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Old 11-08-2020, 08:04 PM   #41
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Originally Posted by Out-to-Lunch View Post
To save 2 basis points? I wouldn't. They are both total-market funds. If you had $100k in the account, the 2 bips would cost you $20/year. If you have to manually upload your funds each month you could easily lose (or gain!) much, much more than $20/year on random inadvertent market-timing moves.

What is your time worth to you?
You had exactly the same thinking as mine - did precisely the same $20/year calculation, and against the same 100k :-).

I wasn't sure that the 401k-provided US index fund was tracking a "total" index as broad as like FZROX (Fidelity ZERO Total Market Index Fund). The former is tracking the Russel 3000, while the latter states that it " seeks to provide investment results that correspond to the total return of a broad range of U.S. stocks." (benchmark index seems to be "F US Total Investable Mkt").

The one in 401k doesn't show the total fund's asset value, while the latter shows about 6 billion in assets.

They are both fairly new (2018 inception date), so not too much track record available. Asset allocation is almost identical, although the 401k holds more cash (0.26% vs. 0.02%) and more int'l diversification (1% foreign, spread as 0.70% in Europe, and 0.25% over Asia, Latin America, Canada/0.01%) vs just 0.01% int'l (Canada only) in latter.

Yeah, it's a wash. BrokerageLink may be worth only for other interesting mutual fund offering thru Fidelity, like Vanguard, iShares, etc, not sure.

Thanks!
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Old 11-09-2020, 11:22 AM   #42
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smihaila,

I haven't posted any more in this thread for the past couple of weeks, but I'd like to say I am happy for you that you have made some breakthroughs in your thinking. When you started this thread, you had several reasons for not wanting to touch the stock market and for not wanting to get your 401k employer match. As a result of many of us answering your posts, you have rethought things. Now, you have signed up for your 401k matching funds, so that's great!

I'm not clear on whether you have done anything with the rest of your savings. In post #30 in this thread, you said, "Could it be that the answer to my immediate problems is as simple as... to keep about 100K Canadian dollars still liquid (for emergency purposes), and re-enter the Canadian stock market with the rest?" But in scanning through the rest of your posts after that, maybe I missed something but it's not clear to me whether you have ended up doing that, i.e. re-entering either the US or Canadian stock market with any of your existing funds.

For what it's worth - the US stock market just hit an all-time high today on the Pfizer coronavirus vaccine trial news. (I don't keep track of the Canadian market but I bet it also went up.) I know it's only one day and the market will continue to have ups and downs just like it always has, but if you jumped in over the past couple weeks, you got a nice little gain today. If you didn't, then you missed out today but there is always tomorrow!
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Old 11-10-2020, 04:02 PM   #43
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Hi ILikeStarTrek,

Glad to be in touch again.

Quote:
Originally Posted by ILikeStarTrek View Post
I'd like to say I am happy for you that you have made some breakthroughs in your thinking. When you started this thread, you had several reasons for not wanting to touch the stock market and for not wanting to get your 401k employer match. As a result of many of us answering your posts, you have rethought things. Now, you have signed up for your 401k matching funds, so that's great!
Well, thanks to you and all the other forumists that helped, there was a slight change to my priorities and objectives. More particularly in regards to 401k, which upon comparing the "free money on the table" vs. the "10% excise tax / penalty", the former had prevailed. Because even if I wasn't able to keep the 401k until the age of 59 1/2 (or later), the employer's match plus the overall growth of a stock-centered investment allocation would outweigh that 10% penalty :-)

Now in regards to being adamant to re-entering the stock market or not, it is still an aspect of immediate cash liquidity needs / short horizon vs. long term. I haven't decided yet to go full-throttle with the stock market (American or Canadian), so for the moment I am limiting the risk aversion only to those 6% pre-tax US$ contributions...

Quote:
Originally Posted by ILikeStarTrek View Post
I'm not clear on whether you have done anything with the rest of your savings. In post #30 in this thread, you said, "Could it be that the answer to my immediate problems is as simple as... to keep about 100K Canadian dollars still liquid (for emergency purposes), and re-enter the Canadian stock market with the rest?" But in scanning through the rest of your posts after that, maybe I missed something but it's not clear to me whether you have ended up doing that, i.e. re-entering either the US or Canadian stock market with any of your existing funds.
I haven't made a more definitive decision yet. It isn't that simple...
But in general, regarding the Canadian assets, I feel like being more comfortable controlling all the investments in an aggregated / unified way. Which suggests the idea of converting everything to USD.

Not to mention that the investment opportunities here in the U.S. are more diverse and competitive: lots of online brokerage platforms to choose from, richer selections of MFs, ETFs, bond issues etc, lower expense ratios, and last but not least, the stock market indices here are tracking a broader market (all you have in Canada is S&P/TSX index which consists of 60 companies, and strongly over-allocated towards banks).

I did make one more move though: Found a more modern Canadian bank, which offers way more flexibility in terms of online-based transactions, larger transfer limits, and a special relationship with TransferWise. I'm in progress of centralizing all the assets by transferring out from the other banks / CUs into this new one. At the expense of a slightly higher risk with the FDIC protection (Canadian equivalent is named CDIC, and it protects only up to 100K per distinct legal account owner combination). I'll also test some electronic transfers and currency conversion between the new bank and TransferWise, but using some very small amounts first.

In parallel, I'm looking for US banks that can offer multi-currency accounts. Could anyone recommend something? I know that HSBC or Barclays are big names on international markets. I also need to take into the picture, the interest rate that they would pay for CAD.

Quote:
Originally Posted by ILikeStarTrek View Post
For what it's worth - the US stock market just hit an all-time high today on the Pfizer coronavirus vaccine trial news. (I don't keep track of the Canadian market but I bet it also went up.) I know it's only one day and the market will continue to have ups and downs just like it always has, but if you jumped in over the past couple weeks, you got a nice little gain today. If you didn't, then you missed out today but there is always tomorrow!
Yeah, I'm mentally trying to distance myself from the psychological aspect (stress) of being in the stock market with max risk exposure, in this rather simple way: I consider the 6% hard-earned money that goes into the 401k as "not immediately needed" and willing to exclude it from any net asset calculation, and for a long time period (10 years+). Only in this way, at least for the moment, I can be more peaceful and able to conduct the next financial decisions more rationally...

Thank you.
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Old 11-11-2020, 09:08 AM   #44
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Quote:
Originally Posted by smihaila View Post
Hi ILikeStarTrek,

Yeah, I'm mentally trying to distance myself from the psychological aspect (stress) of being in the stock market with max risk exposure, in this rather simple way: I consider the 6% hard-earned money that goes into the 401k as "not immediately needed" and willing to exclude it from any net asset calculation, and for a long time period (10 years+). Only in this way, at least for the moment, I can be more peaceful and able to conduct the next financial decisions more rationally...

smihala,

Yes, the mental/emotional aspect is the challenge and what keeps a lot of people from doing well in the stock market.

To tell you one story - My tax accountant is also a Financial Adviser. He once told me a few stories about that part of his job. He said he biggest challenges with his FA clients are to keep them from doing emotional/dumb things. Such as blowing through their money far above their budget. Or withdrawing/tranferring their money when stocks are at a low point. The 2008/9 crisis was hard for him and his FA clients. Some of his clients wanted to transfer all their money out of the stock market when it had lost a lot of money, so part of his job was to persuade them not to do that. In almost all cases he was successful. But one particular client had on the order of $1M in the stock market; he got spooked and was adamant about transferring all his money out of stocks so he wouldn't lose any more money than he already had. When he (the FA) couldn't convince his client otherwise, he had to act according to the client's instructions. Unfortunately this happened in mid-March 2009, and proved to be within a couple days of when stocks were at their lowest point in that financial crisis. He and the client parted ways, but he heard years later from someone who was a mutual friend that this client was so spooked that he kept all his money in things like CDs after the 2008/09 crash. So he had lost almost half of his $1M in 2008-9 and then he missed out on all the gains for the next 10 years and counting. He would have gained back all his losses and a lot more, but he didn't stay in the market.

My own story is the opposite. (Full disclosure, about half of my overall investments are rental houses, so it's easier for me to be agressive in my money-type investments since I have my rentals to fall back on in a worst-case scenario.) Even though conventional wisdom is to go down to a 60-40 stock/bond split approaching/after retirement, I have kept 90% of my money-type assets in stocks (with no bonds and 10% CDs/money market), even after retiring in 2018 (age 55 at the time). My portfolio is up something like 40% over the past few years compared to where I would be on the conventional 60-40 split. When the market crashed in March this year, it wasn't fun to watch that, but I took some comfort in the fact that I was still almost at a level where I would have been anyway on a 60-40 split. I figured it would be like 2008-9 and take 2-3 years or until a vaccine was distributed before stocks would go back up. I'm obviously pleased and very surprised that stocks are back up to another all-time high this fast.

So, even now I could live for another 30+ years, and I trust the stock market history which says that stocks may go down for a couple years at a time, but they are very unlikely to stay down for 10+ years. I would rather take that risk than the certainty that I would lose more and more money relative to inflation if I kept my money in FDIC-insured investments or even bonds for 30+ years. I hope that you can get to that same way of thinking in the near future.

Best wishes to you!
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Old 11-11-2020, 12:41 PM   #45
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If I were you, I will start investing in US growth stock. I like to invest in companies with great growth potential. Having money in the bank making 1-2% interest is not a good way to invest. Focus on Return on Investment (ROI). I look for investment opportunty with a chance of at least 10% annual return.

If I were you, I will also focus on moving to a lower COL area. I won't consider premium schools in US. It's overpriced in my point of view.
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Old 11-14-2020, 09:01 PM   #46
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Originally Posted by ILikeStarTrek View Post
I trust the stock market history which says that stocks may go down for a couple years at a time, but they are very unlikely to stay down for 10+ years. I would rather take that risk than the certainty that I would lose more and more money relative to inflation if I kept my money in FDIC-insured investments or even bonds for 30+ years.

That's a truly inspiring statement, and concept. Thank you for sharing!
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Old 11-14-2020, 09:21 PM   #47
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If I were you, I will start investing in US growth stock. I like to invest in companies with great growth potential. Having money in the bank making 1-2% interest is not a good way to invest. Focus on Return on Investment (ROI). I look for investment opportunity with a chance of at least 10% annual return.
Let me be more blunt: Do you "own" a house?
If you were truly trying to put yourself into my situation, immigration situation included, and the ties with the other country and the little nest egg made there, and not securing a place of living of your "own" (quotes purposely placed, because some are not actually truly owning, the actual owners are still the banksters), would you still bet all the money on the stock market - knowing that you may need it within a 5-year time horizon?

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If I were you, I will also focus on moving to a lower COL area. I won't consider premium schools in US. It's overpriced in my point of view.
The area where I currently live, is a God send. Much lower cost of living (Lafayette, CO), comparing to Boulder / Broomfield / Westminster, CO area. Even though it's practically within 7-10 miles distance from those. Maybe the only other areas that would compete with the place where I currently am, in terms of COL, may be Denver South i.e. Centennial or Highlands Ranch, CO.

And let's also be fair: Those "US premium schools" may not count to those who have already their kids gone thru them (or to families without kids), but they do count to those that are still of mid or high school age. The schools in Colorado are far from being great, to begin with. They aren't Long Island NY schools, for sure :-). Comparing to Canada, I am actually astonished by the fact that parents have to put a lot of effort here, to make sure they live in areas with medium-to-good schools. And scrubbing thru those school ratings websites like greatschools.org or niche.com.

The relationship between how rich or developed a neighborhood, or even a whole town is, and the level of quality of a public school, is mind blowing here. In Canada, it didn't matter too much where you'd put your tent, so to speak.

Another aspect to consider in terms of place of living: driving / commuting distance. While the traffic in the Denver-Boulder metro area is not (yet!) LA, NY, etc, the I-25 highway is horrendous. While I was working for a past company, located at about 45 miles (one-way) from my former place in Denver South, roughly about 6 months of commuting on I-25 had put a mark on me - almost giving me a heart disease! Luckily, I was inspired, and motivated enough, to put a stop to that.

The current employer is actually planning to build a site of their own (instead of commercially renting), and its new building will be at 4 miles from where I live, and all flat land. Biking instead of driving will be a very healthy thing to do.

Thank you.
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Old 11-27-2020, 02:18 PM   #48
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Smihaila,

I'm a bit late, but here's my 2 cents:

It sounds to me as though you have a) quite a bit of uncertainty, and b) a pretty strong aversion to risk.

While I'm not a financial advisor, I am similarly in a situation with a fair amount of uncertainty but a high savings rate. So here's my advice based on your description of the scenario.

-I would not be eager to buy a house. Many houses in my area/price range (i.e. modest ranch-style homes) are going at 10-15% above their tax assessment. I believe the tax assessments are more realistic than the going market rate, so I'll let everyone else overpay.

Based on what I've read about the Boulder area, it is probably a similar situation, although you'd know better than I would. Also given that you do not have U.S. citizenship, that would further scare me off of buying. Rent a nice place, and let the landlord worry about fixing stuff, dealing with regulations and taxes, etc.

-Since you're risk-averse, a first step might be to keep a large portion of your money in cash.

Only you can know how much you're comfortable with, or what your family's expenses are. Given your level of risk aversion, probably *at least* 1 year's worth of expenses in cash--maybe more. Knowing you have this money instantly available will give you a psychological comfort level with having money invested in the market, even if it drops.

That way, next time stocks plunge--not if, but when--you'll have a sizable buffer that will allow you to shrug and say, "It'll go back up before I have to worry about withdrawals."

Or even better yet, you can say "Hey! A sale on stocks! Let's buy some more!"

-As for how to invest, I've been wrestling with asset allocation myself. For a long time, I've been a believer in the jlcollins Simple Path: https://jlcollinsnh.com/stock-series/

But as my assets grow and I continue to learn more, I'm starting to lean in the direction of Paul Merriman's approach described in these free e-books: https://paulmerriman.com/how-to-inve...tary-download/ or shown in the table here: https://paulmerriman.com/vanguard/

Feel free to tweak either approach to suit your own personal preferences. You could go with a jlcollins-like approach to start, but change the allocation from 80% stocks (VTSAX) / 20% bonds (VBTLX) to something more conservative, like 60 / 40 or 50 / 50.

Whatever makes you comfortable enough to stay in it for the long haul is most important. However, you should remember that the more you have in bonds, the lower your return will be.

When considered in combination with your $50k or $75k or $100k (or more) in cash, you should feel far more comfortable exposing your excess capital to stock market volatility. The stock market is still going to be the strongest engine for growth--and therefore defeating inflation--but also has the tendency to give you nausea if you're not committed to a long-term view.

-The reality of investing is that you have to master yourself and your own fear. The markets are going to do whatever they're going to do, regardless of your own greed, fear, or life circumstances. If the stock market drops like it did in March 2020, you can be confident that it'll go back up again over the long run (like they have since April).

-Also recall Warren Buffett's statement that "we're risk-averse, not volatility-averse." This highlights the point that volatility and risk are not the same thing, not if you're maintaining a long-term investing horizon.

-You should definitely take advantage of the 401(k), at least up to the company match. If you contribute 5% and they'll match that dollar-for-dollar, you would be wise to take advantage of the opportunity to instantly double your money!

Even if they have a scheme like my employer, where they contribute 50 cents for every dollar you contribute (up to a certain limit), that's still an instant 50% return on your money!

Your excess savings--over and above the 401(k) plus your cash reserves--could be invested in a taxable brokerage account. This would give you total liquidity, and you could pull that money out at any time. For example, if you wanted to take that money out to buy a house--either in the U.S. or in Canada--you could do that. You'd just be subject to capital gains taxes, assuming your investments have made money. This link explains the capital gains tax in some detail: https://www.nerdwallet.com/article/t...ains-tax-rates

It's entirely possible that you could put some excess money into a brokerage account (say with Vanguard or Fidelity) now, and keep it there even if you end up moving out of the country. But that, of course, would depend on the rules of the brokerage. Since they're incentivized to keep money in-house--and since they're both huge companies that are international in scope--I'm sure they'd be willing to work with you to keep the money invested with them, even if they had to do some internal work to transfer the funds into an 'international' or 'Canadian' type of account.

-Given the complexities of your situation, especially the international piece of it, you would probably benefit--both psychologically and financially--from visiting a good, experienced financial planner.

I'd strongly recommend looking for someone with a CFP or PFS certification, and who charges an hourly or flat rate (rather than percentage of assets under management or something similar). Such a person should have a much better idea of your options if you were to leave the U.S., and may also have some unique knowledge that nobody in this forum would have.
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Old 11-29-2020, 02:03 PM   #49
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FroogalStoodent, thank you for your insights.

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Originally Posted by FroogalStoodent View Post
-You should definitely take advantage of the 401(k), at least up to the company match. If you contribute 5% and they'll match that dollar-for-dollar, you would be wise to take advantage of the opportunity to instantly double your money!

Even if they have a scheme like my employer, where they contribute 50 cents for every dollar you contribute (up to a certain limit), that's still an instant 50% return on your money!
I'm already contributing to 401(k). I don't think I've mentioned the employer's exact match ratio, but it is 50 cents for every dollar, up to 6%.
Technically, it's supposed to be min $0.5 and max $1.5, depending on company's performance. So at the end of each fiscal year, they add a bit more, as "make-up match". For example, their final match factor was $0.662 for the last (2020) fiscal year.

Just wished to remind that I had to consider many factors for my final decision, including the 10% excise tax penalty (I'm pretty sure you factored that in) put also in balance against the about 14 1/5 years until such additional tax no longer applies. As mentioned before, the Canadian 401k-equivalent, which is RRSP (Registered Retirement Savings Plan) is more flexible in that respect. Because it's not necessarily meant for long-term savings i.e. retirement, so one can be more "agile" about it and depending on the years when someone's income may be low enough, one could cash such plan in, with little to none overall income tax paid on the withdrawals (and no additional penalty).

It is usually not in my nature to like "strings attached" and socialist-like "incentives" to forcibly keep me into plans like 401k. Especially considering my U.S. residence status for the moment, it's not factor to be overlooked. But I must thank ILoveStarTrek for making me consider that a 14 1/5 waiting period, is not that long, and also for putting in balance the free-money-on-the-table accumulating high enough to compensate for that 10% potential penalty, should I decide to cash out earlier and leave.

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Originally Posted by FroogalStoodent View Post
It sounds to me as though you have a) quite a bit of uncertainty, and b) a pretty strong aversion to risk.
The level of uncertainty is exacerbated by the fact that I cannot control the immigration / residence aspect. Also the risk aspect is amplified by this uncertainty. Add also to the mix two types of priorities and needs / expectations that I'm personally having: one is short-term (securing a place of my own) and the other is long-term (securing a reasonable comfort of living during retirement, which btw is more difficult with only one breadwinner in the family).

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Originally Posted by FroogalStoodent View Post
I am similarly in a situation with a fair amount of uncertainty but a high savings rate.
That's great, congrats for incorporating that into your daily routine and overall lifestyle!

Quote:
Originally Posted by FroogalStoodent View Post
-I would not be eager to buy a house. Many houses in my area/price range (i.e. modest ranch-style homes) are going at 10-15% above their tax assessment. I believe the tax assessments are more realistic than the going market rate, so I'll let everyone else overpay.

Based on what I've read about the Boulder area, it is probably a similar situation, although you'd know better than I would.
Let's dwell a tad longer on the house aspect. You seem to view the property tax assessments on a fee-simple, detached, single-residence house, as some equivalent P/E ratio from the stock market?

I cannot generalize for all the U.S. States and cities, but here in Colorado, the lower property tax assessments are done on purpose, actually quite similarly to certain provinces and cities in Canada: they are planned to get in sync with more recent, market values, for later on. So it's like a phased-in, gradual increase, spread over a longer time period (5-10 years).

The Coloradans are actually very tax-adverse (a personality and mindset that I actually love), so at State level there is a law enacted that protects (and regulates) against unjustified tax increases, at many levels. It's called TABOR.

The property taxes, even in more expensive Colorado city areas such as Boulder, are much LOWER than what I've got to experience back in Ontario, Canada! To give an example: For a 1600sqft (measured above-ground) 3-bdrm detached house in a small town within 70 miles from Toronto, and bought for $310K CAD, one would pay $3,800 CAD. Here, for a much bigger house (2,500-3,000sqft above ground), you can find places outside Boulder asking only for ... $1,000 USD in annual property taxes.

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Originally Posted by FroogalStoodent View Post
Also given that you do not have U.S. citizenship, that would further scare me off of buying.
Why so much aversion towards buying a house? Even if I wasn't considering it an investment (many peoples make a mistake of considering their primary place to live also an investment), I could've bought a nice house for $400-450K about 1 or 2 years ago. And the median house prices (even with covid-1984) have soared to $550k - 650k in the meantime.

Would you consider the aspect of selling a house (as worst case scenario if I'm forced to leave more or less abruptly) as a more difficult thing to do than selling stock? In the sense that a stock portfolio could still be kept and sold much later than the moment of leaving?

The residential real estate market in the Denver-Boulder metro area is pretty hot, and I don't think I would have trouble selling a house relatively fast.

Quote:
Originally Posted by FroogalStoodent View Post
Rent a nice place, and let the landlord worry about fixing stuff, dealing with regulations and taxes, etc.

As a saver, you know very well that you can't necessarily get ahead with renting, especially if you're conservative (mind you: not because of one's personality but because of priorities and shorter-time horizons!) and don't wish to immerse full-throttle into the stock market.

It is also a psychological plus lifestyle aspect at play here: I am SICK of moving (even as radically as changing countries, you see) because my family and I feel like not getting roots, so the general feeling so far is of a nomadic kind of life. If I didn't have kids, maybe I could go on like this. Heck, even living in an RV and completely "detaching" myself from Government, oligarch and restriction of freedom, by becoming even more nomadic and preparing for even worse scenarios, if you know what I mean. But I don't wish to go that route, because I noticed I must counteract my "free spirited" mindset that seems to characterize me, and become more patient with things in life (I see myself as too impatient sometimes in life).

Quote:
Originally Posted by FroogalStoodent View Post
-Since you're risk-averse, a first step might be to keep a large portion of your money in cash.
The risk aversion is not necessarily "static": In the past I had other priorities (like saving to buy a house back in Canada, not having retirement funds accumulation in mid). Presently, while I am still contemplating a house purchase as objective, now I also realize that I must also think about retirement more (when you're younger time flies faster and you don't get to think about retirement necessarily).

The risk aversion stems from "not getting value from what I'm putting in", and from being burned in the past with Canadian "stock market" (which is less broad and diversified), and also after understanding myself better after financial incidents such as 2008.

Quote:
Originally Posted by FroogalStoodent View Post
[...] next time stocks plunge--not if, but when--you'll have a sizable buffer that will allow you to shrug and say, "It'll go back up before I have to worry about withdrawals."
I understand myself better now, and the key pain point is, as you said it very well in another statement, the risk itself not the volatility per-se. While I can live with volatility (assuming I have an alignment to a long-term investment horizon), a risk factor in my mind should be no more than what an informed decision allows (i.e. no un-calculated / foolish risks caused for example by getting into an exotic investment product that I cannot understand etc).

Quote:
Originally Posted by FroogalStoodent View Post
Or even better yet, you can say "Hey! A sale on stocks! Let's buy some more!"
That saying and way of thinking, is actually a double-edged sword. I used to think a lot like that. But tell that to someone who wants to exit the market, for example a retiree wanting to cash some stock out to survive! Please don't bring the argument that selling stock should be planned "ahead of time", because I call that simply BS!

Quote:
Originally Posted by FroogalStoodent View Post
-As for how to invest, I've been wrestling with asset allocation myself. For a long time, I've been a believer in the jlcollins Simple Path: https://jlcollinsnh.com/stock-series/

But as my assets grow and I continue to learn more, I'm starting to lean in the direction of Paul Merriman's approach described in these free e-books: https://paulmerriman.com/how-to-inve...tary-download/ or shown in the table here: https://paulmerriman.com/vanguard/
[...]
Whatever makes you comfortable enough to stay in it for the long haul is most important. However, you should remember that the more you have in bonds, the lower your return will be.
Thanks a lot for the investment suggestions. If I had a clearer (more deterministic?!) future ahead, especially with the US residency aspect, I'd know better what to invest into - fully 100% into stocks, because besides the need for a house, it is now clearer in my mind that I need to focus on growing those hard-earned cash assets more, for retirement (and to fight against the government crooks who want to steal our money thru inflation).

You know what my main problem is, currently (and hence my need for an alternate view / another take on the situation via opinions from early-retirement.org forum)? I feel like being frozen in time, and my future not being able to evolve properly, because of too many "variables" for the moment. And just saving, saving and again saving, and keeping hard-earned assets into pesky savings accounts (heck, I've recently moved all the US assets to another institution to get 0.91% APY now instead of the previous 0.67% :-) ) seems to no longer be the best strategy.

Quote:
Originally Posted by FroogalStoodent View Post
-Also recall Warren Buffett's statement that "we're risk-averse, not volatility-averse." This highlights the point that volatility and risk are not the same thing, not if you're maintaining a long-term investing horizon.

Yes, Amen to that. Maybe I should buy one share of Buffet's, because after all he's considered the best (and not necessarily lucky) investor of all time, after Graham Bell?

Quote:
Originally Posted by FroogalStoodent View Post
It's entirely possible that you could put some excess money into a brokerage account (say with Vanguard or Fidelity) now, and keep it there even if you end up moving out of the country. But that, of course, would depend on the rules of the brokerage. Since they're incentivized to keep money in-house--and since they're both huge companies that are international in scope--I'm sure they'd be willing to work with you to keep the money invested with them, even if they had to do some internal work to transfer the funds into an 'international' or 'Canadian' type of account.
I don't understand. What's the advantage of keeping cash in cash brokerage accounts earning maybe 0.01% interest rate? There is nothing international about these brokerages (an aspect which one may consider as an advantage towards easily withdrawing, or moving, liquid cash around the countries). All these online discount brokerages look "international" only on paper, believe me because I've got to experience aspects like this first-hand. These companies are buried into government and financial regulations to such extent that they are bound by specific national / state rules.

So unless one goes with multi-portfolio accounts with big companies like HSBC, Citi Int'l Personal Bank (which has nothing to do with what you know as "Citi" btw), everything is "stationary" and bound to US addresses etc. Heck, last time I was having a lot of "frictions" with a crappy discount brokerage back in Canada, even WHILE still being in Canada, so the issues would be even more exacerbated when being in an international context.

So, in terms of managing cash liquidity, I still consider savings accounts (and short-term CDs) best. I also dislike bonds - I mean of the "bond FUNDS" kind, because their perpetuity selling and repurchasing different one so that some "fund administrator" needs to maintain some "objectives" (whose?? Not mine, for sure), is not good.

I never purchased an individual bond (for the purpose of holding to maturity) - maybe I should experiment with that.

Quote:
Originally Posted by FroogalStoodent View Post
-Given the complexities of your situation, especially the international piece of it, you would probably benefit--both psychologically and financially--from visiting a good, experienced financial planner.

I'd strongly recommend looking for someone with a CFP or PFS certification, and who charges an hourly or flat rate (rather than percentage of assets under management or something similar). Such a person should have a much better idea of your options if you were to leave the U.S., and may also have some unique knowledge that nobody in this forum would have.
Eh, I'm not sure how open-minded and truly international these fee-only advisors are. At the end of the day, it is only YOU who understands the current financial (and LIFE) situation better, and nobody else can have their best interest in mind, for YOU.

And Canada and US, from a financial point of view, are generally not super-different.

Such advisors, for example, cannot know anything about work visas, immigration, etc.

On a side note, I could buy my right of US citizenship right now, by investing half of million US$ into US economy - there are certain economical areas in the United States designated by the USCIS or Department of Labor as more in need for investments, and there is a special "US Investor program for citizenship path". But I wouldn't prefer to do that, because I wouldn't have remaining funds to buy a house.

I am still hopeful that CAD will gain more value against USD, so I'm waiting a bit on that front, and getting ready for a potential conversion to USD. Speaking of which I've been actively researching for multi-currency accounts in the US, for individual / non-business customers. It seems to be a rare thing here - I believe due to some law that insists on banks and other domestic institutions to not focus on foreign currency operations.

I was able to find so far (for those who might be interested):
HSBC (Expat account), TIAA Bank (high forex margin i.e. 1%), Cathay Bank, EastWest Bank and VectraBank in Colorado. But so far doing conversion from Canada via a service like TransferWise, or the Norbert's Gambit (buying super-stable stock in a company that is listed on both US and Canadian stock exchanges, journaling the purchase under the US-listed equivalent, and then selling it fast), are the best approach.


Thanks again for your help.
smihaila is offline   Reply With Quote
Old 11-30-2020, 02:29 PM   #50
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Lots to unpack here! Thanks for the additional detail that helps to clarify things a bit

Sounds like you're in good shape for the 401(k)/RRSP plans! That's wonderful news!

Regarding the house--prices in my area (PA) seem to be shooting up for no good reason other than the low interest rate. So everybody's buying because the monthly payments are low, not necessarily because the purchase price is a good deal. So, of course, sellers are jacking up prices, and people are paying those jacked-up prices because a banker tells them "yes, you can afford that monthly payment!" Homes I'd consider to be worth ~140k are selling for $160k. In a matter of days.

Owning a house is a lot of continuing expense and/or work. It's just a lifestyle choice that you have to consider based on your preferences and situation. This link here sums it up in a pretty memorable manner: https://jlcollinsnh.com/2013/05/29/w...le-investment/

That's not to imply that home ownership is bad, as jlcollins points out. The whole post is merely an argument against the universal refrain of "a house is a great investment because it goes up in value!"

Selling a house is complex, time-consuming, and costly. If you're not certain that you want to purchase, I'd avoid it for those reasons alone.

The question is not whether the Denver/Boulder area is a hot real estate market NOW. The question is what it will be like if/when you want to sell (or need to sell, because--as you point out--you have no control over the citizenship/immigration matter).

I totally get being sick of moving--I've moved twice in two years! NOT fun. But my outsider's view, anyway, is that buying a home might not be the best idea right now. Once the citizenship issue is cleared up, my view on the matter would probably soften significantly.

As for 'buying stocks on sale,' I'd never advise that for a retiree or someone who needs the withdrawal! That's only for someone who expects to have time in the market for that investment to grow.

I'd like to clarify the brokerage comment. I mean that you can hold stocks and/or bonds and/or real estate investment trusts in a brokerage account. That money is taxable, so I think it's a better vehicle for stocks, on which you pay capital gains only when you take the money out. Bonds/REITs are subject to taxation whether you reinvest your dividends or not.

Like I said, you should probably consult an experienced professional on that matter, because I'm not sure if your non-US (I think you specified Canadian?) citizenship adds additional tax considerations. It might, or it might not. I'm definitely not a professional in the field, so I have no clue.

You DO have some experience in the matter, and it sounds like you're disinclined to use a brokerage. That's perfectly fine, I was just throwing an option out there--my thinking was that you could use a taxable (brokerage) account that would be yours, even if you were to move back to Canada, without the potential loopholes of a 401(k).

But if it would be a lot of hassle, that suggestion might not be worthwhile. Feel free to ignore anything or everything I suggested!

You could definitely purchase an individual bond if you want! Again, I'm not sure how that would be affected if you left the country. I wouldn't think it would be that complicated--since the gov. was happy to take your money, so you'd think it should be redeemable no matter where in the world you're at.

But then again, knowing how governments tend to work, I'm sure they'd love to put up some red tape for something like redeeming a bond...

I suggest fee-only advisors--specifically those with the CFP or or PFS designations--because as far as I'm aware, those are the ONLY advisors who are legally and ethically bound to the 'fiduciary' standard, meaning they have to make decisions in YOUR best interest.

They voluntarily put themselves through extra hoops [in time, effort, and expense] to achieve and maintain those designations, as well as subjecting themselves to additional penalty if they DON'T make decisions in the client's best interest. Paul Merriman explains it pretty thoroughly on p. 60 of "101 Investment Decisions."

Yeah, it sounds like that's a hazard of doing financial stuff in the U.S. Of course, the federal government wants everything denominated in U.S. currency, so they wouldn't want to make it easy for someone to deal in another currency.

It sounds like you have quite a bit of knowledge on the matter of citizenship/immigration/dealing with foreign assets. Since I have none, other than investing (through a U.S. company) in some mutual funds that hold international stock, I definitely bow to your expertise on the matter.

I just wanted to provide some pointers and resources for you to consider.
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Old 12-06-2020, 06:44 PM   #51
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Quote:
Originally Posted by FroogalStoodent View Post
Regarding the house--prices in my area (PA) seem to be shooting up for no good reason other than the low interest rate. [...] Homes I'd consider to be worth ~140k are selling for $160k. In a matter of days.
Wow.
Quote:
Originally Posted by FroogalStoodent View Post
Owning a house is a lot of continuing expense and/or work. It's just a lifestyle choice that you have to consider based on your preferences and situation. This link here sums it up in a pretty memorable manner: https://jlcollinsnh.com/2013/05/29/w...le-investment/
Thanks for the link. Have you read the users' comments at the end btw? They are excellent. I subscribe to many of those points about HOAs, condos (communism and a plethora of never-ending, always-increasing fees), and renting-as-a-form-of-living-with-low-expectations-of-lifestyle.

But yeah, owning a house is a big responsibility, and considering the quality of the "timber frame construction on wood sticks and glued wood chips" (:-) ) throughout all the North America (at least in the residential market segment), a money pit.

In Europe, assuming money is available (they are more expensive there), one would consider buying into a House (with capital H i.e. brick, mortar, concrete) because it really lasts and it can be passed between generations and without too much consumerist-kind maintenance. But I digress (I could write a separate dissertation about my view on the houses in North America - Canada included :-) ).


Quote:
Originally Posted by FroogalStoodent View Post
That's not to imply that home ownership is bad, as jlcollins points out. The whole post is merely an argument against the universal refrain of "a house is a great investment because it goes up in value!"
Very true. And those saying that a house is their single best investment is because they never tried a different investment, or simply got lucky or speculative.

Quote:
Originally Posted by FroogalStoodent View Post
The question is not whether the Denver/Boulder area is a hot real estate market NOW. The question is what it will be like if/when you want to sell (or need to sell, because--as you point out--you have no control over the citizenship/immigration matter).
Well, nobody has a crystal ball, but with careful planning and patience, one could buy a house in an area showing a "price endurance" or time-tested price resilience, especially if taking into consideration factors such as location, schools, water quality, stable soils / foundation, no surrounding environmental and health hazards, preference for no HOA and other tax/fee leeches etc.

Quote:
Originally Posted by FroogalStoodent View Post
I totally get being sick of moving--I've moved twice in two years! NOT fun. But my outsider's view, anyway, is that buying a home might not be the best idea right now. Once the citizenship issue is cleared up, my view on the matter would probably soften significantly.
Citizenship is a so loooong target. Permanent residence could be a more tangible objective. And should the worst happen during this "journey" and the house needing to be sold, I would be content with selling it at cost, just to recoup and move on.

Quote:
Originally Posted by FroogalStoodent View Post
As for 'buying stocks on sale,' I'd never advise that for a retiree or someone who needs the withdrawal! That's only for someone who expects to have time in the market for that investment to grow.
Yes, great point and clarification. I brought up this aspect, because the "fire sales" can act two ways. And the folks at the end of the sale side, and who have to sell not because of timing the market but in order to ensure meet their "cash out to make the ends meet" objectives during retirement, it is not at all accommodating as situation.

Quote:
Originally Posted by FroogalStoodent View Post
I'd like to clarify the brokerage comment. I mean that you can hold stocks and/or bonds and/or real estate investment trusts in a brokerage account. That money is taxable, so I think it's a better vehicle for stocks, on which you pay capital gains only when you take the money out. Bonds/REITs are subject to taxation whether you reinvest your dividends or not.
Oh, now I see what you meant - thanks for clarifying.
Well, I would obviously favor any investment vehicles that are not tax-deferred / of the "registered" kind. The 401(k) with employer matching affair, is my only exception to the rule (hence my commitment to only the 6% of my paychecks to that).

From a taxable portfolio perspective, there is nothing special about online brokerages. They are one of the many means to hold taxable accounts. One could very well go also with CDs with a larger bank or credit union, robo-advisor stock investments etc.

Quote:
Originally Posted by FroogalStoodent View Post
Like I said, you should probably consult an experienced professional on that matter, because I'm not sure if your non-US (I think you specified Canadian?) citizenship adds additional tax considerations. It might, or it might not.
The tax aspects when holding assets in more than one country but living in just one, are always more complex and sensitive, indeed.

Quote:
Originally Posted by FroogalStoodent View Post
You DO have some experience in the matter, and it sounds like you're disinclined to use a brokerage. That's perfectly fine, I was just throwing an option out there[...] But if it would be a lot of hassle, that suggestion might not be worthwhile. Feel free to ignore anything or everything I suggested!
No, not at all. And I appreciate the advice. The online brokerages + taxable accounts (note that brokerages can also have registered accounts) are definitely the way to go if I decide to enter the stock market right now and get 100% invested into stocks.

Quote:
Originally Posted by FroogalStoodent View Post
You could definitely purchase an individual bond if you want! Again, I'm not sure how that would be affected if you left the country. I wouldn't think it would be that complicated--since the gov. was happy to take your money, so you'd think it should be redeemable no matter where in the world you're at.
Bonds that would be "redeemable anywhere", is rather far-fetched, because we aren't talking about Government bond issues like those savings bonds or TIPS (or what their name is). Or bearer bonds that you could redeem wherever country you go.
The idea was about bonds traded on the bond issuer market (i.e. still thru brokerages). But like any other taxable account, one would look for ways to redeem them from outside the country they have been purchased from. So I wouldn't see them too different than a CD at a bank. It's just that one would be more exposed to market fluctuations if bond not held to maturity, and having to sell prematurely, right?

Quote:
Originally Posted by FroogalStoodent View Post
I suggest fee-only advisors--specifically those with the CFP or or PFS designations--because as far as I'm aware, those are the ONLY advisors who are legally and ethically bound to the 'fiduciary' standard, meaning they have to make decisions in YOUR best interest.

They voluntarily put themselves through extra hoops [in time, effort, and expense] to achieve and maintain those designations, as well as subjecting themselves to additional penalty if they DON'T make decisions in the client's best interest. Paul Merriman explains it pretty thoroughly on p. 60 of "101 Investment Decisions."
Understood, and thank you for the advice. I guess I would have to set as "hiring criteria" something like "must be a Canadian citizen or having been lived in Canada for a while, or consulting for Canadian companies" :-)

Quote:
Originally Posted by FroogalStoodent View Post
[...] knowledge on the matter of citizenship/immigration/dealing with foreign assets. Since I have none, other than investing (through a U.S. company) in some mutual funds that hold international stock, I definitely bow to your expertise on the matter.
I just wanted to provide some pointers and resources for you to consider.
No problem at all - it's always good to get a perspective on things from multiple angles.

FroogalStoodent, thank you again for the great advice!
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