By MoneyBees
See what an ETF's expense ratio, your platform fee and dividend withholding tax cost you in dollars over the years, and how US-domiciled (30%) and Ireland-domiciled (15%) funds compare.
The total expense ratio (TER) is the fund's yearly cost as a percentage of its assets. MoneySense says it covers the manager's fee and other fund expenses and is taken directly from the fund's assets, so you never see a bill.
Investing S$10,000 and S$500 a month for 20 years at 6%, a 0.12% TER leaves about S$260,085 and a 0.85% TER about S$237,063. The difference is about S$23,000.
30% on dividends. The IRS taxes most US income paid to foreign persons at 30% unless a treaty lowers it, and Singapore has no income tax treaty with the US.
The Ireland-US tax treaty cuts the US withholding rate on dividends to 15%, so an Irish fund holding US shares loses 15% of those dividends instead of 30%.
No. IRAS does not tax foreign dividends received by resident individuals, and gains from buying and selling shares are generally not taxable. The tax withheld abroad cannot be claimed back against Singapore tax.
No. Platform or custody fees, brokerage and the bid-ask spread add to it. MoneySense suggests comparing tracking difference too, which includes the TER.
The IRS requires an estate tax return for a non-US person whose US-situated assets are worth more than US$60,000 at death. Check which of your holdings count as US-situated.
It compounds monthly at your price growth plus the dividend yield after withholding, minus the TER and platform fee. It then adds the costs back one at a time to show what each takes.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).