Thank you for this article! There is a relatively new company called Horizons in Canada that provides ETFs (on the Toronto Stock Exchange) that use total return swap contract to replicate the performance of the Index. This way they don't have any taxable distributions throughout the year. This also helps investors simplify the process of keeping track of the Adjusted Cost Base throughout the year because there are no reinvestments or return of capital events (Canadian investors need to do this manually in non-retirement accounts, because the brokers don't support it very well). The only taxable event is when the ETF is sold, which could result in capital gains tax. Ex: S&P500 Index ETF - https://horizonsetfs.com/ETF/hxs/
I would like to hear your thoughts on this kind of ETF structure, and whether this might lead to potential problems in terms of liquidity or other tax issues if the ETFs are held for a long period of time.
Thanks Mike for this information. I always find it difficult to decide on the US to International equity allocation.
Going strictly by the MSCI World index, that allocation might be close to 65 US/ 35 Intl. With respect to total world equity market value it would be closer to 55 US/ 45 Intl. However, more than 20% Intl seems too high to me (probably because of the biases mentioned in the article).It would be great if you could share your thoughts on this.
This article accurately expresses what I have experienced for years - being a person of color whose family never invested in the market or thought about retirement investments, it was a big challenge for me to learn all the aspects of wealth management and about building a diversified investment portfolio in the US. Humble Dollar has been a crucial part of building my financial knowledge. Thank you!
Comments
Thank you for this article! There is a relatively new company called Horizons in Canada that provides ETFs (on the Toronto Stock Exchange) that use total return swap contract to replicate the performance of the Index. This way they don't have any taxable distributions throughout the year. This also helps investors simplify the process of keeping track of the Adjusted Cost Base throughout the year because there are no reinvestments or return of capital events (Canadian investors need to do this manually in non-retirement accounts, because the brokers don't support it very well). The only taxable event is when the ETF is sold, which could result in capital gains tax. Ex: S&P500 Index ETF - https://horizonsetfs.com/ETF/hxs/ I would like to hear your thoughts on this kind of ETF structure, and whether this might lead to potential problems in terms of liquidity or other tax issues if the ETFs are held for a long period of time.
Post: Tax Dodging
Link to comment from August 29, 2022
Thanks Mike for this information. I always find it difficult to decide on the US to International equity allocation. Going strictly by the MSCI World index, that allocation might be close to 65 US/ 35 Intl. With respect to total world equity market value it would be closer to 55 US/ 45 Intl. However, more than 20% Intl seems too high to me (probably because of the biases mentioned in the article). It would be great if you could share your thoughts on this.
Post: Fight That Bias
Link to comment from March 7, 2022
Thank you for the great advice!
Post: Fit to Retire
Link to comment from December 2, 2021
This article accurately expresses what I have experienced for years - being a person of color whose family never invested in the market or thought about retirement investments, it was a big challenge for me to learn all the aspects of wealth management and about building a diversified investment portfolio in the US. Humble Dollar has been a crucial part of building my financial knowledge. Thank you!
Post: Taught by Others
Link to comment from September 22, 2021