Basic Details
I am a US citizen in my early 30s, living and working in the UK for the past three years. I plan to stay here for the foreseeable future, but am unsure where I will retire. I am seeking general advice on my setup/plan, hoping to sanity-check that I'm not making any major mistakes or missing any low-hanging fruit.
I am a software engineer currently earning ~£165k along with (startup) EMI stock options vesting monthly, though I'm operating/planning under the assumption that equity will never become worth anything. I was working in academia earning much less than that until early 2022, so I have only recently started saving/investing at a significant rate -- before that I just made yearly Roth IRA contributions as best I could and stuck those in the S&P 500.
I am paid in pounds, but use transferwise to convert savings to dollars and invest in a US Chase account, sticking there with US domiciled ETFs that are UK HMRC reporting funds based on advice that I read on the wiki.
Current Assets/Allocation:
My goal in choosing this allocation was to keep things relatively simple, without an overly-aggressive or overly-conservative balance of risk. I went with the following allocation in both Roth IRA and taxable accounts after reading up on the basics of three/four fund portfolios on the wiki.
30% VOO (S&P 500 Index)
30% VOOG (S&P 500 Growth Index)
30% VEA (non-US developed markets index)
10% BND (Total Bond Market Index)
At present the taxable account is ~65% of my net worth, Roth IRA is ~25%, and the remaining ~10% is in employer-sponsored UK pension accounts, parked in target date funds.
I make the maximum employer-matched pension contribution via salary sacrifice, then my maximum (backdoor) Roth IRA contribution, then invest the rest in taxable account (aiming to rebalance to roughly the above allocation by topping up whatever's fallen behind)
Questions:
1) Does that seem a reasonable asset allocation? I see various arguments on here about the pros/cons of different ETFs but wasn't super well-informed at the time that I set up these percentages and chose these particular funds, basically just looking at expense ratios.
2) Are my investment priorities/strategy tax efficient? My understanding from reading the wiki and talking with expat colleagues/friends is that this is the optimal approach for UK-resident US citizens. But, I wonder if (a) I might be better served by sacrificing more of my salary as UK pension contribution to reduce my UK income tax burden, even if my employer won't match beyond the statutory minimum, or (b) there are other investment instruments in the UK that I should be taking advantage of, though I know ISAs are a tricky proposition. For example, British colleagues have talked up UK premium bonds, but I suspect that the juice (returns) may not be worth the squeeze (added tax complication).
3) What is the best way to spend money for US expats in the UK? Bills/rent are direct-deposit from my UK current account, and I try to put other expenses on my US credit card where possible, to maintain credit score and since non-amex UK cards are much less rewarding. Is this a smart approach? Am I shooting myself in the foot by doing this little dance? Or does it not particularly matter?
4) Any other advice you would give or things that jump out here?
I am a US citizen in my early 30s, living and working in the UK for the past three years. I plan to stay here for the foreseeable future, but am unsure where I will retire. I am seeking general advice on my setup/plan, hoping to sanity-check that I'm not making any major mistakes or missing any low-hanging fruit.
I am a software engineer currently earning ~£165k along with (startup) EMI stock options vesting monthly, though I'm operating/planning under the assumption that equity will never become worth anything. I was working in academia earning much less than that until early 2022, so I have only recently started saving/investing at a significant rate -- before that I just made yearly Roth IRA contributions as best I could and stuck those in the S&P 500.
I am paid in pounds, but use transferwise to convert savings to dollars and invest in a US Chase account, sticking there with US domiciled ETFs that are UK HMRC reporting funds based on advice that I read on the wiki.
Current Assets/Allocation:
My goal in choosing this allocation was to keep things relatively simple, without an overly-aggressive or overly-conservative balance of risk. I went with the following allocation in both Roth IRA and taxable accounts after reading up on the basics of three/four fund portfolios on the wiki.
30% VOO (S&P 500 Index)
30% VOOG (S&P 500 Growth Index)
30% VEA (non-US developed markets index)
10% BND (Total Bond Market Index)
At present the taxable account is ~65% of my net worth, Roth IRA is ~25%, and the remaining ~10% is in employer-sponsored UK pension accounts, parked in target date funds.
I make the maximum employer-matched pension contribution via salary sacrifice, then my maximum (backdoor) Roth IRA contribution, then invest the rest in taxable account (aiming to rebalance to roughly the above allocation by topping up whatever's fallen behind)
Questions:
1) Does that seem a reasonable asset allocation? I see various arguments on here about the pros/cons of different ETFs but wasn't super well-informed at the time that I set up these percentages and chose these particular funds, basically just looking at expense ratios.
2) Are my investment priorities/strategy tax efficient? My understanding from reading the wiki and talking with expat colleagues/friends is that this is the optimal approach for UK-resident US citizens. But, I wonder if (a) I might be better served by sacrificing more of my salary as UK pension contribution to reduce my UK income tax burden, even if my employer won't match beyond the statutory minimum, or (b) there are other investment instruments in the UK that I should be taking advantage of, though I know ISAs are a tricky proposition. For example, British colleagues have talked up UK premium bonds, but I suspect that the juice (returns) may not be worth the squeeze (added tax complication).
3) What is the best way to spend money for US expats in the UK? Bills/rent are direct-deposit from my UK current account, and I try to put other expenses on my US credit card where possible, to maintain credit score and since non-amex UK cards are much less rewarding. Is this a smart approach? Am I shooting myself in the foot by doing this little dance? Or does it not particularly matter?
4) Any other advice you would give or things that jump out here?
Statistics: Posted by londonexpat — Mon Sep 09, 2024 11:21 am — Replies 0 — Views 29