Re: Japan-based low-fee global index fund?
Posted: Sun Jul 01, 2018 12:45 am
Sorry to drag this one back out again. Just got a nice hefty dividend from VT and along with it the US and Japan got nice hefty tax payments so my interest has been rekindled.
Basically I'd already decided not to go for VT for new investments, but now started to doubt my choice (already contrary to jcc's opinion) of the SBI ETF wrapper.
Let's say you hold 1000 stocks worth $10 each that charge 0.1% and pay a $10 (1%) dividend.
When the charges are taken, that will be a $10 charge.
The dividend is $10, so taxes on the dividend will be around $3. If you get 4 dividends a year, that's $12.
But now let's say a fund charges 0.2% instead but there are no taxes. This brings the charge to $20, while the dividend taxes would have been $12. Higher tax beats higher charge.
But now let's say the dividends are $100 (10%). Now we have 1% charge ($10), 2% charge ($20), and dividend tax ($120). Higher charge beats higher tax by far.
I'm not sure what happens as your holdings in the fund increase. The amount you pay in charges will increase, but so will the dividend you get.
It seems to depend on the amount of dividend. But this is me just making up numbers, I'd like to do this with real data (surely somebody has already done this...)
Basically I'd already decided not to go for VT for new investments, but now started to doubt my choice (already contrary to jcc's opinion) of the SBI ETF wrapper.
This is the key point. The tripple tax is on dividends, but the cost is on the whole fund. My feeling is that the lower costs will win out, but instinct and investing don't go well together so let's look at some numbers.jcc wrote: ↑Thu Mar 08, 2018 9:26 amIt's worth noting that although on paper exe-i has lower costs than say tawara and nissei, that exe-i is holding etfs and in turn getting that triple-tax whammy so it is questionable whether they can outperform the funds that hold stocks and on paper have higher management costs.
Let's say you hold 1000 stocks worth $10 each that charge 0.1% and pay a $10 (1%) dividend.
When the charges are taken, that will be a $10 charge.
The dividend is $10, so taxes on the dividend will be around $3. If you get 4 dividends a year, that's $12.
But now let's say a fund charges 0.2% instead but there are no taxes. This brings the charge to $20, while the dividend taxes would have been $12. Higher tax beats higher charge.
But now let's say the dividends are $100 (10%). Now we have 1% charge ($10), 2% charge ($20), and dividend tax ($120). Higher charge beats higher tax by far.
I'm not sure what happens as your holdings in the fund increase. The amount you pay in charges will increase, but so will the dividend you get.
It seems to depend on the amount of dividend. But this is me just making up numbers, I'd like to do this with real data (surely somebody has already done this...)