Is post #1 the updated cheapest route as of 10/10/2019?

Anyone knows if it's cheaper/possible to fund accounts using Big Pay?

BigPay allows transfers to international banks in few currencies including SGD.
But I haven't tried it so I'm curious if anyone has done it before and whether it's cheaper.

I haven't opened Singaporean bank account or TradeStation yet so cannot try. Anyone who tried, update us haha.

Maybe try with small amount like RM100 and see

But confirm it works is it?

Errr. Guys. How to open Singaporean bank account in Malaysia again? I remember reading it somewhere but can't find.

I remember got Maybank and CIMB options. Anyone know which post?

Bond prices skyrocket near recession or better worded as 'potential recession' because it is deemed as a safer asset.
Most stocks can go bankrupt. Even index like S&P 500 is not spared during recession and can drop >5% in a day.

So, investors flock to bonds which give them a almost 'guaranteed' return although it's low 3%~5% p.a. depending on the bonds.
This 3%~5% p.a. positive return to them is better than losing up to 15%~40% in a recession.

When demand for bonds go up, price of bonds will go up too.
As price of bonds go up, bond yield (coupon/bond price) go down.
Once recession is over or investors think it's over, they will sell bonds and bond price will go down.

If you're a contrarian investor (an investor that goes against the crowd), you will sell bonds and buy stocks or index whenever there is a 'discount'.
The ordinary common investor is afraid and will liquidate stocks and buy bonds nearing recession.

Bond prices change mostly due to interest rates too. By the way, the formula for market value of bond (MVd) is:


If central bank thinks recession is coming, they lower interest rates.
Everything is constant except bond holder's rate of return. When interest rate drop, investors can borrow cheaper hence, kd.BT drops.
When kd.BT drops, MVd.

This is affected by the bond maturity date, n. Longer maturity date means the impact for every 1% change in interest rate is greater.
E.g. if interest rate goes up from 2% to 3%, a bond with 10 year maturity will drop more than a bond with 2 year maturity.

On the other hand, bond prices go down during economic boom because the central bank wants to control inflation by increasing interest rates.

This post has been edited by Yggdrasil: Oct 30 2019, 08:39 PM

Lol wrong link. Should be this one:
ETF: Irish domiciled ETF vs US, WHT benefit vs expense ratio bid spread

The first link is studying the return of S&P 500 vs NASDAQ 100.

The other link is studying whether you have an advantage buying a fund that will give you 15% WHT (non-US domiciled, higher expense, huge spread) instead of buying the 30% WHT (US domiciled, lower expense, narrow spread) equivalent.

Anyways, it depends on who you listen to. My findings based on the sample shows that US domiciled ETF is still better. My conclusion tends to support Stashaway. This is why they rather buy the US domiciled ETF rather than elsewhere to save 15% WHT.

To be clear, the difference is is around 0.12% in the super long run. You are unlikely to lose out. What's more important is when you convert back.

Firstly, you need to clarify what you meant by currency here. Got 2 scenarios:

1) Buying S&P 500 in Euro vs USD - aka buying the same asset using 2 different currencies.

ETF currency does not matter because it is the NAV of the asset which matters.
However, it does matter if the ETF managers hold cash. Almost all hold a small % of cash depending on the currency.

Furthermore, you should be more concerned about the exchange rate when you decide to liquidate, not when you buy.
As you average down, the currency fluctuations will cause you to buy more units when it depreciates and buy less when it appreciates.
In the long run, you will return to the 'average' exchange rate and it only matters when you sell.

When you sell, the exchange will decide whether you earn more or less. This is very important because it will decide whether your compounded return is higher or lower.
Because of exchange rate, you may make a gain 3% gain in USD terms but a 2% loss in MYR terms.

E.g. 1 USD : 4 MYR, you convert RM1000 into $250 to invest. (Just once, no dollar cost average)
1 year later, your $250 grew by 6% p.a. for 2 years to $280.90 [250 x 1.06^2]

You decide to liquidate, MYR appreciated against USD. 1 USD : 3.5 MYR.
You get back RM983.15 [$280.90 x 3.5]. You made a loss.

Why loss? You put in RM1000 and get back RM983.15.
Your return p.a. is -0.84% [(983.15/1000)^(1/2)-1].

Usually by a few % so it's best to liquidate when MYR is weak not when it is strong. Technically, you should buy more S&P 500 when MYR is strong not weak.

If on the other hand, MYR depreciates when you liquidate and convert back:

Say, 1 USD : 4.5 MYR. Your investment after 2 years is still $280.90 remember? But when you convert back, you get RM1264.05 [$280.90 x 4.5]
Your return p.a. is 12.4% [(1264.05/1000)^(1/2)-1].

See now currency is more important when you liquidate?

2) Comparing investing in an EU ETF vs US ETF when they both give 6% return p.a.

Yes. This matters because the NAV of the fund is affected.
Imagine a US company with share price has a RM1,000,000 land in Malaysia at 1 USD : 4 MYR.
Then, MYR depreciate to 1 USD : 4.5 MYR.
The company records the asset value has fallen from $250,000 to $222,222.
This is called 'translation loss'. Each company that has operations overseas will include these in their balance sheet.

BUT, you should only be concerned if your ETF list of companies does not have operations in multiple locations.
ETFs like S&P 500 is safer because they do businesses in almost every country and is 'currency diversified'.

Imagine a buying a, EU company with land in multiple countries vs an EU company with land only in EU.
Same concept.

This post has been edited by Yggdrasil: Nov 5 2019, 08:53 PM

My calculation was based on the closing price everyday. Closing price is the last transaction that took place that day. It can be at the bid or ask price. So it's fair.
I was using all of the samples. Imagine yourself buying the index everyday at the closing price with $10 for 9 years.
Then, what is your average return p.a.? Basically that's what I did for an S&P 500 tracked in US vs the one listed in London.

My findings show that US domiciled S&P 500 wins.

Meaning the benefit of lower expense ratio and lower tracking error exceeds the benefit of lower WHT.

However, I can still try to perform hypothesis testing to see whether the difference is significant or purely by chance.

EDIT: I did the hypothesis testing and if my calculation is correct, there is significant evidence at 99% confidence interval that the returns are not the same and the US domiciled S&P 500 gives higher returns

For those who want to calculate themselves, the n for both samples is 1895.

This post has been edited by Yggdrasil: Nov 5 2019, 11:13 PM

Withholding Tax (WHT) is only applicable for US non-resident alien.
Withholding tax is cash which the resident company holds to pay to the government on your behalf.
If they fail to keep this cash before distributing profits to you, they will still be liable to pay to the government.

Hence, US citizen do not have to pay WHT but pay according to their usual tax rates. I believe they measure the % based on each person's income.
Just like Malaysia. When you file income tax, there is a section for dividends received. However, we do not pay dividend tax because currently, it's exempt.
In future, we may have to.

WHT 15%. If you look at my thread. The dividends are already 'priced in' into the share price. Hence, the ETF does not pay dividends out but the NAV increases, and thus the price of the ETF itself. But someone point out if I am wrong.

Actually you don't have to hedge if you decide to invest every month and dollar cost average.
Eventually, your point of entry will 'harmonise' meaning you will obtain a long term weighted average of the exchange rate in which you entered.
Meaning a weak ringgit will strengthen against USD in some years and weaken.

But if Malaysia get sanctioned by US, GG. Look at Iran's currency:



What is more important is the exchange rate on the time you decide to liquidate.

Alternatively to maximise gains and get value for your money, you can be smart by:
1) Investing in Malaysian stock when MYR is weak and will recover.
2) Investing in US stock only when MYR is strong/strengthen against USD.
3) If you think MYR will continue depreciating forever probably to 1 USD = 5+ MYR, then straight invest in US stocks. It will maximise your gains even more.

This post has been edited by Yggdrasil: Nov 5 2019, 11:44 PM

Yes. My statement is still correct because Japanese also follow the 15% if they buy the Irish domiciled ETF.

Edit: for clarity. The Irish domiciled ETF already pays the 15% dividend because it is applicable to them. Whether or not your own country has additional taxes is a different story.

This post has been edited by Yggdrasil: Nov 5 2019, 11:56 PM

Usually countries solve this WHT problem with something called Double Taxation Agreement (DTA).
Unfortunately, Malaysia does not have one with the US.

Here: http://lampiran1.hasil.gov.my/pdf/pdfam/006a.pdf
Says that non-resident individual is not liable to tax if receiving tax exempt dividends from Malaysia.

If this is not the case, I think it's possible to be taxed in both countries.
This is also why DTA is enacted. It is to reduce taxes from both sides of the country and encourage investment.

A person is considered to be domiciled in the US for estate and gift tax purposes if he or she lives in the US and has no present intention of leaving.

US domiciliaries are taxed on the value of their worldwide assets at death in the same manner as US citizens. Non-US domiciliaries are taxed only on the value of their US “situs” assets. US situs assets generally include real and tangible personal property located in the US, business assets located in the US, and stock of US corporations. The definition of US situs assets may be modified by an applicable estate and gift tax treaty.

An exemption of $60,000 is available against the value of assets includable in the US taxable estate of an individual who was not US domiciled.

NonUS domiciliaries are subject to US gift tax only on transfers of tangible personal property located in the US and real property located in the US.

Source: https://www2.deloitte.com/content/dam/Deloi...dent-aliens.pdf

I guess make sure you withdraw before you die.

Actually, will the US know whether you die or not?
I mean if you let your will executor or your spouse know you invest in US stocks and give them the login details, then they can withdraw immediately when you die.
US don't even need to know whether you are dead or alive.
Then again, better not mess with the IRS.



Anyways, does anyone know how to avoid this tax? Anyone with tax planning ideas?
What if a Malaysian sets up a living trust. Will it still be taxable?

Not sure what you meant but..

Example you have RM1000 to invest every month.
QQQ is USD 200 per unit today. 1 USD: 4.15 MYR.

You convert and get USD 240.96. You can buy 1 unit at USD 200. Means you left USD 40.96 not yet invest. You can use this money to top up with next month.

You are still DCA-ing.
Stashaway charges a % ratio. If you plan to DCA in the very long run, ETF is still better.

Alternatively, you can do a combination.
Meaning you use Stashaway until you reach an amount large enough for you to transfer. E.g. you DCA RM1000 for 12 months + gains = RM12650.

At the end of the year or when MYR is strong, you withdraw from Stashaway and invest in ETF.

Next year, you continue with Stashaway until you accumulate for 12 months and repeat.

This is what I understand:

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You do not need to file any WHT when buying non US-domiciled ETF because no dividends are paid to you.
Instead, the dividends are paid to the management, who then pays the WHT applicable in their country.
They then reinvest the dividend net of WHT back into the index.
Hence, your gains is solely the increase in price per unit based on the NAV.

Meaning if the NAV is $100 and a $1 dividend is declared by companies in S&P 500, the management will pay the tax (assume 15%).
Hence, the NAV increases by $100 + $1 (1-0.15)= $100.85.

This is why no dividend yield is displayed.

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On the other hand, if you buy a US-domiciled ETF, dividends are paid to you.
You have to settle the tax according to the rate applicable to you.
A US-resident will pay dividend tax not WHT. A non-resident alien will pay WHT depending on the WHT applicable to him/her.

Meaning if the NAV is $100 and a $1 dividend is declared by companies in S&P 500.
NAV is still $100 because dividends are paid out to unit holders.
A US-resident pays according to their tax rate.
A Malaysian will pay 30% WHT.
Price of the ETF is still $100.

This is why dividend yield is displayed. In this case, the yield is 1%.

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Dividends are paid to you. You settle the tax and then opt to buy more units using the dividends.
So, a US citizen's and non-resident alien's actual gain is different due to the difference in tax but their capital gains are the same.

I did not test SXR8 against VOO but I tested CSPX.L (London) and VOO performed better by 0.15% p.a.
This is presumably if the method I test it is correct.

NASDAQ 100 pays lesser dividends than S&P 500.
When I compared NASDAQ 100 (QQQ v CNDX.L), the difference is 0.13% p.a.

It's hard to compare the 2 studies together because the expense ratios are not the same.
QQQ has 0.13% higher expense than London equivalent.
VOO has only 0.04% higher expense than London equivalent.