Was it a mistake to invest in VUSD instead of VOO ?

I have bought ~10kUSD of VUSD on IBKR but after doing some calculations, it seems that maybe investing in VOO on tiger broker might be better if I plan to DCA ~500USD monthly. Is there any mistakes in my calculation below ? ( I'm <26 yrs old)

FEES:

For VUSD on IBKR,
Monthly fees= 2.14USD( currency exchange with gst ) + 1.82USD( tired pricing with gst) + 0.22USD( exchange + clearing fee )= 4.18USD

For VOO on Tiger
Monthly fee = 1.99USD( commission) + 0.14USD ( GST ) = 2.13USD

so every year I'll be paying (4.18 - 2.13) * 12 = 24.6USD more with IBKR

DIVIDEND:

VUSD dividends = 1.13%(dividend yield from marketwatch) 10000(capital) - 0.07%(expense ratio) 10000 = 106USD

VOO dividends= 1.4%(dividend yield from marketwatch) 10000 70%(withholding tax) - 0.03%( expense ratio) * 10000 = 95USD

Additional dividend from VUSD is only 106 - 95 = 11USD which is less than the additional cost of 24.6USD I am paying for IBKR.

After some estimation it seems that I need to have around 22kUSD before it is better to buy VUSD on IBKR. So moving forward should I sell my VUSD on IBKR and buy VOO on TIger until I have 22kUSD ?

Any advice is appreciated. Thank you

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Elia

Edited 23 Feb 2022

Hi Wayne, do you have any conclusions on this topic? Did you end up investing in VOO on Tiger?

One thing to take into account is that Tiger has a worse exchange rate than IBKR. I.e. as of 23/02/22: Tiger: 1 SGD = 0.7412 USD, IBKR: 1 SGD = 0.7433 USD.

Hence, if you convert 1,000 SGD you'll end up with 2 USD more on IBKR. Therefore, the 2.14 USD currency conversion fee on IBKR is negligible.

In terms of your dividend calculation, is my assumption correct, that the listed VUSD dividend yield already deducts the 15% withholding taxes?

I'm recalculating the dividends with updated yield data:

DIVIDEND:

VUSD dividends = (1.17%(dividend yield) x 10,000USD(capital)) - (0.07%(expense ratio) x 10,000USD) = 110USD

VOO dividends = (1.38%(dividend yield) x 10,000USD(capital) x 70%(withholding tax)) - (0.03%(expense ratio) x 10,000USD) = 93.60USD

Concluding, with VUSD you'll earn 16.40 USD (110USD - 93.60USD) more dividends per year on your 10,000USD capital.

Now the question is, is the 16.40 USD (0.16%) profit worth to trade an Irish domiciled index fund with a lower spread?

Any advice/feedback would be much appreciated :)

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Tan Choong Hwee

02 May 2021

Investor/Trader at Home

I understand IBKR has a minimum USD10 monthly commission for account with less than $100k. Your monthly USD500 DCA probably generates less than USD10. The cost is relatively high (2%) for small monthly transaction value.

Using Tiger to invest in VOO or VUSD is likely to be cheaper in transaction cost.

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