Does the withholding tax make a big difference on returns for US vs Ireland Domicile ETF?

Hi i intend to DCA monthly of $1500 for 30 years into either CSPX/IVV/VOO.
The broker i prefer to use only have IVV & VOO, but from my understanding CSPX has lower withholding tax for dividends. Does the withholding tax make a big impact on returns if i decide to go with IVV or VOO instead?
For the dividends, do they pay once per year?
Thank you!

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Jing Wei

25 Apr 2021

This will depend on the dividend yield. If the ETFs have high divided yield, the withholding tax will make a significant impact on the returns.

Dividends are usually paid quarterly.

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thefrugalstudent

24 Apr 2021

Founder at thefrugalstudent.com

Hi Anon,

Dividends are paid quarterly. IVV and VOO will pay out dividends to investors while CSPX reinvests dividends as an accumulating ETF.

Over the years, indeed, investing in CSPX would likely be more economical than investing in VOO/IVV.

However, if you're going to DCA monthly, you need to consider trading costs as well. For LSE, you have the option for IBKR or SC online. The former charges a monthly inactivity fee if your AUM is below 100k USD while the latter has high commission fees. For NYSE, you have the option for Tiger/Moomoo which charge no monthly fees and have Low commission fees.

So there are trade offs to consider between the 2 options. Personally, I think it may be more economical to start with VOO using Moomoo/Tiger and move to CSPX with IBKR when your portfolio reaches 100k USD. But that's something for you to decide!

Hope this helps and all the best!

Regards,
thefrugalstudent

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