Living in western Europe over next decade (stock mix)

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facchina
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Living in western Europe over next decade (stock mix)

Post by facchina »

Hello BHs - What would you advise this person?

*Early 30s, soon to be married

*Moving from US to western Europe

*Move likely to be for 5 years but given future spouse is European, assuming long term move is likely and possible

*Good income, modest savings

What should this person stock mix (% NA, EU, Asia, etc.) look like? Same question for bonds.
Blue456
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Re: Living in western Europe over next decade (stock mix)

Post by Blue456 »

facchina wrote: Mon Jul 26, 2021 9:59 am Hello BHs - What would you advise this person?

*Early 30s, soon to be married

*Moving from US to western Europe

*Move likely to be for 5 years but given future spouse is European, assuming long term move is likely and possible

*Good income, modest savings

What should this person stock mix (% NA, EU, Asia, etc.) look like? Same question for bonds.
Why not world cap? Something VT (vanguard total word stock).
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LadyGeek
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Re: Living in western Europe over next decade (stock mix)

Post by LadyGeek »

This thread is now in the Non-US Investing forum (Europe).
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TedSwippet
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Re: Living in western Europe over next decade (stock mix)

Post by TedSwippet »

facchina wrote: Mon Jul 26, 2021 9:59 am Hello BHs - What would you advise this person? ...
"Western Europe" is not a country. Not all European countries are in the EU, and not all EU countries are in the eurozone.

If a US citizen, or if not but retaining investments in the US, study the tax treaty, if any, between whatever country and the US closely. Pay particular attention to pensions, both US (401k, IRA, etc) and local country. If a US citizen or green card holder, take special care to avoid the many nasty tax traps the US sets for US persons who live abroad. Consider having the non-US spouse doing all the investing, to keep the IRS out of family finances. For similar reasons, file US tax Married Filing Separately.

For a completely permanent move, consider taking out local country citizenship and then simplifying financial life by renouncing US citizenship (with a close eye on the US tax treaty, if any).

As for the final question ... global stocks, and either eurozone bonds or global bonds (potentially hedged to EUR), depending on the country in question.
Topic Author
facchina
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Re: Living in western Europe over next decade (stock mix)

Post by facchina »

TedSwippet wrote: Mon Jul 26, 2021 1:45 pm
facchina wrote: Mon Jul 26, 2021 9:59 am Hello BHs - What would you advise this person? ...
"Western Europe" is not a country.
LOL. No one said it was a country.

Thank you for the advice, lots to think about.

Ultimately, the job/career will determine where they live, at least near term.
Last edited by facchina on Tue Jul 27, 2021 7:15 am, edited 1 time in total.
TedSwippet
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Re: Living in western Europe over next decade (stock mix)

Post by TedSwippet »

facchina wrote: Mon Jul 26, 2021 4:42 pm
TedSwippet wrote: Mon Jul 26, 2021 1:45 pm "Western Europe" is not a country.
LOL. No one said it was a country.
Indeed. What I was trying to say, albeit rather obliquely, is that revealing the actual country (or countries) might generate far better quality replies for you.

For some reason, the view from the US in particular appears to be that Europe is a homogeneous blob of undifferentiated tax regimes. It is not. Each country has its own unique set of tax rules and regulations, and also -- if it has one at all -- a unique tax treaty with the US. Forum members from that country might have valuable insights for you, but they will not know to respond if the country isn't named.

Sorry if it seems that I'm picking on you. I'm really not. There have been a lot of posts like this recently; yours is just one of many. And it just seems a shame that with crucial detail missing, the best we can do a lot of the time is offer vague generalities that may or not be useful for the country in question.
Topic Author
facchina
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Re: Living in western Europe over next decade (stock mix)

Post by facchina »

TedSwippet wrote: Mon Jul 26, 2021 6:15 pm Sorry if it seems that I'm picking on you. I'm really not. There have been a lot of posts like this recently; yours is just one of many. And it just seems a shame that with crucial detail missing, the best we can do a lot of the time is offer vague generalities that may or not be useful for the country in question.
[ quote fixed by admin LadyGeek]

All good. :sharebeer

If I were to restate my question, it would be something like: Would the most Boglehead'ish thing to do be invest globally, according to market cap (e.g., Vanguard's VT ETF or some equivalent) or bias toward European stocks?
ShadowCat
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Re: Living in western Europe over next decade (stock mix)

Post by ShadowCat »

facchina wrote: Tue Jul 27, 2021 7:51 am
TedSwippet wrote: Mon Jul 26, 2021 6:15 pm Sorry if it seems that I'm picking on you. I'm really not. There have been a lot of posts like this recently; yours is just one of many. And it just seems a shame that with crucial detail missing, the best we can do a lot of the time is offer vague generalities that may or not be useful for the country in question.
[ quote fixed by admin LadyGeek]

All good. :sharebeer

If I were to restate my question, it would be something like: Would the most Boglehead'ish thing to do be invest globally, according to market cap (e.g., Vanguard's VT ETF or some equivalent) or bias toward European stocks?
We have to back up a bit. I know you're eager to choose your asset allocation and all but I echo TedSwippet's comment: we first need to establish what you are even able to do. For example, it is almost impossible for a resident of the EU to purchase a US domiciled ETF like VT due to PRIPPS regulations. Frustratingly, it is simultaneously a huge tax burden for a US citizen to purchase a foreign domiciled ETF, like an Irish domiciled UCITS ETF, outside of a tax advantaged account due to PFIC rules. That doesn't even take into account specifics of tax treaties and whether or not certain tax advantaged accounts are even honored by the country in question.

So to give advice to you, we really need for you to disclose what country you're talking about. "Western Europe" is simply too nebulous.

Also, while it's implied just want to confirm: are you and your wife US tax persons (US citizens or permanent residents)?
namajones
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Re: Living in western Europe over next decade (stock mix)

Post by namajones »

TedSwippet wrote: Mon Jul 26, 2021 1:45 pm
facchina wrote: Mon Jul 26, 2021 9:59 am Hello BHs - What would you advise this person? ...
"Western Europe" is not a country. Not all European countries are in the EU, and not all EU countries are in the eurozone.

If a US citizen, or if not but retaining investments in the US, study the tax treaty, if any, between whatever country and the US closely. Pay particular attention to pensions, both US (401k, IRA, etc) and local country. If a US citizen or green card holder, take special care to avoid the many nasty tax traps the US sets for US persons who live abroad. Consider having the non-US spouse doing all the investing, to keep the IRS out of family finances. For similar reasons, file US tax Married Filing Separately.

For a completely permanent move, consider taking out local country citizenship and then simplifying financial life by renouncing US citizenship (with a close eye on the US tax treaty, if any).

As for the final question ... global stocks, and either eurozone bonds or global bonds (potentially hedged to EUR), depending on the country in question.
I agree with this advice.
Topic Author
facchina
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Joined: Tue Jun 01, 2021 7:14 pm

Re: Living in western Europe over next decade (stock mix)

Post by facchina »

Thanks all.

It sounds like this question cannot be answered in a general sense. When the details are settled (moved to specific location), I will repost.
TedSwippet
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Re: Living in western Europe over next decade (stock mix)

Post by TedSwippet »

facchina wrote: Tue Jul 27, 2021 3:22 pm It sounds like this question cannot be answered in a general sense. When the details are settled (moved to specific location), I will repost.
Fair enough. I guess my suggestions would be to begin to position things now and before the move, so that there's minimal step discontinuity when it actually happens.

So, stocks by global market cap rather than with any US bias, and global bonds rather than US TIPS or other heavily USD-biased fixed income holdings. If moving to an EUR country, hedging bonds to EUR might be useful, though the options for doing this as a US based investor may be limited to none -- I'm not aware of any US domiciled funds or ETFs that hedge to EUR, and the non-US domiciled UCITS ones that do will be a US tax death-sentence to US investors and US citizen expats thanks to spiteful US PFIC tax rules.

Finally, if a US citizen, pay very close attention to the ways in which the US's unique citizenship-based tax regime will restrict your financial freedoms outside the US, both individual and family. Some perfectly vanilla locally tax-advantaged options may be entirely useless for US citizens, non-US banks and other financial providers may simply refuse to take US citizens as customers due to FATCA, and think very carefully indeed before venturing into Roth accounts (many non-US countries will not recognise these as tax-free) . Also, make sure that any investments held in a US broker or bank can be both retained and fully managed when outside the US. Quite a few US banks and brokers are now expat-hostile.
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