Hey expats. Weâre going to show you step-by-step how to setup your dead simple expat investing portfolio today. So easy your grandma can do it đľ
Today in 10 minutes or less, youâll learn:
𧰠Three key investing levers
đŻ Define your goals and risk tolerance
đ Use International Brokers to save FX fees
⥠Four example asset allocations & ETF portfolios
đ¸ $1000âs of potential tax savings (as a non-American!)
P.S. Iâm writing soon about expat side hustles. If you have one, reply or DM me. I want to hear stories! đ
đ§ Guide to setting up your expat investing portfolio
𧰠0. Understand key investing levers
When it comes to investing, David Swensen, GOAT fund manager of Yaleâs Endowment Fund, said there are only three primary levers for impacting long-term performance:
Asset allocation: what asset classes you buy
Market timing: when you buy them
Security selection: which financial instruments you buy within those asset classes
đĽ His hot take: Only one of these 3 levers actually matters for most investors: asset allocation.
The other two are kinda coin tosses. If you factor in fees/commission, then they are negative sum games.
Donât @ me Yalies. I only got into Dartmouth đ¤ˇ
đŻ 1. Define your investing goals
Work backwards from your long-term lifestyle vision to set your investing goals, which influences your asset allocation.
Steps:
Determine your ideal lifestyle. Be 100% honest with yourself. Consider things, experiences, people, and feeling state.
Calculate your required cashflow. Breakdown the assets & returns you need to support your lifestyle.
Choose a timeframe. Do you want to realize this cashflow in 5, 10, 20, or 40 years?
Example:
Let's say your ideal lifestyle will require you to generate $50k USD / year of passive income in 20 years. If you're expecting a 4% yield to generate this cash flow, then you'll need to build $1.25m worth of assets in 20 years.
If your current net worth is $250k, how will you grow your assets to $1.25m? đ¤
đ 2. Determine your risk tolerance
âManage your money in a way that helps you sleep at night⌠Some people wonât sleep well unless theyâre earning the highest returns; others will only get a good rest if theyâre conservatively invested. To each their own.â
Psychology is a massively underrated part of investing, especially in handling risk.
Be honest with yourself:
Can you really stomach 30-50% drops and then wait 2-3 years until recovery?
If yes, you might be wired to optimize for the highest returns.
If no, optimize for what helps you sleep at night. (as a light sleeper, this is what I do đ´ )
