facebookCan I just buy S&P 500 etf SPY? - Seedly

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Anonymous

01 Apr 2020

โˆ™

General Investing

Can I just buy S&P 500 etf SPY?

Is it ok to just DCA into 1 etf all the way like SPY? Letโ€™s say $600 every month just into SPY?

Discussion (2)

What are your thoughts?

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The current framework suggests using a robo advisor and switching out to a SPY once the portfolio hits 0.8% in fees.

Which you can do after 1 year of $600 a month.

That way you minimize your cost per transaction for both broker and robo advisors.

Andy Sim

01 Apr 2020

HR Professional at a Financial Institution

Not really advisable cos:

1) There's 30% dividend witholding tax which is going to eat into your returns

2) DCA every month via a broker is going to cost you alottt which doesnt make sense

You can try a similar etf CSPX (Accumulating) or VUSD (distributing) that's domiciled in Ireland to reduce your WHT to 15% instead and preferably do a lump sum investment into it. If you like, you can top up into the etf say once every 3 or 6 months instead of every month, to reduce the brokerage fees.

https://newacademyoffinance.com/best-tax-effici...

This article explains very clearly the witholding tax issues. Alternatively, you can try robos, though in the long run, fees will be quite significant as your portfolio grows.

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