Asked on 28 May 2019
I also understand that for some robo Advisors, dividend withholding tax is applicable. Is it the same for DFA (moneyowl or endowus)?
Also, are we able to adjust/change the amount to be invested monthly? (If I transfer more than the stated amount, will everything be invested or only the stated amount will be invested?)
To answer your first question, yes your dividends are re-invested back into the portfolio.
It will go back into your account and it will be whon in the transaction statement monthly.
In fact, I think most robo advisors witholding tax will all apply.
If you transfer that amount into your Robo-advisor account (it is basically their bank account) the total amount will be managed by them (usually they will keep a small % as cash) but almost 95% or more will be invested based on your risk preference and appetite.
Hope this helps!
1 more comments
Let me answer for Endowus - firstly we use accumulation share classes for the funds in our portfolio (both DFA and PIMCO), where there are no distributions. Any interest or dividends received by the fund manager are automatically reinvested. We think that this is a more efficient way to manage your cashflows, since you can redeem the proportionate amount of your portfolio anytime you need the cash.
In terms of witholding tax, there are a few levels of taxes to think about:
The funds in our portfolio are UCITS structured, which we believe is more tax efficient for non-US investors. The portfolio-level tax is generally the same for UCITs and non-UCITs funds, which is tax due by the fund for holding, receiving dividends/income on the underlying securities (including US securities where taxes apply). On the fund-level, which is due by the investor, UCITs funds do not charge withholding tax for income and dividends. There is also the investor-level tax which is dependent on each investor's individual tax status.
You can set a recurring investment for your account, which you can adjust anytime. If you transfer in more than the stated amount, only the stated amount will be invested.
Hope this helps!
From what I know , most of the robo Advisors dividends are all reinvested into your portfolio. Hence you can actually treat the system as compounding interest. So everytime there is a dividends it get reinvest , your portfolio get bigger and bigger with each dividends paid.
For what I know about smarty, they will invest whatever amount that has been transfer into the goal itself.
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