Revealed! An ETF That Beats the Popular SPY!

Best ETF for non-US Investors

Author

Pete Tan
May 13, 2024

In partnership with

One of the passive methods of investing is just buying into the US market. In particular, the S&P500 which tracks the stock performance of the 500 largest companies listed on stock exchanges in the United States.

And the most common ETF (exchange traded fund) is SPDR S&P500 ETF  

However, do you know that this is NOT the best S&P500 ETF to invest in?

Why?

While the S&P 500 ETF managed by SPY is well-known for its liquidity and low expense ratio, it has significant drawbacks, especially concerning U.S. estate taxes. As a non-US investor, you might face a tax up to 40% on your ETF investments upon transfer.

A Tax-Smart Solution: Ireland-Domiciled ETFs

To avoid the U.S. estate tax, you can consider ETFs tracking US market that are domiciled in countries which do not levy estate tax on foreigners such as Ireland. These funds not only provide an exemption from the U.S. estate tax but also offer reduced withholding taxes on dividends due to favorable treaty terms. One standout example is the iShares Core S&P 500 ETF (Ticker: CSPX), which offers a lower expense ratio than SPY and sidesteps U.S. estate taxes.

Optimizing Dividend Taxes

Dividend taxation can significantly reduce your returns. Traditional ETFs incur a 30% withholding tax, but some innovative products like the iShares S&P 500 Swap ETF (Ticker: I500) use futures contracts to avoid this tax, improving your overall returns.

Want to Dive Deeper?

By investing in the alternative ETFs, you can drastically improve your profits with lower or no dividend withholding tax and you can avoid the hefty estate tax when your family inherit your investments!

📹️ For more detailed discussions, check out my in-depth video on it. I went deeper into the comparison of different ETFs and sharing my personal favourite. I also share the possible alternative for those who want to invest in Nasdaq too!

Wishing you a profitable week ahead,

May Your Profits Grow!

Pete
Invest with Pete

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