not2old

disclaimer: the post below is for information purposes only

Risk & reward investing in the 'stock market' , can folks deal with the fluctuations & be ready for a drop of their invested capital?

https://finance.yahoo.com/q?s=EWU

include in that Mutual funds, ETF's, ETN's, CEF's (closed end funds), Preferred shares, low risk/low fluctuating shares that pay dividends that are also optionable, Convertible securities, Exchange traded debt securities, Debentures, Trust units/fund, REIT's, PINE Notes', all where the equity fluctuates, even if its a 'supposingly' guaranteed' fixed return rate , its Risk vs reward

I suppose CD's (certificate of deposits) or a 'MMA' (Money market account') are as safe as it gets even though its 1% ish, then again is it keeping up with inflation?

I will provide you a list of ETN's as an alternative 'look at'


edit: link added below

http://www.firstbridgedata.com/page/...xchangetraded/

For information & reference purposes only, one of the ETN's from that list

http://finance.yahoo.com/news/credit...213000826.html


.

not2old

disclaimer: the post below is for information purposes only

without factoring in a FX for those living outsie the UK & for those in the UK, there are the go to 'financial advisor' as well as a google on 'what is afe with the highest return'

from one.....

Four low-risk scenarios of where to invest for maximum returns - Telegraph

From the horses mouth - 'never trust anyone with your money', always be wary of the 'tip of the day' & from the 'horses mouth' - be dilligent, do the research well, paper trade your potential investment for at least three months prior to sinking any money into it to see what its all about.

For the OP, some further research information is the CEF's or 'closed end funds'

From the WSJ pages

Closed-End Funds by Category - Markets Data Center - WSJ.com

simply click on any one of the investment links to see performance & return

If anyone wants to get into it, I suggest a look at

QuantumOnline.com Home Page

simply sign up for a free in depth look at all that is available, together with everything one needs to know about each & every equity investment

mrken30

The aim for me was to try an pull my GBPs from the UK and invest in UK funds to maintain the link to the currency I may retire on in 20 years. I want to avoid FX fluctuations if possible. Income in GBP , invest in GBP , but living outside of the UK.

not2old

so you want to invest in the UK in UK pounds without any FX?

or invest from the US in global market equities such as the UK in either a fund, track the pound (which is playing with FX) or in gilts?

Depends on your personal 'Risk & reward', to how can you ever be sure that at the end of the day investing in such a thing as that 'ETF' that you currently have, say for 20 years that you have a positive net return?

Gilts is another option for you, as in an international stirling account that has 'term deposits' such as LLoyds international or maybe an HSBC premier account that you can invest in to get as close to a 5% yearly return in GBP all while your capital is safe & secure in GBP

Maybe others can jump in on this

mrken30

I was thinking of maybe investing in UK equities via a US IRA. I know I will lose a little on the FX , but the tax savings should offset that a bit.

I had not thought about gilts.

not2old

OK, so if its 'invest in the UK securities', I'd suggest to you to take a look at the long term options in the following link, in particular investment trusts or trust units

Unit Trust, OEIC and fund prices, data and tools | Morningstar

Look at performance, rate of return & yields, keeping in mind 'past history & performance is not an indication of future results or any expectations they'll meet the past performance whatsoever'

Preservation of capital is utmost & any upside of the investment is a given, with a nice quarterly or monthly payment on the investment to yield at least 5%/yr should keep the wolf from the door.

.

mrken30

These are UK fund which have to be purchased in the UK by the look of things. If so that's a big tax headache.

not2old

In what you posted above

- rental income from the UK brought into the US converted to $US & paying tax on the income. Fluctuating FX, results in fluctuation of capital.

- now wants to invest within the IRA in a UK product in $US, Has to deal with the investment in both fluctuating FX as well as fluctuating price of the investment. Again up's & down's on the total value of the investment in $US that at some point will be converted to GBP when you retire to the UK in 20 years or so.

It could be an all round losing propostion when having to deal with the FX as well as the tax being paid on the UK rental income, to then invest it in $US.

Since this is a 20 year plan, why not consider selling the UK property, get the money into the US at this really good FX rate right now, then plonk the money into your US IRA or wherever to invest that in a 5% yearly return. Deal with the FX 20 years from now?

Less hassle than having to deal with a rental property some 5000 miles or so away, converting the GBP to $USD & then having to pay tax



.

mrken30

I get about a 12% income return on the rental in the UK. that doesn't take into account capital appreciation. Property prices in the US are crazy right now, you are lucky to get a 5% return in the US, many now are 1 to 2%.
Where can you get a 5% return with almost 0% risk of losing it all?
I would have to pay capital gains on the sale of the property.
I got burnt in 98 by selling property and investing in stock. I feel stock is more risky than real estate.
I have been managing the property for over 4 years now and it is not as difficult as you would imagine.
I also have US rental properties, so having the UK property hedges my bet on both FX and property prices.

not2old

On the UK property, is that 12% gross or net after expenses, FX & income tax, net into your pocket stateside?

I see your point about the capital gain if you sold the UK property, yet wouldn't that happen in 20 years time when it also has [hopefully] appreciated also, or would it be that you plan on moving back into that rental as your principle residence, thereby avoiding capital gain... possibly?

Maybe check that out since it wouldn't have been your principle residence for 20-30 years if you decided to move into it on your return?

Of course things can & do change along the way. If keeping the UK property works in your long term plan, then all the best to you & trust that it works out that way.

Just out of curiosity (and I am interested in buy to let having done it many years ago), what would you say is the average return on the US rental properties after all expenses (mortgage, insurance, maintenence etc) including any vacancy rate?

Can you not put an income property within your IRA or at least self mortgage it so you pay yourself the mortgage funded from the IRA?

And what do you see the long term US housing market being in terms of growth for buy to let income property?

On investing in the 'stock market', its not for the novice or the faint of heart.

mrken30

That's net after expenses (property management, utilities,insurance) unless I have a major repair, worse case has been around 6% return. I obviously pay US taxes on this income, but it more or less looks after itself.

I keep the money in the UK at the moment so I don't take into account FX loses/gains.

I won't pay capital gains on it until I sell it, unless I use the proceeds to buy another property through 1031 exchange.


I got sent through this duplex.
Two three bedrooms, 2½ bath townhouse apartments. Set in back, lots of privacy. Fenced backyard. The cost is $489k and rent is $1300 a month each side($2600 total). Property tax is probably around $5k and insurance $800.

As you can see that it's around 5% return assuming no mortgage, repairs or vacancies.

Monthly mortgage payment with 25% down would be $1,831.13 a month.

This is probably one of the better buys around at the moment.

not2old

@ post #26, from that post it appears that you have the rental income well & truly working in your favour.... well done

Living outside the UK, with income from a UK property, with that income being kept in the UK, presumably is in a UK bank account in the property owners name (yours) with a UK address for that account, if so can you do that?

Can a UK non-resident have a UK bank account in the UK? How does that work especially when they have income derived in the UK that is in a UK bank account?

So, living outside the UK, if one earns rental income (or any income) in the UK, those funds are in a UK bank account in their name (HMRC would be aware of that?), wouldn't the person with that income have to declare it in the UK as income, file a tax return as non-resident (or something), then also file the UK income in the foreign country where resident, in the states in your case?

On the 1031 exchange & capital gain - wouldn't that only apply to 'properties' held or owned in the United States & not properties outside the states?


.

not2old

I had to go look up more about the 'offshore property using the 1031 exchange'

Few sticky things about this both positive & negative

Do You Get U.S. Tax Deductions On Real Estate Abroad? | Investopedia

mrken30

Yes you need to make sure you follow the rules, but it does allow you to defer capital gains indefinitiely. The base value is reset on death.

mrken30

I have my US address on my bank account. Also the house records also have my US address.

A non UK resident can not open a new bank account. Currently if you already have an account most banks will allow you to keep it open.

I file with HMRC as a non-resident landlord and I file my US taxes with the IRS

It applies to both, but if you sell a foreign property you cannot use the funds to buy a US property. I can sell my UK house and buy a house in Spain.

One caveat with buying overseas property are mortgages. Fortunately my UK properties are mortgage free. Sometimes it might be easier to use US funds to buy a property, especially with the current exchange rate.