Investing in ETFs from UAE

For residents of the United Arab Emirates.
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momutsafamd
Posts: 2
Joined: Tue Jun 09, 2020 9:35 am

Investing in ETFs from UAE

Post by momutsafamd »

Hi everyone,
Im new to investing and to the forum. Ive been doing a lot of research lately, and the rabbit hole has finally led me here =)

I am a GCC National living in the UAE. 37 year old, married, no kids.
Currently, I have a car loan for 4 years, No other debt, and about 4 months of Emergency funds in cash.

I opened an account with Interactive Brokers with the aim of long term investing. ( 10-15 years)
I am hoping to create an ETF portfolio, with an aim to have
Stocks 70%
Bonds 20%
Gold 10 %

For the stocks I wanted to break into:
S&P 500 ETF 40%
International Market ETF 20%
Emerging Market ETF 10%


At some point I realised that all the research I was doing was related to US investors and then I started to read about tax implications and this where I got confused.

I would really appreciate any advice that can be offered:
1. Should I even be considering US domiciled ETFs like VOO for e.g. or should I completely focus on EU domiciled ETFs?
How does taxation work in this case? If i were to buy US ETFs ,would I be taxed on any dividends? Would I be taxed when I sell in the future and transfer money back to the UAE?

2. If I should be buying only non US ETFs, I would appreciate if you can share the main ones for S&P 500, International market and emerging market and Gold. that i should look at it.

3. What are good options for bonds investing?

4. I plan to transfer funds every 4 months to reduce transfer fees.. good idea? bad idea? any better ideas?

Thank you for supporting a newb!
TedSwippet
Posts: 5181
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Investing in ETFs from UAE

Post by TedSwippet »

Welcome.
momutsafamd wrote: Tue Jun 09, 2020 10:14 am At some point I realised that all the research I was doing was related to US investors and then I started to read about tax implications and this where I got confused.
I think you can find answers to your first three questions in the non-US investors wiki section, which is here if you haven't already found it:

Outline of Non-US domiciles - Bogleheads

As a US nonresident alien living in a country with no US tax treaties, draconian US tax rules mean that you should definitely avoid holding all of the normal US domiciled ETFs (such as VOO) regularly discussed on the site by US based investors, and instead only hold Ireland or other non-US domiciled ETFs. The wiki contains full details on suggested ETFs to hold, and how you might hold them.
momutsafamd wrote: Tue Jun 09, 2020 10:14 am 4. I plan to transfer funds every 4 months to reduce transfer fees.. good idea? bad idea? any better ideas?
Over the long term -- and you mention 10-15 years -- investing every few months rather than (say) every month will very likely not make a noticeable difference to your final outcome. What you suggest is certainly what I would do if I were in your shoes.
frequentflyer
Posts: 25
Joined: Sun May 07, 2017 11:59 pm

Re: Investing in ETFs from UAE

Post by frequentflyer »

Welcome,

There is a Facebook group in the UAE that is very active. It called SimplyFI - Common Sense Personal Finance and Investing, it’s a wealth of information so give it a try.

Regarding your portfolio, just try to keep it as simple and as low cost as you possibly can. Don’t over think it and don’t get analysis paralysis.
michoco911
Posts: 224
Joined: Sun Jul 14, 2019 4:13 am

Re: Investing in ETFs from UAE

Post by michoco911 »

If you want to oversimplify and own the WW market, go with VWRD or VWRA (depending if you prefer the distributing or accumulating version) and go with AGGG for Bonds.

If you want more US portion (VWRD is around 55% US market), then you can add VUSD
60% VWRD 40% AGGG until further notice
Bdzyd
Posts: 5
Joined: Sun Jul 19, 2020 2:09 am

Re: Investing in ETFs from UAE

Post by Bdzyd »

As noted above:
  • Avoid US domiciled funds unless you are a US citizen (most funds are available Irish domiciled in nearly identical form to the US domiciled ones)
  • Keep your portfolio simple, one vanguard retirement index fund, or one world stock index + one government bond index will do you. I see you want to also hold gold, have you heard of the permanent portfolio? It might be interesting to look at as it includes gold. https://www.investopedia.com/terms/p/pe ... tfolio.asp Whatever you choose, keep is as simple as possible, and stick to it over the long run (so spend some time now deciding)
I invest quarterly to save on transfer fees

How are you transferring funds? It's important to consider both transfer fees, AND exchange rates. There is ongoing discussion of this on the simplyfi facebook group since recent issues with UAE exchange.
mohd
Posts: 95
Joined: Wed Jul 22, 2020 2:10 am
Location: Bahrain

Re: Investing in ETFs from UAE

Post by mohd »

I guess we are on the same boat =)

I am from Bahrain and recently decided to invest in ETFs, and did some reading and figured out it was all related to US-investors. What I learned is, stay away from US-domiciled ETFs. For example, VOO is US-domiciled ETF if you invest on it, u will be taxed by 30%. Instead, look for Ireland domiciled ETFs. In that case the equivalent of VOO would be VUSA LSEETF. With Ireland domiciled you will be taxed 15%.

Download the "getting started" guide from this website, it's focused on NON-us investors in UAE, and it has good information
https://www.simplyfi.org/
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