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Anonymous
Is it ok to just DCA into 1 etf all the way like SPY? Letโs say $600 every month just into SPY?
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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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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.