Question about Stock investing (Beginner)

I’ve not done this from your country (and don’t know what it is), so this answer is vague and speculative, and written on a very basic level.

Your access is going to depend on the exact country. IBKR is going to offer access to quite a few. You might start there.
https://www.interactivebrokers.com/en/accounts/open-account-country-list.php

Your local banks might offer options.

Look at the tax laws for individuals in your country and the trading costs (fees, commissions) imposed by your brokerage/banking options. You should go into this with a tax strategy in mind even though the amount of money is relatively low.

Make sure that the bank are you using to deposit funds can be linked to your brokerage account. If both are legitimate then you shouldn’t have issues moving money in and out. Check for any transfer fees.

IBKR should work with Wise but I haven’t tested this myself.
https://wise.com/us/blog/wise-platform-and-interactive-brokers-team-up
https://www.interactivebrokers.com/en/support/fund-my-account.php

Structure your transfers and transactions to minimize fees.

If these options are bad, you can look at company formation in a different jurisdiction. That is likely cost prohibitive compared to local fees and taxes given the amount of money you are talking about.

If you have access to them, low fee ETFs are your best bet to start. Have a goal, a timeline, and an exit strategy before buying. Index tracking ETFs are stupid simple on a long time horizon. Most US domiciled ETFs will pay dividends. EU domiciled ETFs usually offer two options, one of which reinvests dividends for tax optimization. There is little need to get into REITs or individual stocks based on your stated objective unless there are tax or access issues to deal with.

ETFs and mutual funds are similar in practical effect but differ in details. ETFs are probably the most flexible way to go under most circumstances. ETFs designed to track indices will be the most grounded in market fundamentals. There are other themed ETFs as well.

If you set up a brokerage account that gives you access to equities traded on the NYSE, the Vanguard ETF offerings like VOO are good low fee options with good liquidity. VGK is a good ETF that roughly tracks the European markets. VPL is an odd one because it’s about half Japan and half China and those two are often inversely correlated, so it trades in a range. BlackRock, Schwab, and Franklin-Templeton also have good offerings, but watch out for liquidity on the latter two as they have some smaller and less popular ETFs offered. You can find ETFs that track any index or any region, economic sectors, or even leveraged ETFs. Keep it simple at first. Big names and known indices. Index tracking ETFs will be most tightly coupled to market fundamentals.

Over a ten year time horizon it’s as sure a thing as there is. Over a two year time horizon with current valuations, it’s not as sure right now. Everything is near the top of the 52 week range.

HardRJones said:

If you set up a brokerage account that gives you access to equities traded on the NYSE, the Vanguard ETF offerings like VOO are good low fee options with good liquidity.

Click to expand...

Interesting, what platform would you suggest to open the account?

alley said:

Interesting, what platform would you suggest to open the account?

Click to expand...

This is where it becomes very location-dependent and situation-dependent. The EU has rules about access to US-listed ETFs and tax optimization issues. US investors have to worry about PFIC. For other countries, it depends on platform access and local laws. Do you need to set up something outside your country of residence? Americans have a wealth of no-fee or low-fee options. IBKR is usually the first one people look at for international trading. Beyond that I’ve only looked into Europe, Serbia, and Armenia for other options. It’s going to depend on your situation and access. Fees and costs for transactions tend to increase as you get away from US based brokers.

I live in an EU country unfortunately, and I do have access to an IBKR account, which I’ve been using actively up until now, but I’d really like to expand my options with what you’re mentioning here.

Buy a global diversified world index and forget about it. VWCE for EUR, VWRA for GBP.

Don't buy VT (USD) as you will be liable for taxes on your dividends and when you pass away your heirs will pay US estate tax that can be up to 40%.

IBKR is good. Alternatively use any broker that charges 0 or low custody fees.

Don't buy REITS, there is nothing magical about REITS, they just underperform the index (usually) are mainly for boomers who want to receive dividends while their overall performance stink.
Look at most global REIT ETFs and you will see that it's about where it was in 2021.

There are three main issues with European residents and US-domiciled ETFs.


The first is the MiFIDS II/PRIIPS regulations which require a Key Information Document (KID) that most US-domiciled ETFs don’t offer. There is an exception for professional clients, which requires sufficient trading activity, financial experience, and a portfolio size of at least €500000. A few brokerage platforms do offer US-domiciled ETFs to EU residents. EToro used to but there was some kind of settlement and now they only offer them as CFDs. TastyLive supposedly does, though I’ve not used that platform. IBKR doesn’t and also has fairly stout KYC.


The second is a lack of reinvesting ETFs for tax optimization. If you look at most European-domiciled UCITS ETFs you’ll see an option that pays dividends and an option that reinvests dividends. The latter is better for tax optimization. US ETFs typically pay out dividends.


The third is US tax liability both on those dividends and potential inheritance tax liabilities, though the latter might become less of an issue with the pending tax bill. Regardless, you are introducing the complexity of US tax compliance.


You can get around that with corporate structures but at what point does it become not worth it? With a US corporation and US banking, you have access to the whole zoo of zero-fee/low-fee US brokerage platforms, including Fidelity, Schwab, Vanguard, Robinhood, etc. They all make that very easy if you are ok with KYC compliance.


REITs are fine for what they are, but they are specialized instruments for a specialized purpose. They are good for income investing but don’t typically show as much value growth. A percentage of the dividend payout can be deducted from US taxes as qualified business income, so they are tax advantaged to a degree. They’ve not shown much value growth in general over the past few years due to the high interest rate environment. That won’t change until interest rates come down. I wouldn’t bother with them until you can articulate exactly what role they will fill that an index tracking ETF cannot.

Degiro, Freedom24, Saxo, etc. are all popular European options, though access to markets outside Europe can be limited and I’m not a fan of the fees compared to US options.

Serbian and Armenian exchanges have poor volume and liquidity and using local banks that have brokerage services are high-fee. I haven’t found a solution I like there yet.