UK/Aussie Living in UAE - Beginner Advice

For residents of the United Arab Emirates.
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Topic Author
Lukebperry
Posts: 8
Joined: Sun Aug 01, 2021 3:42 am

UK/Aussie Living in UAE - Beginner Advice

Post by Lukebperry »

Hey everyone,

First time on here and looking for some entry level advice. Apologies, if this has already been covered but I didn’t see it specifically.

My wife and I have dual citizenship (born and raised in the UK and both obtained citizenship in Australia recently) and we may be relocating to live and work in Dubai later this year, whilst we don’t know where I will go after this. We also don’t know where we will retire; could be the UK or Australia but to be honest it could be somewhere else unknown at this stage.

We want to start investing in ETFs and would generally like to keep it simple; 75% in shares ETFs and 25% in a total world bond ETF. The shares ETFs would be made up of 25% whole world ETF, 25% Aussie ETF and 25% UK ETF.

But we are unsure on the following:

- Based on our situation does the above strategy make sense? I.e. splitting between our two ‘home’ countries.
- Are we likely to run in to any problems with the above, not knowing where we will retire?
- We are planning to use Saxo Bank as the trading platform.
- Which UK domiciled ETF would be the recommendation?
- Which world / international ETF would you recommend and from which exchange should we purchase this from?

Thanks so much in advance!

Luke
TedSwippet
Posts: 5166
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: UK/Aussie Living in UAE - Beginner Advice

Post by TedSwippet »

Welcome. A few thoughts below.
Lukebperry wrote: Sun Aug 01, 2021 5:10 am - Based on our situation does the above strategy make sense? I.e. splitting between our two ‘home’ countries.
Probably not! The UK is 4% of global market cap, and Australia is 2%, yet you propose 33% of your stock allocation to each. That's a lot of added concentration risk. If it were me, I'd probably just use a single all-world ETF, and remove the 'home-countries bias' entirely. If you really must have a tilt, a much smaller one than this would raise fewer eyebrows.
Lukebperry wrote: Sun Aug 01, 2021 5:10 am - Are we likely to run in to any problems with the above, not knowing where we will retire?
Not sure what type of trouble you're considering, but by-and-large your largest hassle will likely come from tax, specifically UK and/or Australian tax if/when you become residents there. While non-resident, I believe both countries will leave you alone (the UK certainly; not sure on Australian residency rules), so the time to tackle this is before leaving the UAE. Sell and repurchase to wash out unrealised capital gains before becoming resident in a country that taxes capital gains, for example.

Because of foreigner-hostile US tax laws, as UAE residents you will want to entirely avoid US domiciled funds and ETFs, and use UCITS equivalents instead. Full details in the wiki:

- Nonresident alien taxation - Bogleheads
- Nonresident alien investors and Ireland domiciled ETFs - Bogleheads
Lukebperry wrote: Sun Aug 01, 2021 5:10 am - We are planning to use Saxo Bank as the trading platform.
Saxo is a good international broker. Have you also considered Interactive Brokers? They are popular with folks who move around internationally, probably for good reason (not a customer personally).

- Interactive Brokers - Bogleheads
Lukebperry wrote: Sun Aug 01, 2021 5:10 am - Which UK domiciled ETF would be the recommendation?
- Which world / international ETF would you recommend and from which exchange should we purchase this from?
There are suggestions for suitable ETFs in these wiki pages:

- Building a non-US Boglehead portfolio - Bogleheads
- Simple non-US portfolios - Bogleheads

Your choice of exchange will likely be dominated by which ETF trading currency is the most convenient (or cheapest) for you.

Finally, if you haven't already found it, the following link is a good general guide to expat investing:

- Index Investing & Financial Independence for Expats
Topic Author
Lukebperry
Posts: 8
Joined: Sun Aug 01, 2021 3:42 am

Re: UK/Aussie Living in UAE - Beginner Advice

Post by Lukebperry »

Hi TedSwippet,

Thank you for your detailed response, much appreciated. After some more thought, I am leaning much more towards a single all-world ETF.

In regard to the "type of trouble you're considering', yes it was capital gains tax that I was worried about when/if we move back to UK or Australia. So when you say "Sell and repurchase to wash out unrealised capital gains before becoming resident in a country that taxes capital gains" by that I think you mean I wouldn't pay any CGT as I would be in the UAE?

Since writing my post and reading your reply, I have found that I can purchase Vanguard Life Strategy via Swissquote. I had previously disregarded this, because of the minimum 100,000 GBP needed to invest but as Swissquote lowered the minimum to just 1000 GBP I am thinking this may be a good option for me.

Many thanks again.

Luke
DJN
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Joined: Sun Nov 19, 2017 11:30 pm

Re: UK/Aussie Living in UAE - Beginner Advice

Post by DJN »

Hi,
just a few things to add:
- You should consider interactive Brokers (IB), its a better platform + cheaper than either Saxo or Swissquote.
- When you leave UAE don't forget to sell everything and repurchase wherever you end up.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
TedSwippet
Posts: 5166
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: UK/Aussie Living in UAE - Beginner Advice

Post by TedSwippet »

Lukebperry wrote: Thu Aug 05, 2021 7:57 pm In regard to the "type of trouble you're considering', yes it was capital gains tax that I was worried about when/if we move back to UK or Australia. So when you say "Sell and repurchase to wash out unrealised capital gains before becoming resident in a country that taxes capital gains" by that I think you mean I wouldn't pay any CGT as I would be in the UAE?
Yes, this.

A few countries step up your asset cost basis on becoming resident. For example, Canada does this. Others do not, and so will cheerfully make you pay capital gains tax on gains that accrued years or decades before even setting foot in the country. The UK and the US definitely do this.

Not sure about Australia, but a quick Google search showed up nothing promising, so it looks like it may be the same as the UK and US in this respect.

For such countries, you will want to sell and repurchase to reset your basis before becoming a resident. You might also need to watch out for any of those countries' "wash sale" or "bed and breakfast" tax rules. Usually something like if you repurchase the same asset within 30 days or so, the basis reset is disallowed. I say "might" because while these rules apply to all residents, it is never clear whether or not the rule applies to events from before becoming resident.
Topic Author
Lukebperry
Posts: 8
Joined: Sun Aug 01, 2021 3:42 am

Re: UK/Aussie Living in UAE - Beginner Advice

Post by Lukebperry »

Thank you both,

One final question - there is an ETF I’d like to buy from Swissquote, but it is available on Xetra, Euronext and Italian exchange, with a huge difference in the volume available. Does it matter which one I purchase? Assuming the Xetra one would be best?

Volume
Euronext: -
Xetra: 7,084
Intalia: 3,097

Thank you!
Luke
Topic Author
Lukebperry
Posts: 8
Joined: Sun Aug 01, 2021 3:42 am

Re: UK/Aussie Living in UAE - Beginner Advice

Post by Lukebperry »

The ETF is Vanguard LifeStrategy 80 Equity IE00BMBV5R75
TedSwippet
Posts: 5166
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: UK/Aussie Living in UAE - Beginner Advice

Post by TedSwippet »

Lukebperry wrote: Fri Aug 06, 2021 4:16 pm One final question - there is an ETF I’d like to buy from Swissquote, but it is available on Xetra, Euronext and Italian exchange, with a huge difference in the volume available. Does it matter which one I purchase? Assuming the Xetra one would be best?
There is a Vanguard document here that describes why an ETF's volume is not a good measure of its actual liquidity:

Understanding ETF liquidity and trading

In practice then, providing you stick to ETF trading 'best practices', it shouldn't matter. Aside from volume, are there any other motivations for choosing one exchange over the other?
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