facebookUS domiciled or Ireland domiciled ETFs for long term investment? - Seedly

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Anonymous

11 Jun 2021

โˆ™

General Investing

US domiciled or Ireland domiciled ETFs for long term investment?

Which is more cost efficient? I am planning to hold long term.

  • For US domiciled (30%), I thought I could just buy using TD Ameritrade without fee
  • For Ireland domiciled (15%), I may have to buy using SCB, perhaps will be 4k every 3-4 months

Discussion (5)

What are your thoughts?

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Chris

11 Jun 2021

Owner and Writer at Tortoisemoney.com

Well, if you mean long-term like 20 years and beyond, the dividend withholding tax will eat up the comms difference eventually.

Even just after two years of your arrangement, you'll have about $32,000 invested (4k 4 2). Assuming an S&P500 dividend yield of 1.5%, the dividend withholding tax difference would be around $72 (1.5% 32000 0.15). Less off the difference in expense ratios ~$12.80 (0.04% 32000), and your net gain from choosing LSE will be around $60. Less off your incremental comms of $42.8 (10.70 4) and your net gain would still be around $17.20.

As the years go on, the savings will get larger. Once you hit a large enough sum invested, you can move over to IBKR, which charges much lower comms, further increasing your savings!

Lastly, I think one factor that many fail to consider actually is that US has Estate tax, which means that in the event that you pass away, the US government can levy a tax of 18-40% on your assets (above $60,000). Of course, there are certain ahem less than legal ways of going around it but some people don't want to risk it and by keeping your investments on the LSE, you avoid the whole fuss associated with that.

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