[Dubai] Mixed Household Expat living in Dubai - Advise Needed

For residents of the United Arab Emirates.
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TheExpatDXB
Posts: 1
Joined: Mon Mar 16, 2020 1:49 am

[Dubai] Mixed Household Expat living in Dubai - Advise Needed

Post by TheExpatDXB »

Good Morning Everyone,
I am Italian, my wife is British. We are mid-30s and have been living in Dubai for almost 10 years now.
We both work and for the next foreseeable future we are planning to stay in Dubai (but you never know...). We have no idea where we will retire but very likely we will stay expats all our lives (no plans to move back to Italy for sure, and probably UK neither).

After doing some reading, I guess I am ready to take the first step into the markets. assuming my starting point is approx 100,000USD, long term window (20+ years) and sustain it with around 5,000USD per month max. I have the following random questions for you:

1) Platform --> Saxo Bank Platinum vs IB Pro?
This is what I know: Saxo has lower fees on the platinum account and inactivity fees are based on 6 months inactivity (unlikely to happen). On the other side, IB PRO has inactivity fees based on monthly inactivity (more likely to happen). As far as my understanding goes, IB buys in the market under their name vs Saxo buys on my name (does this make a difference in case either of them go south?). What's your thought?

2) Risk Exposure and Portfolio Content (what is your overall thought?):
- 74% ETF (VWRA or VWRD)
- 25% Bonds (IAAA or IGLO or AGGU or AGGG or a mix of them)
- 0.5 to 1% stocks or crypto --> this is more in case I fall into the temptation of investing short term just to try something new and risky.

3) Accumulating or Distributing Funds?
I guess here it goes a bit into International Tax, but I guess (correct me if I am wrong) distributing is good while I am in Dubai and dividends aren't taxed and if I were to move somewhere else in the future (where dividends are taxed) then it would be best to shift to accumulating? Does it make sense? When is one recomended vs the other one?

4) Portoflio Currency Question.
Is it best to have funds in one currency only (100% USD) or distribute the portfolio into a mix of currencies given the structure of the household and the AED being pegged to USD? (in which case I would guess a 60%USD - 20% GBP 20% EUR)?

Anything else you would recommend?
Thank you all in advance!
DJN
Posts: 996
Joined: Sun Nov 19, 2017 11:30 pm

Re: [Dubai] Mixed Household Expat living in Dubai - Advise Needed

Post by DJN »

Hi,
a few answers to some of your questions to start you off:
I wouldn't use Saxo due to their cost. I would just use the basic IBKR, that's all you will need.
Age in bonds is a simple way to choose your allocation but you should do some more work on that.
Your suggested portfolio is fine, I wouldn't bother with the stock picking / crypto.
If you remain in UAE I would choose accumulating versions.
You are earning most likely in dollar equivalent, therefore the currency issue is limited. I wouldn't bother with the sterling.
There is a bogleheads for UAE residents: viewforum.php?f=26
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
ICH
Posts: 244
Joined: Wed Jun 13, 2018 3:08 am

Re: [Dubai] Mixed Household Expat living in Dubai - Advise Needed

Post by ICH »

1. Platform
IB is substantially cheaper than Saxo, particularly for >100k usd portfolios where they don'tchargeinactivity fee. You can calculate the costs if you wish.

2. Asset allocation
75% stocks - 25% bonds is ok, assuming you can handle the volatility. That's a personal selection. Whatever you choose, simply stick to it.
All funds you mention are fine. You don't need a combination of bond funds, simply select one of them.
You shouldn't look at crypto, individual stocks etc as part of the portfolio. If you want to play with some money, keep aside a fixed amount and play with it. Once you lose it forget about it.

3. Distributing vs accummulating
Selection has to do with how the funds are taxed in the country you are a resident. Since UAE doesn't tax you anyway, it makes no difference what you choose. Accummulating have a small advantage since you don't need to reinvest the dividends by yourself, hence saving the commission. Distributing have the advantage that they may allow you easier rebalancing. Small stuff.

4. The currency you trade in doesn't matter. What matters is the currency exposure of the funds you buy. Stick to one trading currency. Simpler=better. Read also this: https://www.bogleheads.org/wiki/Non-US_ ... currencies

P.S. stay safe
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