£400k Portfolio DIY vs. Professional Help

dunstonh

ExremelyCautiousSocialist wrote: »

Of course not. You consult the IFA on the large % you want in traditional investments not small % you want in a unregulated high risk speculation.

Technically, IFAs can advice on unregulated investments and are required to consider them to be able to refer to themselves as IFAs. If they don't then they have to drop the I and become FAs.

However, the vast majority of the public should go nowhere near unregulated/non-mainstream investments. Far too many go bad. A dabble of a few percent of their investible wealth on the assumption it can be fully written off with no impact on their affordability would do no harm.

bostonerimus

My first concern would be your tax situation. Are you an Australian tax resident? If so you'll have to declare all income and capital gains from your overseas investments, the ISA is probably not a tax free wrapper in Australia so check that out asap. Having so many funds is going to make your tax filing tedious if each holding has to be dealt with separately. You'll have to apply the treaty rules to offset any UK taxes and make sure you pay the right amounts to the UK and Australia and take the correct credits for any withholding. Also you need to understand if foreign income and gains from foreign funds has any special Australian tax treatment.

So for just peace of mind and tax and investing simplicity I think you should look at a low cost global equity index portfolio with far fewer funds....3 or 4, 5 or 6 etc. that doesn't emphasize dividends. Being young you want capital gains and you can figure out how to minimize CGT when you decide to cash some of the money in. I'd also be trying to maximize your local tax advantage investments like pensions or the ISA equivalents.

Be careful about trying to avoid CGT by moving around. Counties don't let you out of your tax obligations just because you leave the country. There are usually strict residency rules and you often have to become resident somewhere else before you can get rid of your old residency, so check out the Australian rules.

ExremelyCautiousSocialist

dunstonh wrote: »

Technically, IFAs can advice on unregulated investments and are required to consider them to be able to refer to themselves as IFAs. If they don't then they have to drop the I and become FAs.

However, the vast majority of the public should go nowhere near unregulated/non-mainstream investments. Far too many go bad. A dabble of a few percent of their investible wealth on the assumption it can be fully written off with no impact on their affordability would do no harm.

An IFAs hands are going to be tied more. They cant go suggesting what might appear crazy else risk starting to lose clients. There is a level of irrational bias. Some IFAs would speculate on all kinds of high risk stuff they wont endorse to clients unless pushed.

OpalMiner11

bostonerimus wrote: »

My first concern would be your tax situation. Are you an Australian tax resident? If so you'll have to declare all income and capital gains from your overseas investments, the ISA is probably not a tax free wrapper in Australia so check that out asap. Having so many funds is going to make your tax filing tedious if each holding has to be dealt with separately. You'll have to apply the treaty rules to offset any UK taxes and make sure you pay the right amounts to the UK and Australia and take the correct credits for any withholding. Also you need to understand if foreign income and gains from foreign funds has any special Australian tax treatment.

So for just peace of mind and tax and investing simplicity I think you should look at a low cost global equity index portfolio with far fewer funds....3 or 4, 5 or 6 etc. that doesn't emphasize dividends. Being young you want capital gains and you can figure out how to minimize CGT when you decide to cash some of the money in. I'd also be trying to maximize your local tax advantage investments like pensions or the ISA equivalents.

Be careful about trying to avoid CGT by moving around. Counties don't let you out of your tax obligations just because you leave the country. There are usually strict residency rules and you often have to become resident somewhere else before you can get rid of your old residency, so check out the Australian rules.

I am an Australian tax resident and you're correct - the ISA is not recognised as a tax free wrapper.

I also think that it's logical to reduce the number of funds - would it be unwise to sell all and invest in Lifestrategy 100 or 80? Do you have any recommendations of a sample portfolio?

I take it we want to have a lower emphasis on Dividends to reduce the amount of tax that will need to be paid at this stage, whilst capital gains have not been realised?

bostonerimus

You'll want to do any portfolio reorganization with a mind towards minimizing CGT....so you might want to do it over a few years depending on you CGT allowances. The unfortunate thing is that in a cross border situation you might end up paying the higher of the two tax rates in the countries concerned and withholding tax can be an annoyance.

As far as portfolios are concerned I'm very unimaginative as I use broad cap weighted indexes and don't bother to overweight things like small cap or emerging markets hunting for alpha. In your situation I'd probably have some domestic equity index and then a global equity index so I get the big markets like the US. Then you should look at some global and domestic fixed income. Having so much outside tax advantaged wrappers makes tax planning important. I'm in the US and if I was setting something up in the US it would be tax efficient low dividend paying equity index funds and for fixed income I'd look at US municipal bonds as they are tax free. I have no idea if there is something equivalent in Australia.

dunstonh

I also think that it's logical to reduce the number of funds - would it be unwise to sell all and invest in Lifestrategy 100 or 80? Do you have any recommendations of a sample portfolio?

In Australia, when are gains taxed? I presume at disposal but just want to make sure.
Is there any annual allowance on gains?
Is there any tax advantaged accounts you can use in Australia?

Less funds can make it harder to control capital gains. Also, if you do a largescale switch out, if tax is charged on disposal then you could be facing a significant tax bill.

Are you planning to return to the UK? (just wondering if offshore bond tax wrapper would have been better).

aroominyork

ExremelyCautiousSocialist wrote: »

An IFAs hands are going to be tied more. They cant go suggesting what might appear crazy else risk starting to lose clients. There is a level of irrational bias. Some IFAs would speculate on all kinds of high risk stuff they wont endorse to clients unless pushed.

Extremely cautious crazy investing bitcoin socialist. Excuse us if we don’t take you seriously.

OpalMiner11

dunstonh wrote: »

In Australia, when are gains taxed? I presume at disposal but just want to make sure.
Is there any annual allowance on gains?
Is there any tax advantaged accounts you can use in Australia?

Less funds can make it harder to control capital gains. Also, if you do a largescale switch out, if tax is charged on disposal then you could be facing a significant tax bill.

Are you planning to return to the UK? (just wondering if offshore bond tax wrapper would have been better).

Gains are taxed on disposal. Unfortunately there is no annual allowance, it is considered part of your income and I will therefore be subject to 32.5% tax!

In Australia the only tax advantaged accounts are pension schemes which I have not utilised fully yet as I am waiting for my permanent residency to be granted.

I will return to the UK if my permanent residency visa is not granted (will find out in next few months). If this happens, I will need to leave Australia within 31 days and I will be considered a non-resident for tax purposes once I have left. I am therefore thinking of taking an extended holiday and disposing of all my shares in the UK before returning in November 2019. (I left the UK in October 2014 so that will satisfy the 5 year CGT rule). That way I can hopefully avoid paying CGT in either country.

ExremelyCautiousSocialist

aroominyork wrote: »

Excuse us if we don’t take you seriously.

Fidelity Investments is targeting a March launch date for its Bitcoin custody service, according to three people with knowledge of the matter, as the mutual-fund giant moves forward with a plan that could help ease fears of trading cryptocurrencies.


Fidelity, among the largest providers of retirement savings and mutual funds, is hoping it can leverage its famous name and win over institutional customers keen on digital currency trading. The company already works with more than 13,000 financial institutions.


https://www.bloomberg.com/news/articles/2019-01-29/fidelity-is-said-to-plan-march-launch-of-bitcoin-custody-service

aroominyork

ExremelyCautiousSocialist wrote: »

Fidelity Investments is targeting a March launch date for its Bitcoin custody service, according to three people with knowledge of the matter, as the mutual-fund giant moves forward with a plan that could help ease fears of trading cryptocurrencies.

Fidelity, among the largest providers of retirement savings and mutual funds, is hoping it can leverage its famous name and win over institutional customers keen on digital currency trading. The company already works with more than 13,000 financial institutions.

https://www.bloomberg.com/news/articles/2019-01-29/fidelity-is-said-to-plan-march-launch-of-bitcoin-custody-service

Indeed, “... the Boston-based firm announced it would offer a range of crypto products designed for large investors like hedge funds.” So that’s what you are recommending to the OP?