of funds, instead of investing directly in products, I decided to buy
funds that cover these allocations. For anyone interested in learning a lot more, I
recommend reading Tony Robbins Money: Master The Game. You dont need to be a Tony
Robbins fan to benefit from the great information there. The book is non profit, all proceeds
go to feeding hungry people around the world. Mr. Robbins is already very well off and as
many Americans in his status, pursues a lot of charity work (not to mention that this book
will probably b\ring even more people to his seminars).
Regardless, the book is recommended. I learned a lot. It has actual practical information on
what to do and how to do it, all about investing.
Even if you arent nbew to the investment world as I am, I believe it will add a lot.
Keep having fun!
Reply
jlcollinsnh says
December 31, 2014 at 2:57 pm
Hi RD
While I havent read the Robbins book, I have been hearing mixed reviews that lead me
to suggest caution in accepting it all as gospel.
For instance, Kathryn Cicoletti is a financial pro and someone whose irreverent views
Ive grown to respect. She is kindly calling bs on most of what Tony Robbins says:
http://kathryncicoletti.tumblr.com/post/103145906441/kindly-calling-bs-on-most-of-
what-tony-robbins-says
In that piece she says the hedge fund managers secret sauce is
The All Weather Portfolio that looks like this:
Stocks: 30%
Bonds: 55%
Commodities: 15%
Anyone who has read thru my stock series (button at the top of this page) wont be
surprised that this strikes me as terrible advice.
Reply
RD Portfolio says
Hi JL,
I read Kathryns comments. Whereas I get the impression from reading her
comments that I am personally less of a Tony Robbins fan than she is in general, in
this instance it seems to me she comments with partial information as she writes
herself.
I do not want to give too much information from the book as I dont want to
infringe on any copyrights, but the above is a simplification of the Ray Dalio All
Seasons Portfolio and RD is quoted himself several times as saying that he may be
wrong. TR also repeatedly writes that past performance is no guaranty, so reading
the book is the better way to make decisions about using the contents.
Back Testing was reportedly done for 70 years as well as for 30 years and came
with similar results.
I personally do not intend to following Tonys 7 Steps Plan to Freedom, but I take
many good things from the book. Thanks to this book I found out about Vanguard
and from that search got to your blog (great info by the way!).
The book is endorsed by the likes of Carl Icahn, Steve Forbes and others, and that
was what convinced me to buy and read it completely.
The book is in my opinion not to be followed to the letter, but it has a lot of usefull
information if you would like to see yourself as an investor and not a day trader or
speculator. It is up to each reader to sort out what is relevant for herself or himself
obviously.
To me it was a great help. After reading Capital in the 21st Century, it became clear
that if you are not one of the lucky ones, you need to join the investing class to
make money. It does not seem to come from work regretably.
So folks, if you decide to buy the book, help JL and click the link. If any one else
has read it and can give any sort of usefull comments for or against, that would
great to read here.
Reply
RD Portfolio says
Here is a link received from Vanguard Europe where all the funds available to Europeans are
listed. Most are for institutional investors but there are several for private investors as well
that could be interesting.
https://www.vanguard.nl/portal/site/institutional/nl/en/investment-products/mutual-
funds-product-list?productType=indexFund
Vanguard has no ETF for US bonds available in Europe, only mutual funds.
Keep having fun!
Reply
Micks says
They do: IE0007471695. Which is also shown on your link from Vanguard, though it
holds no corporate bonds (for me no problem since I take on enough risk in the equity
portion of my portfolio). In my opinion, bonds are for safety in your portfolio, and since
I am Euro-based and a big portion of international bonds volatility is coming from
other currencies I prefer to buy European bonds.
As for EU domiciled ETFs, do not limit yourself to Vanguard. Yes they are a great
company, but for Europeans, accumulating funds from for instance iShares or DB-x are
often much better suited to their needs. For us Dutch, I do not see why you should not
invest in US-based ETFs by the way.
Reply
RD Portfolio says
Hi Micks,
This one has a 100.000$ minimum. Out of my league.

On iShare I could only fin d EURO bond EFTs. Can you help with info or a link
where I can find any bond ETFs for US government bonds? Like you, I have
enough risk elsewhere.
Reply
Micks says
April 6, 2015 at 8:41 am
Yes you are right, for me as well out of my league. For me US bonds do not fit
into my portfolio though due to currency risk (I spend and earn in Euros). You
could search on Morningstar or on the EU section of
http://www.etfinfo.com/en/home/ for European domiciled ETFs.
Reply
Povilas Panavas says

Thank you, Mrs EconoWiser. This article was really helpful and allowed me to start investing
sooner.
P.S. Im following your blog too
Reply
Daniel Perez says

April 8, 2015 at 1:42 pm
Im a Spanish citizen living in Switzerland at the moment.

Ive read your blog post and its very interesting and enlightening
I wanted to know if you have any particular recommendation in order to take a look at
vanguard funds/ETFs
I would like to do some long term investments, where I can pour some money in monthly,
without incurring in high fees. I thought that ETFs are not very good for this, since they
trade as stocks and usually have fees for each transaction, whereas funds may have smaller
fees in this case
Is what Im saying right? Whats the best approach in my case?
thanks a lot!
Reply
Rosalind says
July 27, 2015 at 8:24 am
Hi everyone, thanks for all this mine of information. Im a complete novice here, based in the
UK, arrived here via Jeremy at go curry cracker, about to dip my toe in the water after a
lifetime of thinking investing isnt for me.
So just a quick question for starters, when I look at the vanguard FTSE all world UCITS ETF
for example, to buy on Hargreaves Lansdown where Ive set up an account, Im offered two
options: one is accumulation, the other is income. Am I right in assuming that all the advice
here on Jcollins is based on buying accumulations for maximizing growth? Would seem
logical but as I say, forgive the complete novice about to throw 5000 in the pot!
Thank you
Rosalind Arden
Reply
Marco says
August 3, 2015 at 4:56 pm
Where do you see accumulation for VWRL on hargreaves lansdowne? I dont see this
option. There is only VWRL which pays a quarterly dividend?
There is no difference between reinvesting dividends yourself and the ETF doing it for
you.
Outside of an ISA it is best to have your dividends distributed otherwise your tax return
gets more complicated to work out.
Reply
Povilas says
August 4, 2015 at 5:31 am
Hi,
the difference is in the fees, which the person needs to pay when reinvesting
dividends. Plus the time needed to do it.
Also, if you get 100 dividends quaterly, you cant reinvest them easily, its too
small amount. For example, iWeb takes 5 per trade. So, if I invest those 100
every quarter Im paying 5% of the sum, just to invest. So, it will take nearly a year
to just cover that fee.
Marco, Im not sure what you mean about distributing dividends outside of the
ISA. Could you elaborate?
Also, I believe that its better to get dividends in ISA, as in that case you dont need
to report them and pay additional taxes (after you get to higher tax bracket).
Reply
John fortune says

August 13, 2015 at 4:56 am
Hi Mrs Econowiser,
Thanks for the great info. How can one emulate the three fund portfolio from Europe? This
involves investing in the Total Stock Market, Total International, and Total Bond Market.
Does the Vanguard FTSE All-World ETF emulate this? If not, what are the advantages and
disadvantages?
Reply
Stephanie says
November 2, 2015 at 3:47 am
Unfortunately where I live does not offer a lot of choice when it comes to online brokers. The
one that offers the best deal charges a flat rate of US20 for each transaction and an annual
administration fee of US30. Im not so sure if its worth it. Whats your take? Id love to know
what you think. Thanks!
Reply
jlcollinsnh says
November 10, 2015 at 6:03 pm
Hi Stephanie
Too bad about those fees, but I wouldnt let them deter me from investing.
Reply
Povilas Panavas says

November 11, 2015 at 4:27 pm
Hi, Stephanie,
I have quite a similar situation with my Lithuanian account. Where a flat fee is 23.17
and administration is percentage (at the moment around 15/year from ~16 000
investment).
To make it work, you just need bigger lump sums. My thumb of rule is that flat fee must
be not more than 0,5% percent of investment.
So, if your fee is 20$, you must invest per time at least 4000$.
Thats at least what I do, I invest at least 4 634.
The good news is that if annual fee in your case is also flat, then after a few investments
those 30$ will mean nothing.
Good luck investing.
Reply
Michele says
Hi, very good article!

I dont know if youve already answered but Id like to know any idea about investing in
bonds for Europeans any suggestion?
THANKS!!
Reply
Ian says
Hello to jlcollinsnh and Mrs. EconoWiser,
Ive been reading up on the blog for a few weeks now, and I must first say thank you to
jlcollinsnh for making investing clear and entertaining.
I write, beacause Im in a bit of an odd situation, and Im hoping one of the two of you, or
another reader, could help me out:
Im a dual citizen with the United States & Ireland, but I live in Berlin and pay German
taxes. Im looking to invest in VTSAX and have to believe that, as an American citizen, I am
able to simple open a US bank account (closed it years back), and open up an account with
Vanguard. That said, Im wary of the tax implications of doing so. The United States is the
only large western country that requires its citizens to file income tax forms when they live
abroad i.e. I have to file and pay in Germany, but also have to file (and pay, if I go above a
certain US-set threshold) in the United States.
Question 1: if I put, say 10k into VTSAX, and the fund growns 4% in a year, do I pay taxes on
that 4% in the USA?
As far as I understand, the US doesnt tax investments until the investor takes the money out
of the market taxed at the end, so to say. Is that correct? In Germany, capital gains are
taxed annually.
So, Question 2: If I pay capital gains taxes in Germany on the 4% earned on the 10k, do you
think I will be taxed AGAIN in the USA, when I pull the money out 30 years down the line
even if I have been paying taxes in Germany every year?
Sorry, this is a super specific question, but any answers would be so helpful.
i.
Reply
jlcollinsnh says
Hi Ian
I can tell you that when you own a mutual fund like VTSAX, the US taxes any dividends
and capital gain distributions (GCDs are rare with VTSAX) in the year they are paid.
Youll receive a tax document from Vanguard showing these and youll report them on
your tax return for that year.
Capital gains (and loses) are only reported when you sell shares and in tax owed is due
in the year you sell.
As for the rest, Im afraid thats above my pay grade.
Reply
seano-nz says
April 6, 2016 at 5:52 am
Hi readers, just re-posting this comment on the advise of Jim, looking for anyone from NZ
that is following this investment that has got a handle on fees and taxes and how to hopefully
make them as low cost as possible.
Hi Jim
Ive recently come across your website, what a find it has been! Such an amazing series!!!!
Ive been doing a bit of research into investing in Vanguard from NZ which is where I live.
Unfortunately its not cheap. I have one option where I can invest in the ETF through my US
brokerage account or another one through a local investment company that offer the
vanguard funds which I can directly save with at no cost (brokerage and international funds
transfer fees).
Unfortunately they are not cheap.
The local managed funds company which allows New Zealanders to invest in some of the
Vanguard funds charge from 0.3%-0.5% management fee in addition to the typical
Vanguard fee.
If I use my US brokerage account, I will be subject to expensive brokerage fees and overseas
bank transfer fees so using this method I would have to invest my savings 1-2 times a year
until I build up my holdings in an ETF to keep costs down. Then I can invest more regularly
as my effective costs will go down as I build a larger position in the funds in the years ahead.
Next problem is taxation
I will pay 15% tax on the dividends I receive from the funds which is okay. I also have to pay
a foreign investment fund* (*FIF) tax (NZ tax for investing in overseas markets).
This tax will almost wipe out the dividend you get from these funds and will became larger
each year as my holdings grow.
For example if I have $100,000 in the VTI and it makes a gain that year, in addition to the
15% dividend tax I will have to pay the foreign investment tax of $1400.
As you know VTI pays a roughly 2% dividend.
$100,000 investment
$2,000 dividend income
-$300 dividend tax (less)
-$1,400 foreign investment tax (less)
$600 after tax dividend payment
This is a lousy 0.6% effective dividend after taxes.
This foreign tax grows as my holding grows and I have projected out 10 years. My effective
dividend after taxes is down to about 0.4% as that foreign tax portion grows.
One more example to show how bad this tax is:
$500,000 investment
$10,000 dividend income (2% on $500k)
-$1500 dividend tax (less)
-$7000 foreign investment tax (less)
$1500 dividend after tax
0.3% effective dividend after taxation and fees
Through the local company the the dividend to be similar as they pay all the taxes on your
behalf as well as charge 0.3%-0.5% in a management fee. So instead of getting a nice 2%
dividend you only get around 0.5% or so.
I dont think I can defer these taxes and they have to be paid each year. What are your
thoughts on this situation and how do I factor in these costs for working out a potential FI
date?
Hoping you can give me some pointers on this situation. Or, do you know anyone on this
side of the world investing at a low cost? I have joined the bogleheads forum where a few
New Zealanders post but havent got a definitive answer on the best way to reduce the costs
of this method living here or how much havoc this wrecks on your investments.
Cheers
Sean
Reply
Sean-ireland says
April 18, 2016 at 6:40 pm
Hi there,
Really enjoyed scanning through your site as I am trying to do the impossible, invest with
Vanguard while living in Ireland. Yes, despite what has been said in various posts
throughout, the ordinary investor here finds it very hard to do what even our European
friends find easy and our American friends find simple investing in a reliable fund that
doesnt try to rip us off.
While the likes of Vanguard and iShares are domiciled here for tax purposes, we cannot
actually buy their funds here directly (they dont even have a website for Ireland!) and have
to either pay crazy commissions to Irish brokers that mean we would lose about 25% of our
investment over time, or take the risk with new players to the market like deGiro, which still
dont inspire me with confidence yet despite their low fees.
If we buy investment funds or ETFs domiciled in Ireland or the EU we pay 41% capital gains
tax on disposal and on dividends with no loss relief. Curiously if we buy US domiciled ETFs
and funds, then we pay 33% CGT with the first 1270 exempt and dividends are taxed as
income at our marginal tax rate of 20/40%. So you can see why buying ETFs and funds is a
little bit complicated this side of the pond.
There also seems to be some confusion with withholding tax regarding US funds and
dividends. The US itself charges 30% for all investors who are not domiciled in the US, but
by filling out US form W-8BEN every three years they reduce it down to 15%. Ireland doesnt
keep the 15% as seems to be the opinion expressed by various posts. If your country hasnt
enabled a double taxation agreement with the US then you need to get on to your elected
representatives.
Really enjoyed looking around your site if you happen to come across a Bogel or Solin who
is willing to write a book about smart passive investing aimed at Europeans, tell them there
is a surefire market waiting for it!
Reply
Patrick says
May 13, 2016 at 1:37 am
Hey
Thanks for all your work that you put into this blog. Its a great series and opened my eyes
and probably every others visitors too. I am 23 living in Switzerland and want to start
investing my first 15k and then continuously investing every month if my budget allows
I am interested of an ETF. My Question is, is this one a good choice or would I make a
mistake going with this one?
iShares MSCI World Minimum Volatility UCITS ETF
TER 0,3% with 9.- for every transaction. My taxation situation is something I have to find
out more about.
Other ETFs available. iShares MSCI World UCITS ETF, Vanguard Total World (VWRL).
Thanks, Patrick
Reply
jlcollinsnh says
May 13, 2016 at 2:04 am
Beats me, Patrick.
Unfortunately I am unfamiliar with that fund.
But Ill bet some of my ace readers here have some insights.
Reply
jan says
June 27, 2016 at 6:09 am
Your comment is awaiting moderation.
Hope mrs EW can still answer this one

I too live under the Dutch tax burden. My bad.
Let me thank you for this great article first. And then pose my question(s):
Maybe I got it wrong but it seems that we can buy VWRL in Euros through NYSE Euronext.
But the underlying assets would still be in USD. So I do not see how that would reduce
currency risk (vs buying the funds sister in USD directly). Am I correct or am I overlooking
something?
Second question is the tax thing: Very nice that Dutch citizen are entitled to the 15% US dvd
tax , iso 30%. But how would this work? I cannot see how an ETF would know that it has a
Dutch holder
Reply
Przemek says
July 4, 2016 at 8:00 am
This is my first comment, so big words of praise to JLCollins for this wonderful blog, and to
Mrs Econowiser for this post.
Mike and Lauren brought me here. Since then I am patiently reading through the Stock
Series from Part I. I was hoping this article could clarify how can I invest in Europe, but I
still have some questions.
I am a 30 y.o. Polish living in Switzerland. Currently I have 100 000 CHF/EUR just lying on
the bank account. My plan is to accumulate 600 000 ideally before 40 and to move to a
lower cost country (Poland or Spain).
So my questions are:
1. On the Vanguard.ch website I can see that the minimum initial investment for Investor is
100 000 CHF/EUR, not 500 000?
2. You write that in ETFs I can invest by a broker, but what about funds? What If I have the
required minimum and want to buy a fund? Can I buy direct by Vanguard?
3. Ive done some googling for a Swiss Broker and found Corner Trader. They charge 0.2%
for deposit and have no custody fees. Is this fair?
4. How do I handle Tax? In Switzerland there is a withholding tax of 35%. If my dividends
get reinvested, do I pay tax on them, or do I only pay tax at the end, when I withdraw?
5. In Switzerland there is a third pillar for retirement, where you can put in up to 6700
CHF tax-free money per year. But where do I put my money so that its treated as third
pillar?
6. As I do not plan to spend my retirement in Switzerland, in which currency should I hold
my money: CHF/EUR/PLN? Also, is investing in US-based companies not too risky for
Europeans? I dont want to be an implicit Forex speculator.
7. For USA, VTSAX has 0.05% custody fee. For Europe, index funds have 0.30%, All-World
ETF 0.25%, S&P500 0.07%. Should we not go for the S&P, or can the World overperform it
by more than 0.20% each year?
Thanks in advance for any help.

Reply
Povilas says
July 14, 2016 at 6:31 pm
6. Currency totally doesnt matter as long as you invest globally, preferably world index.
The concrete example would be Vanguard VWRL. The morning of the Brexit, it fall 4%
in dollar value. However, in my account (I live in UK) the same stock expressed in
pounds gained value of 4%. How has it happened? Because pound fell 8% compared to
dollar.
It means that as long as your money are invested, you dont have currency risk. If pound
drops, you sell your stocks for more pounds. If pounds get stronger, your stocks get
cheaper, but when you exchange it to euros or dollars, you get more of that currency.
Reply
Przemek says
July 15, 2016 at 9:34 am
Hi Povilas. Thanks for your reply. I am flexible as to where I will be living in 10

years (it should be warm, peaceful and cheap), so I guess what youre saying makes
a lot of sense.
I was just considering buying VUSA instead of VWRL, because it has been
performing better in the long run, and because it has a 0.07% fee, compared to
0.25%.
On a side note, if the performance of an index so strongly depends on the reporting

currency, is there a more agnostic way to measure it? Instead of USD, CHF, EUR,
GBP, a more independent measure. I mean, after Brexit VWRL may go up in GBP,
but down in CHF, it strongly reflects the condition of the currency. Is there a way
to represent the index value in a mix of currencies or something, that has a fairly
constant value all over the world?
Reply
Povilas says
July 15, 2016 at 9:54 am
After Brexit I will not invest in a single country market ever. Even if its the
biggest (VUSA).
I didnt believe Brexit will happen as most of the people. So, I had some
FTSE100 index funds. They were undervalued and paying really good
dividends. Experienced some losses on Brexits morning while changing it to
VWRL.
Probably exactly the same story is with Trump. I mean if he wins, you better
off having VWRL, even if 50% of it consists of USA. But this would be so big
that all the markets would be down anyway And means to protect your
assets probably wouldnt be stocks in this particular case.
But Im no expert and its my personal experience. My current portfolio value

86 000.
As for a fair performance of a stock (not dependent on the currency) I dont

know such a way.
However, you usually can see the same stock in several currencies.
Finally, as I wrote before, currency wont matter. But yes, it makes harder to
properly evaluate and compare a performance of index funds.
Reply
Przemek says
July 15, 2016 at 10:59 am
First of all, congratulations on your savings! It took me 5 years to collect
what I have, starting from 0 at age 25. But all this is from a salary, these
will be my first steps in investing.
Now, secondly, thats a fair point with Trump. Although its debatable if
he will be a good or bad president, I think the public opinion may have a
short-term effect on the condition of the dollar. I think VUSA is a special
case, because it is so big an so international. It may seem to be more
reasonable to invest in VWRL, but its performance looks less convincing
and more volatile than VUSA.
Thirdly, yes, that was my goal, to properly evaluate an index, not having
to deal with the currency. By the way, do you know in what units are the
popular indexes like S&P500, FTSE All World and MSCI All World kept?
I dont mean the ETFs that follow them, but the indexes themselves.
Mr FOB says
I fully agree to bet on the world market instead of US only for risk
reasons. VWRL exists for less than 5 years, but the benchmark VWRL is
following has a 5 year annualized return of 8.4%. If you combine VTI and
VXUS in a ratio 50/50, you also nicely cover the world market (US
represents 50% of world market (VTI), the non US countries make up the
remaining 50% (VXUS). They have a 5 year annualized return of 14.7%.
VTI and VXUS are very large (several hundreds of billion dollars per
fund), while VWRL is much smaller (less than 1 billion dollar size). This
makes VTI/VXUS much more efficiently (lower tracking error), although
I am not sure whether that fully explains the much better performance
than VWRL.
Povilas says
July 16, 2016 at 8:56 am
Probably we reached the maximum nested comment level as I cannot click

reply to your latest one.
Thanks. Im 29 and 92% of it is my salary Living in UK for a bit less than 3

years and thats where my real saving started as salary in Lithuania was 500
a month.
You are doing a good job too. I believe you have the minimum 100 000 to
invest directly with Vanguard, which is awesome!
As for investing, I started long time ago but sadly started by picking individua
stocks, later picking dividend stocks. Only two years ago dived into index
funds, got rid of all the individual stocks.
Anyway, getting back to your question. Sorry, I dont know the answers, but
could speculate that at least S&P500 must be valued in dollars as stocks in
that index are traded solely in dollars.
Reply
Przemek says
July 16, 2016 at 11:39 am
I see we share a similar path to wealth :). I worked 4 years full time in
Poland, earning 500 EUR with my first job, and 2000 EUR as I was
leaving the country. In this time I saved 40 000 EUR. And in 14 months
in Switzerland I saved 60 000 :).
Do you know how I can invest directly with Vanguard? Their Swiss
website is a joke, it looks very old and there is almost no information
there. Based on the website alone I would never put my money there.
Actually iShares (Blackrock) and Source have more professional websites
and lower expense ratios.
Do you know what is the advantage of investing directly? Is it that you

dont have to pay the broker? I found a broker in Switzerland that only
charges 0.12% for each transaction and there is no custody fee. Then I
can buy an ETF, which has a lower expense ratio.
Povilas says
July 19, 2016 at 7:59 am
Thats a nice achievement! 100 00 is quite an amount, especially in under 6

years
I dont have experience investing directly with Vanguard as I started when I

had little money. Plus using tax sheltered account ISA whenever I can. So, I
have little money to invest directly.
I would have guessed that the main problem is to find a cheap broker
(depends on the country). But these days there are coming better and better
ones. I use a broker with a fixed fee of 5. And I rarely make deals bigger than
5000. I invest in smaller chunks and more often.
Having said that, your 0,12% fee sounds good to me, better than mine. From
5000 it would be only 6, but when I invest 2000 I pay 5, and you would pay
only 2.4.
And even from 100 000 its just 120, which is still good.
Its very important there would be no custody fee as from the amounts of
money we are going to use there even a small fee would eat up a lot of our
capital.
Reply
Przemek says
July 20, 2016 at 9:19 am
The full rules of the broker I found are: 0.12%, but Minimum 18 CHF. So
its most efficient at 15 000 CHF and up. And thats OK for me. It means
can just make a purchase once every 3-4 months.
Malachi Rempen says

July 30, 2016 at 12:51 pm
Hello wise investment druids,
Im in Germany and trying to figure this whole thing out, so bear with me! Any answers are
much appreciated.
I found an investment management company called iShares which in Europe (and the US?)
seems to be a competitor of Vanguard. They appear to take the same dim view of actively
managed funds as Vanguard does, which is nice, and offer a lot of the same ETFs (the great-
looking S&P500 at 0.05%, for example). The only downside seems to be that theyre
shareholder-owned, rather than owned by the investors themselves like Vanguard, so theyre
motivated differently. I cant figure out where their European branch is domiciled, though.
So my first question is: would investing through iShares relieve me of the Vanguard Irish
double-taxation tomfoolery?
Second, Im trying to find an appropriate broker in Germany (iShares also requires you go
through a bank or broker to buy with them), and having a hell of a time. Maybe a German
could chime in and help me out here. I thought an online broker would be best, since phone
calls and in-person meetings are so last millennium, so I looked up comparisons on multiple
sites like http://www.finanzen.net/online-broker-vergleich,
http://www.brokervergleich.net/aktien, and others. This led me to a top five online brokers
jostling for supremacy, each with their own offer of low costs. However, they each also have
their own frustrating retinue of hidden fees and costs and other miseries. Other commenters
on other sites recommended going through a local broker or bank, since you can walk in if
you have any issues or need advice, but some of the prices seem outrageous. Really, I have to
pay 10-20 plus percentages plus other fees every time I want to invest money in my fund?
Am I understanding this whole thing completely wrong, or is there a better way? What do
other Germans / similarly-situated Europeans do?
Thanks guys! May the winds of fortune blow liberally in your direction.
Reply
Miriam says
August 20, 2016 at 4:39 am
Hi Malachi Rempen,
same situation here, Im from Germany and just starting to look into investing in ETFs.
I found this great website, where you can research ETFs, and also research online
brokers that offer special deals with ishares-ETFs: https://www.justetf.com/de/find-
etf.html
On the left, click Aktions-ETFs/Aktionsangebote or Sparplanfhige ETFs/Sparplan-

Aktionen. You can sort by TER, choose if you want ETFs that reinvest or pay
dividends, and also compare the ETFs you pick in detail (button
Auswahl/Detailvergleich on the top right).
I have been using the online broker Flatex for 4 years now to keep shares I inherited.
For ETFs, as far as I see, they have a flat fee of 5,90 to buy them, no management
cost, and if you choose an ETF on offer (Sparplan-Aktion), you will not pay a fee for a
certain monthly savings rate you choose (Sparplan).
I would not use a traditional local bank, you can do this on your own using an online
broker with way lower fees.
Im thinking about a portfolio like this:

50 % S&P 500, TER 0,07 % (IE00B5BMR087)
20 % Europe 600, TER 0,2 % (DE0002635307)
10 % DAX 50, TER 0,16 % (DE0005933931)
10 % Japan, TER 0,2 % (IE00B4L5YX21)
10 % Pacific without Japan, TER 0,2 % (IE00B52MJY50)
Something like a World-ETF, but less emphasis on the US and the UK, more on
Germany and Europe because of the currency. And using the low fees on the S&P 500.
Im finding the tax laws for foreign ETFs confusing (apparently, ishares is in Ireland).
Apparently you will pay tax in Ireland on dividends, whether reivested or not
(Quellensteuer), and again in Germany (Abgeltungssteuer) if you sell them. So you have
to keep all tax reports and put the foreign tax paid in your tax declaration to get it back
(or parts of it anyway, still trying to figure this out), or you will end up paying tax twice,
really.
Tschau!
Miriam
Reply
Johannes says
Hi Miriam,
any updates regarding the exact tax regulations?
Also, doesnt your portfolio lack emerging market stock?
Johannes
Reply
Miriam says
Hey Johannes,
sorry for the late reply, I was moving flats (and cities)! Ive decided to go with
ETFs either from Ireland or Germany, because I will have to request the taxes
I have to pay in Ireland (or any other non-German ETF) back. My broker
(Flatex) does not offer this service, so I will have to do this myself next year
when I do my taxes, I asked them.
I enjoy managing my finances, but realistically, as soon as Im working

fulltime again, Ill not be able to spend massive amounts of time on my
finances and tax laws. This was also my reason to pursue ETFs: Buy them and
forget (mostly) about them.
Regarding your other question: At the moment, I feel like I dont understand
emerging markets or the reasons for investing in them well enough to decide
whether I would like them in my portfolio. This is can of course be solved by
more research, so thanks for the suggestion, Ill look into it!
Tschau!
Miriam
Reply
MAURIN says
August 13, 2016 at 10:49 am
Hello jlcollinsnh,
I would like to thank you for your very interesting blog.
I am French and live in France.
I am 36 and my retirement is expected in 22 years minimum.
Our distribution pension system explain most french people are not saving for retirement
and this is, I think, one of the first reason why french people do not invest in the stock
market. Most of them think stock market is for rich.
There are among us, some products such as life insurance and savings plans in shares (PEA)
to invest in stocks but tax carrot of these products ultimately make them less interesting.
Therefore, I agree with actively managed stock funds for 2 years. However, even if I chose
quality managers (SKAGEN Kon-Tiki, Bestinver International, Jupiter European Growth )
I found that index funds were long term are of more benefit.
Not having the chance to subscribe to funds such as VTSAX, so I decided just a few months,
invest periodically in VTI and VXUS. The funds I have in the portfolio will be sold and
reinvested in these two ETFs.
Dividends will be obtained initially reinvested in these ETFs. Then approaching retirement
age, I will buy BND and BNDX so as to have, at the end of the plan the following portfolio:
37.5%: VTI
37.5%: VXUS
10%: BND
10%: BNDX
5%: Cash
Jrme
Reply
AAA says
Hello!
First, thank you very much for this life-changing blog! For a long time I didnt know
what/how to invest my hard earned money.
Second, my situation is a bit complicated but I am hoping you/someone can shed some light
I read through all the comments, and I cant seem to find a scenario close enough to mine.
I am 29, a US resident that already has a US vanguard account (thanks to this blog),
investing in 100% VTSAX in a vanguard brokerage and also 100% VTSAX in a Roth IRA. (I
also have a 401k, unfortunately not a vanguard, but A John Hancock. 500 index fund.)
However my current job position is moving me to Italy, and I was informed by HR that once
all the Italian paperwork goes through (another few months), that I would no longer have $
deposited to my 401k, no longer be paid in USD to my US bank account, but I would be paid
in Euros, to my Italian bank (that will be opened up shortly).
My question is 2 fold:
1. as a US expat, that already has a current vanguard account, can I still continue to deposit
money, with the Italian bank account? Or would I have to transfer the money back to my US
account (loss of $$ in wire/transfer fees), and deposit that way?
I will still keep my US bank account/address etc..
2. regarding the 401k, should I max out my contribution before the switch over in a few
months (ie 1/2 of my paychecks for the next few months), or should I just let it go, and use
the money that I would have invested in the 401k, into my current vanguard brokerage
account?
Any other recommendations?
Thanks a bunch!
AAA
Reply
jlcollinsnh says
Hi AAA
Sounds like a cool assignment, so congratulations and enjoy your time in Italy. Seems
like a great place to live, at least for awhile.
1. I think that you have to have a US based address to continue to add money to your
Vanguard funds. But I would call them directly and discuss your situation.
2. I would max out the 401k before your move. Then youll have time to figure out your
best moves for 2017.
Have a great time!
Reply
AAA says
Thanks for the prompt reply, and thanks, it is quite an exciting assignment
1. I do still have my US address and will continue to keep it.

2. Okay great, thats what I was planning to do, (and convince them to keep the
plan while Im abroad, if they legally can).
Thanks again!
AAA
Reply
Todd says
Hi,
Any advice for a U.K based investor?
I just want to make it as simple as your website puts it Jl.
I have 10,000 and want to shove it in best fund available etf, mutual, index etc
Reply
jlcollinsnh says
Hi Todd
Please see the conversation with Bastiaan below
Reply
Alan Donegan says

Hi Todd,
I am a UK investor as well. Have been reading Jim and some others for some time. I
had a couple of thoughts to share with you.
on platforms we have found the most cost effective to be Halifax for ISAs with over
20k in them. I know you are investing 10k this year but you will soon go past this
number. Halifax only has a 12.50 annual charge!
Vanguard have range of funds in the UK and there are lots to suit. From the Lifestrategy
100% equity that gives you global exposure, the US, UK and Developed work excluding
UK. there are loads to choose from and mostly low cost.
Hope that helps? We live down south and happy to chat if we can help
Alan
Reply
Bastiaan says
Mr. Collins,
Ive been reading your blog for the past two weeks and have lost some sleep over it in
excitement. Im loving everything about it.
Im from the Netherlands, I read your Stock Series and many of the comments, and I have
one question left: what would be your recommended portfolio for a European in the wealth
building stage?
Im 29 years old and pretty sure I can handle the bumpy ride. If I would live in the USA,
100% VTSAX would be the way to go . However, because I pay my food in Euros, Im
thinking I should probably diversify internationally. So, 100% Vanguard Total World would
be an option. However, I am concerned that the performance of this etf wont do as well as
VTSAX, for example. What are your thoughts on this?
https://personal.vanguard.com/us/funds/snapshot?
FundId=3141&FundIntExt=INT#tab=2
Reply
Guido says
Im keen on the answer you would get.
For me, I put stock-investing part of my portfolio for 100% in iShares Core MSCI World
UCITS ETF (AEX:IWDA, IE00B4L5Y983), domiciled in Ireland. I have no doubts
about this, although how the taxes go is not that clear to me (I tried..)
Via DeGiro as trader there are 0% transaction costs, or other fees. So dont invest with
the greedy ING for example (absurd maintenance fees).
For the savings/bonds part of my portfolio, it is in Moneyou savings accounts (crappy

0.5% 0.65% interest rates) and not in Bonds.
Ratio between stock part and saving account/bonds part is according the 110-age rule o
thumb.
Reply
Bastiaan says
Hi Guido,
Thanks for your input. Why did you choose iShares Core MSCI World over
Vanguard VTWSX?
Reply
Guido says
Hi Bastiaan,
I think you mean VWRL or VT then instead of VTWSX?
I cannot find VTWSX to invest into with DeGiro, and VT seems inactive on
DeGiro.
Furthermore, think VT and VTWSX are domiciled in the USA and for
Europeans (or Dutch) I believe that means that there are more tax difficulties
than with an Ireland-domiciled funds.
I compared IE00B3RBWM25 (Vanguard FTSE All-World ETF) and

IE00B4L5Y983 (iShares MSCI World UCITS ETF (Acc) (EUR) | IWDA) with
each other, in terms of:
Availability on trader DeGiro
UCITS?
Domicile
Currency
TER
Dividend (i.e. distributing/accumulating)
Region
Replication type
IE00B4L5Y983 (iShares) has a TER of is 0.20% and has Accumulating

divident, but has an optimized replication type strategy.
IE00B3RBWM25 (Vanguard) has a full replication type strategy, but it is
distributing divident (that you have to reinvest yourself) and has a TER of
0.25%. I guess the higher TER is due to the requirement to have full
replication strategy.
It is mostly the TER that convinced me to go with iShares rather than

Vanguard.
If anyone disagrees, let me know!
Reply
Jerome says
Ok I throw myself. VT is, in my opinion, more advantageous: it is much

more diversified than the iShare ETF because it includes emerging
markets, its cheaper, its a us tracker so it isnt exposed to Double
taxation as is the case with the products of Irish rights. The dividends
distributed by Vanguard are rather an advantage because they can be
consumed once the savings phase is over.
Bastiaan says
Thanks guys, for your responses. I agree with Jerome that VT seems like
the best option. However, if you create your own VT by buying 55
percent VTSAX and 45 percent VXUS, you have an expense ratio that
is .05 lower than that of VT for essentially the same portfolio (.14 for VT
against 0.09 for the combination).
Guido says
March 28, 2017 at 3:07 pm
Hi Bastiaan,
Morningstar shows me that VT has a TER of 0.09% now
(http://www.morningstar.nl/nl/etf/snapshot/snapshot.aspx?
id=0P0000G5T2&tab=5).
The Vanguard.com website shows a TER of 0.11% (as of 2/24/2017
Perhaps they lowered their TER? What do you think.
I am looking into moving to VT based on your and Jeromes comment,
together with the 100% stocks strategy in JL Collins book. I need to wait
until my 6-month frozen deposito is liquid again until I can move tho.
Bastiaan says
April 30, 2017 at 6:38 am
Hi Guido,
Sounds good. An even lower TER. You could still add VTSAX because it
lowers the cost, but simplicity may win. Brave that you are ready to jump
all in. I have tipped my toes in the water, but I felt that after ten years of
bull markets, my internal irrational market timer started bothering me
again. Sticking to 100% stocks under all conditions is really not for the
faint of heart. Good luck!
jlcollinsnh says
Hi Bastiaan
Since I know nothing about the opportunities and challenges facing European
investors, Im not the best person to help. That is the reason for this post, in fact.
Better to listen to Jerome and Guido (thanks guys!) and any others here who might
choose to respond.
That said, were I not in the US, a world fund like VTWSX with an ER of .25 or the ETF
version VT with an even lower .14 ER.
In fact, were the ER closer to VTSAXs .05, I might even be tempted living here.
Good luck!
Reply
Bastiaan says
Hi Jim,
Thank you for your response! I am very much surprised that the expense ratio
might be the only thing holding you back from moving to VTWSX, given all that
youve written about international stocks. Or am I interpreting your answer
incorrectly? And, as Jerome pointed out, isnt the American Stock market more
efficient? So, would you seriously consider moving to VTWSX if the expense ratio
were equal to VTSAX?
Having this discussion brought up another question for me: because all Vanguard
funds are in dollars, in terms of currency risk, investing in VTSAX or VTWSX
wouldnt make a difference, right?
For other investors from Europe, here is what Ive found helpful:
Broker DeGiro is very low cost, as Guido pointed out. In fact, a standard account
charges nothing for investing in VTSAX or VTWSX, which makes Vanguard just as
easily accessible to Europeans as to Americans. However, as Europeans, we pay
taxes over dividend gains, depending on the country you live in of course. When
investing through a standard DeGiro account, there is one risk one has to be aware
of: they are allowed to lend your stocks to people wanting to short those same
stocks. Although the risk of this costing you money is very low, there is an option
to avoid this risk altogether by creating a Custody account. The downside to this
type of account is that you pay 1 euro admin fees in dividend payout fees + 3% of
your dividend yields.
Reply
Bastiaan says
PS Jim, excuse my greediness, but I would love to hear your take on VTWSX
vs. VTSAX assuming they would have the same expense ratios.
Reply
Oscar says
June 2, 2017 at 1:54 am
Hi all,
Jim, congratulations on your Excellent Blog!! I love the stock series.
Thanks also to Mrs. Econowiser for giving us the european point of view.
Bastiaan, I agree with you on DeGiro, it is an excellent option tu buy

Vanguard ETFs for free from Europe.
Besides, the exchange rate is really low 0,001%.
On the other hand, in Spain taxes over dividend gains (from 19% to 21%)
increase the VT ER 0,11% to, at least 0,3%, (considering a 2% dividend)
making more interesting other options.
Is possible to invest in Vanguard mutual funds from Spain through BNP

Paribas and TER range from 0,2 to 0,4%.
Moreover, it is important to take into account that investments in DeGiro are
only protected up to 20000.
Reply
Jrme says
Hi,
I am french and live in France. I invest 100% on VTI.
VTI is the cheap ETF and the American stock market is one of the most efficient in the
world. It is not because I live in the euro zone that I should not invest all my money in VTI
Reply
Bastiaan says
Hi Jerome,
I get your point. However, as Europeans, we have a currency risk when investing all our
euros on the other side of the pond in dollars.
@Jim: I know you get a million questions like these, but I am really curious how your
portfolio advice is different for people not living in the US. I know you personally dont
see the need for international stocks, but youve also mentioned that you see them as a
rational choice. In other words: how would you invest if you lived in The Netherlands
(or any other European country)?
Reply
Tanguy says
Hi Jrme,
good to meet some French people over there.
I would love to invest in vanguard but I am keen to invest also in my PEA for tax
optimisation.
How do you invest ? through a CTO ?
Best
Tanguy, Bordeaux (France)
Reply
Jrme says
Hi tanguy!
PEA is an interesting product for us, french, but it is limited to European stocks. In
my case, I prefer to opt for one of the most efficient and cheaper markets in the
world.
See You soon
Jrme
Reply
Antoine says
March 11, 2017 at 11:33 am
Hi Tanguy,
I disagree with with Jrme on this point.
Unfortunately, from my (humble) experience, Vanguard is currently not a great

option for us. Might be in the future, but not now. PEA is just too good to be
ignored.
However, with synthetic ETFs, you CAN invest outside Europe in your PEA, but
not with Vanguard. A few options :
LYXOR UCITS ETF PEA MSCI WORLD C-EUR (FR0011869353). 0.45% TER
AMUNDI ETF MSCI WORLD UCITS ETF (FR0010756098). 0.38% TER.
LYXOR UCITS ETF PEA S&P 500 C-EUR (FR0011871128). 0.15% TER.
AMUNDI ETF S&P 500 UCITS ETF (FR0010892224). 0.15% TER.
There are a lot more.
The World TERs are a bit high for me, so i opted for a three fund, really low cost
portfolio, which covers most of the world economy :
Vanguard FTSE Developed Europe UCITS ETF (0.12%)

AMUNDI ETF S&P 500 UCITS ETF (0.15%)
AMUNDI ETF MSCI Emerging Markets UCITS ETF EUR (0.20%)
Of course, you can also keep it simple and stay with S&P 500. 0.15% is not 0.05%,
but honestly its still a pretty low TER.
Antoine
Reply
Xavier says
April 5, 2017 at 3:29 am
Hi Antoine, Tanguy & Jrme,
nice to see fellow Frenchmen on this thread!
I also agree that the PEA is too advantageous of an option to be ignored.
Im a 32M and started investing a few years ago, initially picking stocks
individually before seeing the light and gradually moving to Indexing.
My current strategy is the following:
1. Contribute to both our PEAs (mine and my wifes) up to the 150,000 limit
(so 300.000 in total).
Im keeping it simple and investing 100% in a low TER ETF tracking the US
Stock Market. I use Amundis S&P500 PEA ETF, which is both cheap at 0.15%
and quite liquid (compared to its main equivalent at Lyxor).
Another option was to use Amundis MSCI USA UCITS, which is closer to the
Vanguard Total US Stock Market ETF and also PEA-elligible but its expense
ratio is higher at 0.28% and I dont think its worth it.
2. Now that both PEAs are maxed up (Just got there, hurray!).
I will use a joint CTO to invest our savings in Vanguards VTI (Total US Stock
Market) and VXUS (Total Stock Market ex-US) with the intention of bringing
VXUS share to about 20% of my overall portfolio.
Another option is to use Life Insurance (Assurance-vie) instead of a CTO, to
benefit from further tax advantages. But I found these products to be quite
inflexible (even with 100% online providers), they do not usually offer
Vanguards ETFs, and all sorts of extra fees had tendencies of creeping up
over time.
3. At some point, Ill add some bonds to the mix. Its still difficult for me to
figure out exactly when to do that. As I get ready to Retire Early and provided
the stock market is not plunging, Ill probably pull a lump sum from my stocks
and dump it into a bond ETF.
Ive recently moved to Australia, adding another layer of complexity to all this
but this is a story for another day
Im keen on hearing what other French people are doing to achieve FI
cheers,
xavier
Reply
Matt says
Afternoon all!
I initially asked this question on the Bond section of the stock series, but Mr C advised me to
post this here. I am hoping someone has an opinion from a UK perspective
I am 35 and in the wealth building stage, so I am happy with a reasonable level of risk. I have
recently switch my investments from an actively managed fund (Neil Woodford) to low cost
trackers with Vanguard via Cavendish Fund supermarket.
I have 40% in FTSE UK All Share Index Unit Trust Acc and 40% in FTSE Dev World ex UK
Equity Index Acc.
I think I have a nice spread in relation to equity allocation across the markets (although
some may say I am too heavily weighted in the UK?)
I would like to invest the final 20% in bonds that complement my equity allocation.
Is there a UK version of VBTLX or VFIDX that you mention in your blog above?
Any thoughts would be welcomed!
Reply
Terje says
March 28, 2017 at 10:30 pm
Hello guys. Im a Norwegian trying to invest my money as rational as possible. Here is my

current portfolio: http://i.imgur.com/iOQiblq.png
What I am concerned with is currency risk, especially if the dollar weakens or the norwegian
kroner strengthens.
Im thinking about selling the funds that has 0,3% in annual fees.
And I want to reinvest that into one of the cheaper index funds that I already own a small
part of. Vanguard is not available at a reasonable price in Norway, but there are cheap
alternatives like Ishare. Investors can also invest with 0,00% annual fees in index funds that
contains approximately the 300 largest companies in scandinavia. An S&P 500 indexfund is
available at 0,07% in annual fees, the largest 50 companies in the EU is also available at
0,09%. I also have a s&p500 fund where the currency risk is mitigated/insured, but the
annual fees are 0,3%.
If you were me, how would you change the portfolio?
Thanks!
Reply
Thor says
April 2, 2017 at 12:44 pm
I dont think there is any currency risk between owning in USD and owning in EUR. You
own the same stock and it has a set price on the market. I think this is a mistake in the
original post.
Example:
Assume 1 USD = 1 EUR. A buys 1000 EUR worth of a stock fund and B buys 1000 USD
worth of the same fund. Now if the value of the currency changes so that 1 EUR = 1.25 USD.
If Bs fund would still be worth only 1000 USD, then the same stocks would simultaneously
have the value of 800 EUR (for B) and 1000 EUR (for A). That can simply not be the case.
This means that either the value of Bs fund will rise to 1250 USD or As fund will drop to
800 EUR (or something in between). What happens is related to if the actual assets (for
example they might own cash and real estate) of the stock is valued in USD, EUR or some
third unrelated currency.
The real currency risk is in what currency the underlying asset (the stocks) are tied to. An
European takes a currency risk when buying stocks operating in (and owning) USD
regardless of if the fund is listed in USD, EUR, NOK or something else.
Reply
jlcollinsnh says
April 6, 2017 at 9:34 am
Hi Thor
I think you might be on to something here and that it might very well relate to
something Ive been thinking about.
However, I dont quite follow what you are saying.
Can you clarify it a bit?
Thanks!
Reply
Thor says
May 14, 2017 at 12:16 pm
Sorry for not cheking in earlier. What I mean is that you are buyig a part of the
company. If that company owns or operates in USD you are exposed to the USD
regardless of if you buy a part of that company in EUR or in USD. So you cant
avoid the currency risk by buying American companies in EUR instead of in USD.
Imagine a company liquidated all of its holdings and now have $1M. If $1M is 0.9
M You will own 0.9 M. This doesnt depend on in which currency you bought
the company. (Otherwise you could arbitrage every currency change by selling you
EUR listed stocks, exchaging EUR to USD, and buying USD listed stocks whenever
the USD drops).
Of course a European investor will take a currency risk when buying a US

company, but that risk is not associated with the currency used to buy the
company. Its all about the exposure of the COMPANY, because that is what you
are buying.
Might be easier to think in terms of bonds. If I buy $1M of the US T-bills and my
living costs are in EUR, then I will take a currency risk. I cant mitigate that
currency risk by asking to list the price tag in EUR when I buy it.
Reply
Lynette says
May 21, 2017 at 6:06 am
Thank you Jim for sharing all your insight and advice! A friend told me about
http://www.millennial-revolution.com and that led me to buying your book.
I am based in Singapore and was wondering how best to effect your strategies in my local
context. While Vanguard has an office in Singapore, its not a open to retail investors and
after much searching, I discovered I could possibly buy VTSAX through Citibank Brokerage.
fees at 0.35%! I am still doing some research and will let you know if there is any success.
I am not sure there are any readers out there based in Singapore but if there are, would be
happy to connect.
Reply
JB656 says
May 21, 2017 at 11:59 am
FYI anyone who has been waiting for a UK vanguard optionits now available directly with
just a 500 buy-in.
https://www.vanguardinvestor.co.uk/
Reply
Frankie says
May 22, 2017 at 2:58 am
https://www.irs.gov/individuals/international-taxpayers/some-nonresidents-with-u-s-
assets-must-file-estate-tax-returns
Just to check, according to IRS, non-residents with USA asset in stock, which exceeds
Usd60,000 are subjected to USA estate taxation.
Am I missing out something on this?
This should be a major factor to consider when we invest in Usa stocks or Vanguard funds
which hold USA stocks if we plan to leave some asset to our children.
Reply
Guido says
May 30, 2017 at 2:26 pm
Hi Frankie, this depends on the tax treaty that has been signed between the USA and
your country of residence.
Take a look at this: United States Estate and Gift Tax An Overview for the
International Executive:
http://www.kplaw.com/pub/docs/2015%20United%20States%20Estate%20and%20G
Its from 2015.
If you are Dutch, it is discussed on this Dutch blog in the comments:

https://www.trackerbelegger.nl/amerikaanse-erfbelasting/
Reply
Frankie says
June 18, 2017 at 10:39 am
Thanks, Guido!
If I understand correctly, Most of us have to pay Usa Estate Tax, just by how much
only, from the formulas given.
Reply
Dominik says
August 3, 2017 at 11:12 am
Thanks for this great post as it is almost impossible to find ways to invest in Vanguard for
the many of us not living in the US. while the above covers the situation of many readers it
does not address my particular situation: German National living in a tax free country. Does
anyone know if there is any way to invest into Vanguard Total Stock Market ETF Offshore,
meaning to avoid the tax trap altogether?
Thank you!
Reply
Mirko says
August 14, 2017 at 7:19 am
I found this one, only have to invest 25000 Dollar. What do you think it is cheaper than
Vanguard and no trading fees on the Schwab platform.
Schwab Total Stock Market Index Seeks to track the total return of the Dow Jones U.S.
Total Stock Market IndexSM, Ter 0,03%
Reply
Kevin says
August 18, 2017 at 5:09 pm
I would like to invest in msci world to get best diversification my favourite:
HSBC MSCI World UCITS ETFUSD 0,15 %

Or The ultra cheap fund: Legal & General
International Index Trust costs 0.13%
I will try to buy them in swiss franks as i work in switzerland.
or us market: cheapest i found was

Schwab total stock market index 003% 25000 min invest sounds reasonable and no
transaction fees if u do it on the schwab platform but its usdollars.
Can you beat this funds price?
P.s.Hey if u have to invest in another currency i would use transfer wise, charges 0,5%.
W-8BEN: form would be interesting if that works also for eu or swiss citicens?
Reply
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jlcollinsnh

The Simple Path to Wealth

About Stock Series Manifesto Calculators Disclaimers

Ask jlcollinsnh As seen on Books

Stocks Part XXI: Investing With Vanguard

So as you might imagine, it really rather stunned me to see jlcollinsnh develop an

Shes done a brilliant job and, if her name

With all this in mind, about a month ago I

If you live in Europe, this is a must read.

But wherever in the world you are: Enjoy!.

Investing With Vanguard In Euros

Lets do something useful with our euros instead. http://www.megagadgets.nl/en/euro-toilet

Vanguard Mutual Funds Vs. Vanguard ETFs

Vanguard Mutual Funds Vanguard ETFs

Might be a bit more difficult to buy Accessible to all Europeans

Vanguard exchange-traded funds TER Available ISIN

Vanguard FTSE All-World UCITS ETF 0.25%USD/GBP/EUR/CHF IE00B3RBWM

Vanguard FTSE All-World High Dividend Yield 0.29%USD/GBP/EUR/CHF IE00B8GKDB1

Vanguard FTSE Dev. Asia Pac. Ex Japan ETF 0.22%USD/GBP/EUR/CHF IE00B9F5YL18

Vanguard FTSE Developed Europe UCITS ETF 0.15% GBP/EUR/CHF IE00B945VV12

Vanguard FTSE Emerging Markets ETF 0.29%USD/GBP/EUR/CHF IE00B3VVMM

Vanguard FTSE Japan UCITS ETF 0.19% USD/GBP/EUR/CHF IE00B95PGT31

Vanguard FTSE 100 UCITS ETF 0.10% GBP IE00B810Q511

Vanguard Government Bond UCITS ETF 0.12% GBP IE00B42WWV

Buy Broad Based Index Funds

Heres the lowdown on the fund:

Vanguard FTSE All-World UCITS ETF

Greater Europe 27.36%

Greater Asia 20.39%

Find a broker costs matter hugely

Before We KISS, Theres The Tax Thing

Lets Keep It Simple, Sweetheart!

Investing With Vanguard In Dollars

ISIN US9229087690 US9220427424

U.S. 98.35% 53.38%

Greater Europe 1.56% 26.63%

Amount of stocks3609 5109

TER 0.05% 0.18%

Again, Find Your Broker

Will LTC Bankrupt the Nation?

Youve solved the index investing in euros puzzle! http://www.financialdirector.co.uk/financia

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Filed Under: Guest Posts, Money, Stock Investing Series

Mrs EconoWiser says

You lucky UK bastards!

Great article Mrs EconoWiser!

Mrs EconoWiser says

Hi Rob / Mrs EconoWiser / others,

What are your thoughts?

At Jims request Im posting a follow-up.

Thanks, Adam, for the follow-up report.

Sounds like a pretty good allocation if a little US heavy. Im no expert but is

However, heres another way to think about it. In owning Vanguard US

Im currently living in Japan and earning my salary in Yen. The Yen is

Mrs EconoWiser says

Many, many thanks for that blogpost!

Our pleasure, Leo

Thanks for checking in!

Mrs EconoWiser says

Lucky you, those fees sound awesome!

Wow talk about perfect timing for this post.

Good to hear it, David

and glad you found your way here.