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Re: DRiPs?
Old 07-15-2005, 03:03 AM   #21
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Re: DRiPs?

Hi Mike,

Quote:
(ineligible for IRA due to expat exemption)
Did you mention that you take occasional business trips to the US? If so, any income earned while physically in the US counts as US-sourced income, falls outside of the FEIE, and can thus be put towards an IRA (subject to all the other rules and limits). I used this trick to partially fund an IRA last year and this year.

(Most years I don't have any business trips to the US, so it's a strategy of fairly limited use for me, but every little bit helps, right?)

Bpp
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Re: DRiPs?
Old 07-15-2005, 03:24 AM   #22
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Re: DRiPs?

Good idea, Bpp

I should have opportunities to go overseas a couple months a year, starting in two years.

BTW, I checked with Schwab, they won't let nonresidents hold onshore open funds. TD Waterhouse will allow it, if I open the account with a US address. But they won't let my Japanese wife have an account, if something happens to me. There is probably a way around that but my wife wouldn't go for anything creative.

I am considering forgetting about open funds and only using ETFs and closed funds. Something of a loss but not the end of the world. And it would make things simpler.

Mike
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Re: DRiPs?
Old 07-15-2005, 03:57 AM   #23
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Re: DRiPs?

Quote:
TD Waterhouse will allow it, if I open the account with a US address.
They must have changed their rules. They have let me open accounts without a US address, and buy funds within them. I opened my first account with them in 2000, so things may well have changed since then, but then again I opened my IRA account with them just a few months ago, again using only my Japanese address... Well, maybe they let it slide since they already had the earlier account open for me.

Quote:
But they won't let my Japanese wife have an account, if something happens to me. There is probably a way around that but my wife wouldn't go for anything creative.
I don't blame her, I wouldn't, either. Come to think if it, I listed my Japanese wife as beneficiary if I die on my accounts... If TDW is going to give her a hassle about it if I die, I may have to worry about asset location issues a bit more. Did TDW say they wouldn't give your wife access to the money in the account at all? Or just that they would insist on liquidating everything first before writing a check for the proceeds to her? The latter, while annoying, I could at least deal with.

Quote:
I am considering forgetting about open funds and only using ETFs and closed funds. Something of a loss but not the end of the world. And it would make things simpler.
I have actually moved towards an almost all-ETF (and individual securities) portfolio over time myself, largely for the cost savings. The only two open-ended funds that I still hold are EGLRX (Alpine International Real Estate) and PCRIX (Pimco Commodity), but it wouldn't be a terrible disaster if I were no longer allowed to do so.

Bpp
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Re: DRiPs?
Old 07-15-2005, 05:21 AM   #24
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Re: DRiPs?

Quote:
I don't blame her, I wouldn't, either.* Come to think if it, I listed my Japanese wife as beneficiary if I die on my accounts...* If TDW is going to give her a hassle about it if I die, I may have to worry about asset location issues a bit more.* Did TDW say they wouldn't give your wife access to the money in the account at all?* Or just that they would insist on liquidating everything first before writing a check for the proceeds to her?* The latter, while annoying, I could at least deal with.
The guy at TDW just said she could not hold the funds as a nonresident. He said she could open an account and hold the funds, if she had an SS number and a us address. But that would mean she would be saying she was a US resident for taxes. I think that is starting to get creative. I don't think he really knew entirely what he was talking about.

TDW opened an offshore discount broker in Luxemburg. That maybe the reason for the change.
http://www.internaxx.lu/

I am in the process of moving my savings onshore. I am thinking, I am going to go with Schwab Global. Here, if something happens, just slide the funds over into her account.
http://www.schwab-global.com
They seem to have some good services for nonresidents and nonresident aliens.
They also have Japanese language services although the Japanese speaker I talked to was a Chinese woman.* Also, everytime I call at 3 am. I get the same grumpy chinese guy.

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Re: DRiPs?
Old 07-15-2005, 07:11 AM   #25
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Re: DRiPs?

Mikew, here is the irs publication that talks about taxation of dividends. http://www.irs.gov/pub/irs-pdf/p550.pdf It addresses drips on page 21. Ben is right that you will have to pay taxes on them immediately even though the dividends are used to buy stock.


On the otherhand, if a company distributes its stock itself as a dividend, then no tax until the stock is sold.
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Re: DRiPs?
Old 07-15-2005, 09:18 AM   #26
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Re: DRiPs?

"If I had drips now I would only keep the ones giving discounts on purchase + no fees to purchase and dump the rest into an ETF or fund of my liking."

- very well said on this point. Some of these drips charge up to 5 bucks on optional cash purchases, which I would avoid since sending in 50 bucks a month would be a killer. That said many have no fees. It certainly isnt difficult to find quality utilities, banks, pharma, consumer and food stocks, and reits with no fees. Many of the reits have discounts on dividend reinvestment, also.

You also have to look at the brokerages, some only offer reinvesment on full shares (most dont offer on fractional and if they do, your brokerage fees are usually higher like TD Waterhouse). NOTE that dividend reinvestment is a big boost in total return.

Another point on drips is that it has to be fun for you. You have to keep the annual statement on each in a file and it helps to have a spreadsheet to add your cost basis. Also, selling parts of your holding can be a pain on figuring your cost basis, but there are ways around (sell the entire position and make sure it is all in a long term capital gains rate).

What I do when the drips start fees, is to have the shares issued and deposit in my brokerage account with free reinvestment.

http://www.dripinvesting.org/Boards/Boards.asp

fyi, is an excellent site to discuss drips.
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Re: DRiPs?
Old 07-15-2005, 09:43 AM   #27
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Re: DRiPs?

maddy

Good link.

Yep - ya gotta love em - er ah hate em every year at tax time - the div info, any cash mergers, etc.
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Re: DRiPs?
Old 07-15-2005, 07:08 PM   #28
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Re: DRiPs?

Thanks for correcting my mistake Ben and Martha.

The book I got the idea from is going in the garbage on Monday.

Mike
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Re: DRiPs?
Old 07-31-2005, 12:05 AM   #29
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Re: DRiPs?

Ok, I'm just learning the "new" concept of Dividend Investing and DRiPs have been reviewed here.* I was wondering what your thoughts were on the ETF (DVY) Dow Jones Select Dividend Index that seems to be a basket of 34 stocks comprised of the DJIA that pay dividends.

Obviously that would help tremendously with paperwork that everyone seems to convey here, but would that be a great option other than DRiPs?* I'm going to be purchasing more books on the subject of Dividend Investing.

I'm 33.* Thanks guys.


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