# Investment Portfolio



## MrChoco4U (May 2, 2018)

Hello all,

How do you guys management investment portfolio when living in the UAE? Do you guys actively open up stock portfolios, mutual funds, etc? If so any recommendations on which company in the UAE? 


1. How do tax implications work? 

2. Do they have any robo-investors such as wealthfront? Acorns ? Even Maybe Robinhood?


At a complete loss here any help would be appreciated. Thank you!


----------



## MrChoco4U (May 2, 2018)

Any insights?


----------



## twowheelsgood (Feb 21, 2013)

Yes, don't.

Its a shark pool in the UAE unless you hadn't noticed.


----------



## MrChoco4U (May 2, 2018)

twowheelsgood said:


> Yes, don't.
> 
> Its a shark pool in the UAE unless you hadn't noticed.


I assume from your statement the local market is **** lol. So what options do expats have ? I'm sure some of them do some type of investment or maybe not ? :confused2:


----------



## twowheelsgood (Feb 21, 2013)

No idea but I've only heard horror stories.

Invest where there are regulators and a strong culture of investment protection - take your choice.


----------



## John-AD (Feb 13, 2017)

The basic method is to open an account with an international, low cost, online brokerage: Interactive brokers, Saxo bank, Degiro, Swissquote, Internaxx, etc. From there you will have access to the big stock markets and trade as you like. If you are a passive investor, there is a local bogleheads chapter in the UAE that can help.
There are robo advisors and good firms (Sarwa, AES) but they are generally more costly than DIY. And there are plenty of ways to loose money "investing" here.
Taxes is a big story. In short, you don't pay taxes in the UAE, you may pay in other countries.


----------



## XDoodlebugger (Jan 24, 2012)

I used TD Amertrade now that Scottrade was bought by them. Same as if I was in the US.


----------



## John-AD (Feb 13, 2017)

XDoodle****** said:


> I used TD Amertrade now that Scottrade was bought by them. Same as if I was in the US.


 Just to note that most of the brokers I mentioned above are most likely not going to accept US citizens. Of course Interactive brokers will. Another option is Schwab International. By the way, did you inform Ameritrade that you are no longer a resident in the US and they were ok with it?


----------



## XDoodlebugger (Jan 24, 2012)

John-AD said:


> Just to note that most of the brokers I mentioned above are most likely not going to accept US citizens. Of course Interactive brokers will. Another option is Schwab International. By the way, did you inform Ameritrade that you are no longer a resident in the US and they were ok with it?


I did not tell them but do not think it would matter. I still have to pay taxes and the money is in a US account so no reporting requirements like a foreign account.


----------



## ThunderCat (Oct 28, 2015)

Many people including myself invest in mutual funds via our banks.

I don't recommend dealing with investment companies though.


----------



## MrChoco4U (May 2, 2018)

XDoodle****** said:


> I used TD Amertrade now that Scottrade was bought by them. Same as if I was in the US.



Thanks for the reply. So you are using your US bank account via investing. Is there any legal tax implication with that? So with that I can maintain my portfolio in robinhood if I have a US account?


----------



## MrChoco4U (May 2, 2018)

ThunderCat said:


> Many people including myself invest in mutual funds via our banks.
> 
> I don't recommend dealing with investment companies though.


Thanks for the reply. Does UAE banks charge a lot overhead via the mutual fund investment? If you don't be asking, mutual funds returns are relatively lower than stock market. What's it like in UAE? And any bank recommendation you suggest if I were to go mutual funds?


----------



## John-AD (Feb 13, 2017)

XDoodle****** said:


> John-AD said:
> 
> 
> > Just to note that most of the brokers I mentioned above are most likely not going to accept US citizens. Of course Interactive brokers will. Another option is Schwab International. By the way, did you inform Ameritrade that you are no longer a resident in the US and they were ok with it?
> ...


Apparently it matters: https://assetbuilder.com/knowledge-center/articles/american-brokerages-slam-the-door-on-us-expats


----------



## ThunderCat (Oct 28, 2015)

MrChoco4U said:


> Thanks for the reply. Does UAE banks charge a lot overhead via the mutual fund investment? If you don't be asking, mutual funds returns are relatively lower than stock market. What's it like in UAE? And any bank recommendation you suggest if I were to go mutual funds?


Overhead is variable. ADCB charges 3% on entry and 0% on exit.

Mutual funds are basically equity managed by investment companies like Black Rock, Tempelton ... etc. It is of course different than managing stock yourself. One cannot say if it is of less or higher return. It depends on what are you investing in. 

I don't recommend you invest in stock/mutual funds until you have enough related knowledge.


----------



## John-AD (Feb 13, 2017)

ThunderCat said:


> MrChoco4U said:
> 
> 
> > Thanks for the reply. Does UAE banks charge a lot overhead via the mutual fund investment? If you don't be asking, mutual funds returns are relatively lower than stock market. What's it like in UAE? And any bank recommendation you suggest if I were to go mutual funds?
> ...


One can compare his fund return to the benchmark the fund is trying to beat. For example he can compare a US stock mutual fund return to the return of the S&P500 index. If one is paying 3% front load and around 1%per year fund expense ratio when a typical S&P500 index fund (by blackrock or Vanguard or State Street) has no front load and ER=0.04%, one will most likely discover that in the long run he has underperformed the index by an amount equal to the expenses.
One does not need that much knowledge to invest in a global equities index fund that costs 0.25%per year or less, although it is of course good to read a couple of books. One is unlikely to find such products through a bank because the banks cannot charge high commissions on such products.


----------



## ThunderCat (Oct 28, 2015)

John-AD said:


> One can compare his fund return to the benchmark the fund is trying to beat. For example he can compare a US stock mutual fund return to the return of the S&P500 index. If one is paying 3% front load and around 1%per year fund expense ratio when a typical S&P500 index fund (by blackrock or Vanguard or State Street) has no front load and ER=0.04%, one will most likely discover that in the long run he has underperformed the index by an amount equal to the expenses.
> One does not need that much knowledge to invest in a global equities index fund that costs 0.25%per year or less, although it is of course good to read a couple of books. One is unlikely to find such products through a bank because the banks cannot charge high commissions on such products.


There are no annual expenses after the front load, at least with ADCB. Not sure about other banks. I didn't mean he has to read books, just get familiar with the sectors and geographical issues. 

Different funds invest in different sectors and parts of the world (Emerging markets, Asia, japan or the US or even a mixture of many regions). There are banking funds, health sector funds, energy funds and technology funds. One has to understand what they are investing in.

About your last statement that it is unlikely to find such products with banks, I beg to differ, all big banks have a huge variety of different types of mutual funds nearly covering all major fund managers.


----------



## John-AD (Feb 13, 2017)

Thundercat, 
we are completely opposite on the subject. I would suggest you revisit your strategy to reduce your fees, but that's up to you. One thing we may agree in is that investing through the bank's mutual funds is better than investing through an insurance company...



ThunderCat said:


> There are no annual expenses after the front load, at least with ADCB. Not sure about other banks.


I checked the bank's website and could not find a fund without an annual expense ratio. If you actually read the KIID you will see that mentioned clearly. Here is an example of a fund that has ER=1.82%. This means that every single year the fund (not the bank) is taking 1.82% of your money. The KIID also includes the benchmark the fund is trying to beat.
https://lt.morningstar.com/nttgz903...UniverseId=FXALL$$ALL_3866&BaseCurrencyId=USD

The point is that if you lose 3% of your money upon entry and then year after year you lose another 1.82%, the fees you are paying compound to substantial numbers, whether you realise it or not.



ThunderCat said:


> I didn't mean he has to read books, just get familiar with the sectors and geographical issues.


I certainly advise to read books, learn how to invest in a sensible and beneficial manner and not fall prey to the financial industry. Here are my suggestions (the last one is a free wiki collection):
https://www.amazon.com/Millionaire-Expat-Wealth-Living-Overseas/dp/1119411890
https://www.amazon.com/Little-Book-Common-Sense-Investing/dp/0470102101
https://www.bogleheads.org/wiki/Main_Page



ThunderCat said:


> Different funds invest in different sectors and parts of the world (Emerging markets, Asia, japan or the US or even a mixture of many regions). There are banking funds, health sector funds, energy funds and technology funds. One has to understand what they are investing in.


There is no way to know unless I see the KIID. But even if I know, say I choose a fund that invests in Europe Large-Cap Value Equity because the bank's salesman is giving a hot tip. I am making a bet that I know more than all the traders and professionals out there and I have selected the winning fund. Even professional money managers cannot consistently select winning funds. I prefer to buy an index fund (ETF) that covers the entire world equities with an ER of 0.25% and no load.




ThunderCat said:


> About your last statement that it is unlikely to find such products with banks, I beg to differ, all big banks have a huge variety of different types of mutual funds nearly covering all major fund managers.


They don't seem to cover Vanguard or any low cost funds! I was referring to products that do not charge an initial load and have an expense ratio of 0.25% or less. Can you show me one from any bank? Even if there are, I assume the salesman didn't tell you about it, did he?
Here are some that you can find outside the banks. Fidelity currently launched funds with 0 expense ratio and no load; i.e. you buy them and keep them for free!
https://investor.vanguard.com/mutual-funds/
https://www.blackrock.com/investing/products/mutual-funds/index-mutual-funds
https://www.fidelity.com/mutual-funds/investing-ideas/index-funds


----------



## ThunderCat (Oct 28, 2015)

John-AD said:


> Thundercat,
> we are completely opposite on the subject. I would suggest you revisit your strategy to reduce your fees, but that's up to you. One thing we may agree in is that investing through the bank's mutual funds is better than investing through an insurance company...
> 
> 
> ...


I do agree with you about lack of cheap funds. And of course I understand the concern about the management fees, loading fees & expense ratio.

Take this fund as an example: 

Franklin Technology Fund A(acc)USD|LU0109392836

This fund has made a profit of 40% last year and is currently making 14% YTD. I believe after all fees the investment looks worthy. I have many other examples. I do understand the risks of course. It's a personal choice you make.


----------



## John-AD (Feb 13, 2017)

The particular fund you chose has a front load of 5.75% and ER=1.81%. The fund may have given the returns you mention, but you did not get them. Your return was equal to the fund's return minus the front load minus the ER per year. You just threw 7.51% down the drain. Now, if you see the chart, you will see that the fund performance follows the benchmark very closely (actually one is on top of the other). This means that the fund manager is buying mire or less the index.
A typical technology sector index has an ER=0.15 and no load, so you only threw 7.56% down the drain. Actually the index did slightly better than your fund: https://www.justetf.com/uk/etf-prof...oteCurrency=USD&from=search&isin=IE00B3WJKG14

A serious problem is that you look at past performance to make decisions. Do you believe that this performance will continue in the future? Plus if you knew that the technology sector was going to boom one year ago, why didn't you buy Apple shares? You would have made a clean 50% profit.


----------



## John-AD (Feb 13, 2017)

Sorry I saw a typo: If you had bought your fund one year ago, the fees you paid would have been 5.75+1.81=7.56 (+bank fees). Compared to a 0.15% fund, you paid 7.56-0.15=7.41% extra.
Also have a look at these low cost funds that have made more than your fund year to date before expenses. http://etfdb.com/compare/highest-ytd-returns/


----------



## ThunderCat (Oct 28, 2015)

John-AD said:


> The particular fund you chose has a front load of 5.75% and ER=1.81%. The fund may have given the returns you mention, but you did not get them. Your return was equal to the fund's return minus the front load minus the ER per year. You just threw 7.51% down the drain. Now, if you see the chart, you will see that the fund performance follows the benchmark very closely (actually one is on top of the other). This means that the fund manager is buying mire or less the index.
> A typical technology sector index has an ER=0.15 and no load, so you only threw 7.56% down the drain. Actually the index did slightly better than your fund: https://www.justetf.com/uk/etf-prof...oteCurrency=USD&from=search&isin=IE00B3WJKG14
> 
> A serious problem is that you look at past performance to make decisions. Do you believe that this performance will continue in the future? Plus if you knew that the technology sector was going to boom one year ago, why didn't you buy Apple shares? You would have made a clean 50% profit.


I don't understand why are you angry : )

I don't see any serious problems other than you trying to force your opinion. There is no 5.75% loading fee. You just read that I understand but it doesn't apply. You only get charged 3% by the bank. Still, after your calculations, some people ACTUALLY earned 32% on their USD investment in 2017, this is GREAT.

You are now saying this might not happen again ? I do agree. But it might still also happen again. Otherwise, I don't look under my feet. If the fund doesn't make money this year or even the year after, I am just keeping the shares. On the long term I am definitely winning. This is not an opinion, these are facts. Take a look at the charts for the past 40 years.

AGAIN, this is one's personal choice, I personally don't advise my friends for instance to follow me. And I am certainly not selling anything here. I don't even work in this industry. Just stating my personal opinion. I might be wrong. You might be right : )


----------



## ThunderCat (Oct 28, 2015)

Now answering the question, why if I knew the tech sector will boom I didn't buy apple shares ?

I knew, I invested in tech and earned more than 30%, you didn't.

Why didn't I buy apple in particular, I would have earned 50% ? To diversify the risk, I accept to earn less.


----------



## John-AD (Feb 13, 2017)

Look, it seems that the bank salesman has done a good job with you, but what you are doing is not investing: you are speculating.

If you want to speculate, there are more profitable vehicles than the stock market. If you want to be diversified you don’t go and buy a sector fund.

Now, the point you don’t seem to get is that by paying a large amount in fees, your returns diminish over time. It’s not only the one-off fee that you pay to your bank; it is also the ER that the fund takes annually. Fees compound substantially over time.

By investing some your time to educate yourself you can do by far a better job by yourself and get rid of the money sucking finance industry.

P.S. At least you are not investing through an insurance company: fees there are a lot more than 3%.

Good Luck


----------

