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I'm a EU citizen from Eastern Europe and I'm interested in investing in American funds. My regular pension will be very small so in 2006 or 2007 I tried investing smaller sums (total of €5000?) in locally available investment funds and they all went to poo poo in 2008, I still have a loss there. I have even less faith in government-organized pension funds and I heard from different people that I should look into big American funds, specifically Fidelity and Vanguard... I'm 40 and I make €1300 net a month which is pretty good for this part of the world. I'd rather make a lump investment instead of monthly payments but I'm open to that possibility too. That lump sum investment would be €50000 and I'd leave it for 20-25 years. 1. Would you agree with my plan or is it better/simpler to go with something Europe-based? 1b. There are now local investment funds that put most of their money in Vanguard, Blackrock, etc. If I use them I wouldn't have broker fees but they have fees of their own, plus I lost trust in local banks who own those funds. Am I being irrational with this loss of trust? 2. To invest I need to use an investment broker, right? Any advice in choosing them, or should I just try to find the cheapest one? 3. Vanguard or Fidelity? 4. Put it all into one financial product or diversify? 5. Should I pay for some kind of service which will tell me which fund exactly to pick? BTW if other goons are interested in this topic, there was a related thread earlier but it's archived or something. http://forums.somethingawful.com/showthread.php?threadid=3665034
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Mar 29, 2015 22:28
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| # ? Apr 24, 2024 17:05 |
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This might be a good place for you to start: http://jlcollinsnh.com/2014/01/27/stocks-part-xxi-investing-with-vanguard-for-europeans/
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Mar 29, 2015 23:21
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You should consider opening a brokerage account that lets you trade US markets (I use interactive brokers), then buying shares in the Vanguard ETFs. Managed funds typically are expensive. If you are investing for the long term, annual fees and tax considerations will make a material difference. Depending on what exactly you are doing, they may have a greater impact than asset allocation decisions (which is choosing what asset classes to invest in). If you just want to invest 50k in equities, pick a low cost index tracker, e.g. https://personal.vanguard.com/us/funds/snapshot?FundId=0968&FundIntExt=INT You should have a read of this http://www.amazon.com/Global-Asset-Allocation-Survey-Strategies-ebook/dp/B00TYY3F3C and this is a good book too http://www.amazon.com/The-Ivy-Portfolio-Endowments-Markets-ebook/dp/B001ULD5BY/ You are also exposed to currency risk buying USD denominated assets with euros. Right now the USD is very strong and the EUR very weak, there's no way to know what things will look like in 25 years though. If the USD weakens or the EUR gets stronger, you might end up making less in EUR terms than you thought. You should dig around the EU markets to see if there are ETFs that track US indexes but are priced in euros. Currency fluctuations will still have an impact but you wont have to deal with it directly which may make the day to day "whats my net worth" questions easier, and may also make tax easier. Buying US funds/etfs are basically saying you believe growth in US will be better than in the EU. Right now US stocks are quite expensive. Countries like Italy (and Greece lol) are quite cheap. You should make sure you are understand why you are picking the US over Germany or whatever. 1. Would you agree with my plan or is it better/simpler to go with something Europe-based? Its probably simpler to stick to Europe. Don't neglect to investigate tax implications, like will you have to pay tax on dividends, capital gains taxes when you sell etc. However if you have a broker that lets you trade many markets buying shares in the US is likely no more complex than ones local to you. 1b. There are now local investment funds that put most of their money in Vanguard, Blackrock, etc. If I use them I wouldn't have broker fees but they have fees of their own, plus I lost trust in local banks who own those funds. Am I being irrational with this loss of trust? No, banks/funds don't give a gently caress about you or your long term financial goals. They want your money. Try and find low cost ETFs that target the sectors/asset classes you are interested in. 2. To invest I need to use an investment broker, right? Any advice in choosing them, or should I just try to find the cheapest one? You can find an online broker. Pick one that has been around for a long time. You put all your money in an account with them so you dont want them to go broke or run off with it etc. You might find your local bank will have a share trading facility, but it might restrict what countries you can buy shares in. 3. Vanguard or Fidelity? I am more familiar with Vanguard than Fidelity but they are both reputable. Things like fees/expense ratios are more important. I am not really familiar with any of their managed fund offerings. 4. Put it all into one financial product or diversify? Diversify, ideally across asset classes. So you might have EU equities, US equities, maybe some bonds. That is what is neat about ETFs, its makes it very easy to do this. The Ivy Portfolio talks about this. 5. Should I pay for some kind of service which will tell me which fund exactly to pick? Nah. a) they dont really know the future, b) they get commissions for money they bring to the fund, and they might not tell you about funds that are a better fit for you etc. Advisors arent all bad but there are many conflicts of interest and it can be a real minefield. If you feel comfortable doing a bit of research yourself then its not worth it.
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Apr 2, 2015 11:31
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When (american) people tell you to invest in Vanguard, they usually mean you should invest in in a broad market index ETFs. You can usually find equivalent funds for the european market, like the iShares Core series. You should diversify between regions an asset classes, depending on your risk tolerance. So typically you should buy some corporate- and govt bonds and at least some US and EU equities. For equities you could also just buy MSCI World and be done with it.
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Apr 2, 2015 15:45
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Unixbeard and futurebot have pretty much said it all. I'd only add that you should spend some time to think about asset allocation, i.e. how you divvy up your funds among asset classes and how narrow or broad you choose your investments in each asset class. Asset allocation is often much more important for your overall performance than the choice between individual securities. As an example, over the last months it would have made much less of a difference if you've bought Procter & Gamble or Colgate shares, but a big difference if you had invested in an oil company. The broader you go, the more you are protected against the misfortunes of any individual industry or company, but you also have a lower expected return. Also, I'd really stay away from investment advisors/paying someone to invest your money. As said, they can be good, but in your position it's more worthwhile to educate yourself a little bit and invest yourself.
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Apr 3, 2015 19:44
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Just wanted to thank everyone. I'm currently travelling and will arrange some calls with local brokers when I return to my home city. I definitely need to educate myself and will then probably post here again with more questions.
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Apr 15, 2015 12:10
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Hang on, what do you mean "local brokers"? Like, banks or real broker firms? You should look into an online trading platform, as they have much lower fees. I would simply find a localized (so they conform with laws, give you support when needed, etc.) online trading platform where you can buy US stock, such as the tried and true SPY. It's just an ETF traded at market price, and its administrative costs are next to nothing. You could also buy Vanguard's VOO. Don't go lump-based; investing monthly is preferred. It gives you diversification and allows you to alter your investment strategy over time. As you say yourself, don't use a broker firm, they just add fees for something that is easy to do yourself. Diversity, both in European and US. Mix bonds and stocks. Do absolutely not pay for a service that tells you what to pick, because no one can guess correct what happens in the future anyway. As you say, educate yourself more on amateur investing in index funds / ETFs, and be very very wary of paying a broker, bank or "expert" any money or even fractions of a percent for their useless aid.
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Apr 15, 2015 13:59
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Pilsner posted:Hang on, what do you mean "local brokers"? Like, banks or real broker firms? You should look into an online trading platform, as they have much lower fees. As a private investor I can't open an account with Vanguard or buy stock as such - I have to go through a broker. I'm not sure what kind of online trading platforms local brokers have (I mean real broker firms, I'm not aware I can buy stock through my bank) but I'll investigate. I'd prefer to invest the entire sum at once. It doesn't mean in the same product (as you say, diversification is important), just at the same time. I'm not that young either so it makes sense to start making profit from the entire sum today, than release it slowly over months. I don't know if it's the optimal approach, but if I put myself in the mindset where I'm open to altering the investment strategy, I'll start making stupid moves based on newspaper headlines.
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Apr 15, 2015 14:38
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