New EUR (Portugal) portfolio. VWCE/AGGH vs Vanguard LifeStrategy ETF

For investors outside the US. Personal investments, personal finance, investing news and theory.
Sister forums: Canada, Spain (en español)
---------------
Post Reply
Topic Author
potz
Posts: 27
Joined: Mon Feb 01, 2021 12:11 am

New EUR (Portugal) portfolio. VWCE/AGGH vs Vanguard LifeStrategy ETF

Post by potz »

Hello,

Country of Residence: Currently Asia (Capital gains tax free). Will be Portugal from 2022 under NHR
International Lifestyle: Plan to be in Portugal for min 5 years. Unknown after that.
Currency: USD and EUR
Emergency funds: Yes.
Debt: No Debt
Age: 50-60
Desired Asset allocation: 80% stocks / 20% bonds

Current retirement assets (USD)

Current General investment account, taxable
68% ISHARES CORE MSCI WORLD LSEETF (IWDA)
6% ISHARES CORE EM IMI ACC LSEETF (EIMI)
26% ISHARES GLBL INFL LNKD GOVT LSEETF (IGIL)

New investments (EUR)

New annual Contributions (EUR)
250K EUR Sheltered investment account

_______________________________________________________________
Background:

Due to being a bit of a nomad throughout SE Asia over the last 15 years, my current portfolio has been denominated in USD with IBKR for some time. I am moving to Portugal in early 2022 and will be under their NHR program.

The Portugal NHR program still taxes capital gains on financial instruments if they are not in a retirement account so I doubt I will, nor have the need to, touch these retirement savings while I am tax resident in Portugal. I have recently reset the costs basis for these holdings "just in case" before I move to Portugal so I will not be taxed on the total capital gains should I have need to use funds from these investments.

I am now semi-retired, but earn passive income from private businesses in which I have either participated in founding, or invested in. Lately these dividend payments have been in EUR and will continue to be in EUR for the foreseeable future.

My current and future incoming corporate dividends will be in EUR, so I have created a NEW investment account under my holding company (outside Portugal, no capital gains tax, non black listed country) and plan to now make any NEW investments as EUR denominated in this account. As incoming personal dividends are tax free in Portugal under the NHR, should I wish to use funds from this investment account, I can receive these as personal dividends tax free.

Want something very easy to manage in this new investment account. I like my current USD denominated 3 ETF fund investments, but would like 2 (or 1...) ETF(s) instead. Was initially considering a combination of VWCE/AGGH and re-balancing yearly, but am now wondering if I should take this simplicity a step further and only use the Vanguard LifeStrategy 80% Equity ETF.

Questions:

1. Am I trying to take this simplicity to an extreme by using the Vanguard LifeStrategy 80% Equity ETF instead of VWCE/AGGH combo? I know there is a is a higher TER but this may be worth it to me just to set it and forget it.

2. If I choose a 2 ETF solution and not VWCE/AGGH combo, is there any other suggestions that mimic my current USD holdings?

3. If I do choose Vanguard LifeStrategy 80% Equity ETF, it seems very new (Dec 2020 inception) and I was concerned that there is so little liquidity in the fund. When I checked JustETF today it was >60m EUR total fund size. Should this lack of assets concern me? anything else concerning about a new ETF?


Thanks!
XtremePWN
Posts: 43
Joined: Fri Aug 23, 2019 3:01 am

Re: New EUR (Portugal) portfolio. VWCE/AGGH vs Vanguard LifeStrategy ETF

Post by XtremePWN »

If you are semi-retired, you might want to be able to rebalance your bonds portion of portfolio to add more bonds in the future, so keeping a simple 2-fund portfolio VWCE + bonds fund would make that easy, meanwhile with Lifestrategy funds it's impossible to rebalance, this being the biggest disadvantage for you
Laurizas
Posts: 515
Joined: Mon Dec 31, 2018 3:44 am
Location: Lithuania

Re: New EUR (Portugal) portfolio. VWCE/AGGH vs Vanguard LifeStrategy ETF

Post by Laurizas »

potz wrote: Mon Aug 02, 2021 1:26 am 3. If I do choose Vanguard LifeStrategy 80% Equity ETF, it seems very new (Dec 2020 inception) and I was concerned that there is so little liquidity in the fund. When I checked JustETF today it was >60m EUR total fund size. Should this lack of assets concern me? anything else concerning about a new ETF?
I would not be concerned with novelty and total fund size. It should grow bigger over time.
Topic Author
potz
Posts: 27
Joined: Mon Feb 01, 2021 12:11 am

Re: New EUR (Portugal) portfolio. VWCE/AGGH vs Vanguard LifeStrategy ETF

Post by potz »

XtremePWN wrote: Mon Aug 02, 2021 2:38 am If you are semi-retired, you might want to be able to rebalance your bonds portion of portfolio to add more bonds in the future, so keeping a simple 2-fund portfolio VWCE + bonds fund would make that easy, meanwhile with Lifestrategy funds it's impossible to rebalance, this being the biggest disadvantage for you
Thanks for the feedback. Agreed that if I decided my asset allocation percentages needed to change as I get older the LifeStrategy fund would become cumbersome, but I have other investment accounts where I could accommodate this, and do not envision having to change asset allocations in this account at all.
assyadh
Posts: 580
Joined: Tue Sep 18, 2018 12:44 pm

Re: New EUR (Portugal) portfolio. VWCE/AGGH vs Vanguard LifeStrategy ETF

Post by assyadh »

You would have foreign dividends tax free under NHR so you should prefer ETFs that distributes rather than accumulates. Pick VWRL
Topic Author
potz
Posts: 27
Joined: Mon Feb 01, 2021 12:11 am

Re: New EUR (Portugal) portfolio. VWCE/AGGH vs Vanguard LifeStrategy ETF

Post by potz »

assyadh wrote: Wed Aug 04, 2021 10:12 am You would have foreign dividends tax free under NHR so you should prefer ETFs that distributes rather than accumulates. Pick VWRL
Thanks for the feedback!

This brokerage account would not be in Portugal, but would be under a corporate entity in a jurisdiction in which it will not have to pay tax on dividends or capital gains. Should I need access to funds from these investments I would then pay myself a personal dividend, and would not be charged tax on dividends in Portugal.

So I dont think it matters if it is accumulating or distributing. As such, I think I am better off with the accumulating VWCE for simplicity
assyadh
Posts: 580
Joined: Tue Sep 18, 2018 12:44 pm

Re: New EUR (Portugal) portfolio. VWCE/AGGH vs Vanguard LifeStrategy ETF

Post by assyadh »

Sounds correct
Post Reply