For the starters, what do you recommend? I am more inclined towards ETFs for around 1-2 yrs investment horizon and it looks like the US market has far more options obviously. Apart from the currency fluctuation, are there any other complexities involved in trading in the US market (say using Stake) vs investing locally?
Trading in US stock market vs Aus stock market - pros and cons
virhlpool on 27/12/2020 - 00:21
Comments
ETF isn't something people normally trade. People buy ETF and hold them for passive income.
The main pro of Aus-domiciled ETFs is that there is no W-8BEN to fill out in order to avoid foreign withholding tax.
Also there is friction (ie fees) every time you want to move money back and forth.
Getting down to the minutiae,
- "ex-Australia" products are unlikely to be offered on US markets
- AUD-hedged products are unlikely to be offered on US markets
- I don't think there is an easy way to claim back franking credits if for example a "World Leaders" ETF contains BHP as one of the constituents then these franking credits are essentially lost. Even if you choose an "ASX200" ETF, if it's domiciled in the US I believe you forego the franking credits (someone might be able to confirm).
If the government ever gets rid of franking credits then it makes the decision a lot easier.
Using Stake (and similar apps), we don't have to do any paperwork such as W-8BEN. Do we? I believe they take care of everything and the annual statement that you get from them is good enough for Australian tax purpose. Please correct me if my understanding is incorrect.
not sure why it was negged. good advice nicely put.. gave a +
US market has far more options obviously
I don’t get that.
You only need a few investments to make a lot of money, unless you’re so rich you move the market and there’s not enough liquidity for your investment size.
So unless you’re moving billions of dollars I see no need on “more options”.
I’m confident most can manage a multimillion account just in Australia without being constrained.
What are you talking about?
The US does offer more stocks for trading including more ETFs.
Sounds like the words of someone who over-invested in baby bunting.
@watwatwat: I “over invest” in all my investments. When I know I’m on a winner why would I just invest a little?
As buffet has said, imagine you have a punch card with 7 or 8 holes in investing, for your whole investing life. If you did, you’d be a better investor. And if that’s the case, you wouldn’t need to venture outside to unknown regions.
I “over invest” in all my investments
I know I’m on a winner
crappy australian retailerYeah ok.
@cloudy: Warren Buffet is an old hoarding dinosaur that doesn't understand that intangible assets have intrinsic value even when they don't understand it.
that doesn't understand that intangible assets have intrinsic value even when they don't understand it.
i dunno what to say about that other than the obvious, you dont get what you dont get. Why does that need to be put into words lol You basically said nothing
Even if someone invests only in the ASX, I have a 1 in 3000 chance someone would pick my investment (at random). And if they do invest their $1000 hard earned, it wouldn’t move my investment by one iota.
But yes, I do very well investing thanks for pointing it out.
Depends what ETF you're after, that's not avail locally.
1-2yrs are short even for ETFs especially going into the market at ATH when all sectors already getting pumped.