48 year-old Brit wants to retire at 50

[nun]

Paulio,
Most people on here will envy you having such a great foundation for retirement. Few are multi-millionaires like you, so you've certainly been doing lots of things right. If I had your net worth I'd be cash heavy as my budget calls for $40k a year. So I'd only need 2% annual return and I could get that easily in a long term saving account (CD in USA). So do a budget and adjust your investment approach to match what and when you'll need to start drawing income.

[chinaco]

Welcome.

[Bossonova]

Regarding Vanguard US, it is generally not a good idea to have a high portion of assets in a foreign currency. If the stock market is up 10% this year, and the dollar is down 25%. Since my assets and expenses are in dollars. I am up 10%. If it were you, with assets in US$ and expenses in pounds. You would be 15% in the hole. It's best to keep only modest currency risk in a portfolio IMHO.

[Alan]

Quote:

Originally Posted by Bossonova Regarding Vanguard US, it is generally not a good idea to have a high portion of assets in a foreign currency. If the stock market is up 10% this year, and the dollar is down 25%. Since my assets and expenses are in dollars. I am up 10%. If it were you, with assets in US$ and expenses in pounds. You would be 15% in the hole. It's best to keep only modest currency risk in a portfolio IMHO.

I second that

Also for US taxpayers holding stocks in a foreign country in the foreign currency it also complicates the taxes greatly. It could well be the same for UK taxpayers holding US equities.

[nun]

Quote:

Originally Posted by Alan I second that Also for US taxpayers holding stocks in a foreign country in the foreign currency it also complicates the taxes greatly. It could well be the same for UK taxpayers holding US equities.

It's not quite as bad as PFIC for US citizens, but it isn't nice either. If a non-UK based fund is not a "distributor fund" in HMRC's books then the capital gains for someone resident and domiciled in the UK will be taxed as ordinary income. 99.999% of US funds don't go through the paperwork to show they comply with HMRC's rules. It's ok for a UK tax resident to be in US funds if they are in tax deferred retirement accounts because withdrawals are classed as income anyway.

As a UK and US citizen if I move back to the UK and become resident I'll be in a catch 22 situation wrt taxation of mutual funds in after tax accounts. I'll probably just keep a fair amount in cash and what after tax equity funds I have I'll keep in the US and just keep my UK tax bracket low. Alternatively I could invest in shares as there's no tax issues doing that.

FYI withdrawals from US ROTHS are also tax free in the UK.....thanks to the tax treaty.

[Alan]

Quote:

Originally Posted by nun FYI withdrawals from US ROTHS are also tax free in the UK.....thanks to the tax treaty.

Thanks for clarification, and I'm impressed that ROTH withdrawals are recognized as having had tax paid in the US already so no double taxation.

[nun]

Quote:

Originally Posted by Alan Thanks for clarification, and I'm impressed that ROTH withdrawals are recognized as having had tax paid in the US already so no double taxation.

Yep a US retirement account is tax free in the UK to the same extent as in the US. This is why I will probably spend a few years in the US after ER. I intend to live off after tax money and rollover an amount each year from my IRA to a ROTH to fill up the 15% tax bracket. That way I will be able to largely avoid tax in the UK and US once I move to the UK and start making withdrawals.