Thank you for the great info,I will definitely take a look. Do you have to pay any special taxes investing in EFV or the other international etf?
The tax question is one of the downsides of investing in foreign stock funds, where you have no control of where the holdings are based. Yes, you can be (and most likely will be) liable for taxes on the dividends from foreign companies. And these are withheld from the dividend.
The best explanation I have seen can be found here:
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ttps://www.onefpa.org/journal/Pages/JUN16-Understanding-Tax-Implications-of-Foreign-Stocks.aspx
Some nations have a tax treaty with the US that exempt the withholding (the UK, Singapore and Hong Kong being good examples). But other countries can withhold as much as 30%! But, because our nation has a dim view of double taxation, you can file for a tax credit when you file your US income taxes.
But, it has to be in a taxable account. That sounds counter productive to hold an investment in a taxable account to avoid paying taxes. But, that's what you have to do with the exception of Canada. For stocks held in an IRA, Canada does not withhold taxes from dividends! The UK only withholds taxes for REITs are the rate of 20%. Common stocks are exempt.
I think for many investors, all this isn't worth the trouble. You do make yourself vulnerable to capital gains distributions in taxable accounts, too. It will take a significantly higher dividend payout to make these kind of investments worthwhile, and for some it is a hassle when they just want to collect some passive income. However, my situation is different than most. I do plan to spend much time living abroad in retirement. I travel abroad frequently for pleasure, anyways. So, retirement abroad allows me to do what I love to do anyways. However, when you have a fixed income in US Dollars, you need to be aware of how exchange rates will impact your purchasing power abroad. The USD is very strong against most foreign currencies now. That will inevitably change and we will see a reversion to the mean. You dollar will buy less in your host nation or your vacation destination. That is why I have a strong interest in high-yield investments from abroad, specifically those with UN-HEDGED currency exposure (which is the case for virtually mutual fund and ETFs).
I want to see my payouts from my overseas investments rise when the US Dollar slides. I've been on the wrong end of currency exposure before at a critical time. I was able to leave for a semester abroad in Germany, when the Iran Hostage Crisis unwound, and the dollar slumped. Suddenly, all the money I had worked hard for to save up for my this suddenly was going to buy a lot less. It didn't help that we were still in the grips of runaway inflation, which was eating away at your savings. So, I learned a lot from my experience then, and this is my reason for needing foreign currency exposure in my income flow. I recommend that others looking to retire abroad or spend time abroad do the same. Aside from being good insurance against serious economic threats (currency devaluation and inflation), it can also be profitable in the end, as well.