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jaybee747

How can a Filipino invest in US low cost mutual funds?

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jaybee747
22 hours ago, Cgu said:

As I mentioned before, if you want to avoid being taxed at source select funds which are Price return. They will not pay dividend, but track a basket of stocks based on price (I am sure you are familiar what happens to stocks at the time when they pay out dividends- arbitrage trading - but that is a different topic).  PR funds sometimes track a basket synthetically, so dividends are anyway impossible. So you can avoid tax at source. The 2% mentioned is an average (see my post, as some pay, some don't and some pay stock dividends)

And yes Cash dividends are under withholding tax.

The process is easy. Open an account with a online brokerage an you can access any fund you imagine.

Rfm mentioned TD am, I recommend IB. With TD am you might have to fill the W8 Ben manually and snail mail it, which is a pain (maybe they changed it). With IB everything is electronically, even signing, it is breeze - and fees are much lower.

Again, I doesn't matter! The "price return" fund that you mentioned earlier QQQ, just look at few of its top holding - Texas Instruments 2.4% div, PepsiCo 2.82%,  Intel 2.43%, Cisco 2.83%, etc... So when these companies pay dividend, who do you think pay the taxes? I am sure QQQ will not pay the taxes for you... They will just send you a 1099DIV form and now you owe money to the IRS...

But taxes are not the only issue with using American brokerage, my question was about investing for my Filipina gf, she may not be comfortable interacting with USA based company, making oversea calls, handle redemption, etc. long distance. So in my mind having a local institute when she can do all locally may be a better option. So this is the reason for my initial question. I done research and found that there are few options to for Filipino to invest in USA low cost mutual fund locally from the Philippines, low cost on paper at least... I hope someone who have an experience with these type of accounts can chime in. Please don't send me Google links... I hope to get some real life experience on this subject.

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Cgu
1 hour ago, jaybee747 said:

Again, I doesn't matter! The "price return" fund that you mentioned earlier QQQ, just look at few of its top holding - Texas Instruments 2.4% div, PepsiCo 2.82%,  Intel 2.43%, Cisco 2.83%, etc... So when these companies pay dividend, who do you think pay the taxes? I am sure QQQ will not pay the taxes for you... They will just send you a 1099DIV form and now you owe money to the IRS...

 

1 hour ago, jaybee747 said:

Again, I doesn't matter! The "price return" fund that you mentioned earlier QQQ, just look at few of its top holding - Texas Instruments 2.4% div, PepsiCo 2.82%,  Intel 2.43%, Cisco 2.83%, etc... So when these companies pay dividend, who do you think pay the taxes? I am sure QQQ will not pay the taxes for you... They will just send you a 1099DIV form and now you owe money to the IRS...

But taxes are not the only issue with using American brokerage, my question was about investing for my Filipina gf, she may not be comfortable interacting with USA based company, making oversea calls, handle redemption, etc. long distance. So in my mind having a local institute when she can do all locally may be a better option. So this is the reason for my initial question. I done research and found that there are few options to for Filipino to invest in USA low cost mutual fund locally from the Philippines, low cost on paper at least... I hope someone who have an experience with these type of accounts can chime in. Please don't send me Google links... I hope to get some real life experience on this subject.

Again, I think you better study how price return works ( hint: there is no dividend, even they track Cisco etc.) Or better buy QQQ and when you will get a dividend drop a post here ( but I think Godot will turn up earlier😁, meaning that will never happen).

You can of course use a local broker, but good luck with the transaction fees - they will surely exceed your withholding taxes on top of the withholding taxes.

Myself and some of my (Filipino) friends have IB, never need to call, ever thing only - I only had to chat once ( instruction for a special order)  anyway, good luck

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jaybee747
1 hour ago, Cgu said:

 

Again, I think you better study how price return works ( hint: there is no dividend, even they track Cisco etc.) Or better buy QQQ and when you will get a dividend drop a post here ( but I think Godot will turn up earlier😁, meaning that will never happen).

No need to wait for Godot or even buy QQQ...  Just quick search can show that QQQ pays dividend every 4 months... I guess now you are going to tell us that these dividends are not really paid... Maybe all this money is just getting sucked into big black hole... :lol:

https://finance.yahoo.com/quote/QQQ/history?period1=1537272713&period2=1568808713&interval=div|split&filter=div&frequency=1d

Date                  Dividends
Jun 24, 2019      0.416 
Mar 18, 2019    0.324 
Dec 24, 2018    0.421 
Sep 24, 2018    0.33 

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Cgu
5 hours ago, jaybee747 said:

No need to wait for Godot or even buy QQQ...  Just quick search can show that QQQ pays dividend every 4 months... I guess now you are going to tell us that these dividends are not really paid... Maybe all this money is just getting sucked into big black hole... :lol:

https://finance.yahoo.com/quote/QQQ/history?period1=1537272713&period2=1568808713&interval=div|split&filter=div&frequency=1d

Date                  Dividends
Jun 24, 2019      0.416 
Mar 18, 2019    0.324 
Dec 24, 2018    0.421 
Sep 24, 2018    0.33 

I stand corrected. I even looked up my old statements and I have been charged around 100USD in one year holding the QQQ (of course my withholding fees are lower - most countries have lower than Philippines). In the Philippines the rate would be around 0.2% (as the QQQ pays out around 0.8% - I was surprised seeing that - for me is even another notch lower - a fraction of transaction fees in the Philippines).

You are better off with a local broker - if they trade US stocks - even the fees might exceed several times the withholding tax (and incur of course the withholding anyway on top - and maybe even capital gains charged in the Philippines - but the last statement I do not know). The reason is that I assume that you feel safer with it and with IB you need little bit experienced to trade with the workstation and also you are more concerned about withholding taxes then overall transaction costs. So if transactions cost is none of your concern, get a traditional broker (via phone) - I honestly do not know the fees then, but I would not be surprised if the cost doubles or more.

So good luck.

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Billy Johnson
On 9/13/2019 at 1:37 PM, jaybee747 said:

How can a Filipino invest in US low cost mutual funds? If anyone have a personal experience in this I will be glad to hear, thanks!

Interactive brokers. A Filipino can open an account there. My girlfriend just did.

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Contango

How can a Filipino easily invest in US based mutual funds.

 

They Cant is the easy answer, closest they can get would be a USD fund run by one of the PH banks, still going to pay about 1 - 2 % management fee though.

On 11/5/2019 at 7:17 PM, Billy Johnson said:

Interactive brokers. A Filipino can open an account there. My girlfriend just did.

Hi Bill, Interactive Brokers do not operate in the Philippines, so where did she open the account? if its a US IB account how did she fund it without a US bank Account?? what's the settlement account??

Edited by Contango

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Cgu
1 hour ago, Contango said:

They Cant is the easy answer, closest they can get would be a USD fund run by one of the PH banks, still going to pay about 1 - 2 % management fee though.

Of course they can. I have several Filipino friends who have an IB account and are very active traders.

IB is an online broker, so by definition they do not have physical branches. You open your account online (might have to send some scanned documents like passport etc.). Once approved just wire the money to the account ( via their merchant bank - all instructions are given to you). Once funding is there you trade. 

Online brokers do not need settlements account, as custody and funding is in one place.

Everybody can open an IB account (except you are resident in a country sanctioned by the US, like Iran, but these are only a few countries).For IB it does not matter where you have tax residency, most IB customers are not US tax resident anyway. Of course you have to tax under the regime of your residence country, but this is your obligation, not IBs.

I might be also worth to look at Ameritrade and Schwab, which dropped the trading fees to zero (meanig trading is free). However, Ameritrade might still have a manual withholding tax form process, where IB everything is electronically- already filled out, you just need to press a button- hassle free (most of the time these are very small amounts, unless you are a dividend investor, but you incur these with any broker, even physical local brokers).

https://markets.businessinsider.com/news/stocks/td-ameritrade-to-eliminate-online-stock-etf-fees-before-schwab-2019-10-1028570971

Edited by Cgu
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Billy Johnson
3 hours ago, Contango said:

How can a Filipino easily invest in US based mutual funds.

 

They Cant is the easy answer, closest they can get would be a USD fund run by one of the PH banks, still going to pay about 1 - 2 % management fee though.

Hi Bill, Interactive Brokers do not operate in the Philippines, so where did she open the account? if its a US IB account how did she fund it without a US bank Account?? what's the settlement account??

Like I said before interactive brokers apply online. To fund account you need to open a dollar acct. and wire funds. The money has to come from her account.

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Billy Johnson
3 hours ago, Contango said:

How can a Filipino easily invest in US based mutual funds.

 

They Cant is the easy answer, closest they can get would be a USD fund run by one of the PH banks, still going to pay about 1 - 2 % management fee though.

Hi Bill, Interactive Brokers do not operate in the Philippines, so where did she open the account? if its a US IB account how did she fund it without a US bank Account?? what's the settlement account??

Fund it by a wire from her account. Has to be in dollars

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Billy Johnson
3 hours ago, Contango said:

How can a Filipino easily invest in US based mutual funds.

 

They Cant is the easy answer, closest they can get would be a USD fund run by one of the PH banks, still going to pay about 1 - 2 % management fee though.

Hi Bill, Interactive Brokers do not operate in the Philippines, so where did she open the account? if its a US IB account how did she fund it without a US bank Account?? what's the settlement account??

No it doesn’t your giving bad advice. Interactive brokers apply online then fund it from a dollar account in her name. Wire money

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