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Investment Ideas Expats’ portfolio bolstered by U.S. dollar and low taxes

Jim Herrler and Ellen Ma

Jim Herrler and Ellen Ma

Occupation

Retired (Mr. Herrler) and marketing executive (Ms. Ma)

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The portfolio

Registered accounts of mainly North American dividend stocks (including BCE Inc., Canadian National Railway Co., Royal Bank of Canada, Apple Inc. and Cisco Systems Inc.) and corporate bonds; and a Singapore-based account of global stocks, bonds and metals.

The investors

Jim Herrler, 65, and his wife, Ellen Ma, 50, are Canadian expatriates who have lived in Singapore, Shanghai and Penang, Malaysia, for the past 10 years.

Before retiring, both were senior advertising executives. A little while ago, Ms. Ma returned to corporate life as chief marketing officer for a technology firm.

They have written a retirement guide: Planet Boomer – Retire Now for Less in Southeast Asia. It says there are many modern communities with expat populations in Southeast Asia that have lower living costs, lighter taxes and better health care than Canada.

How they invest

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As non-residents of Canada, Mr. Herrler and Ms. Ma can still make portfolio changes inside their registered retirement savings plans. Just prior to, and during, the 2008 financial crisis, they got out of mutual funds and into dividend-paying stocks to reduce risk and smooth market swings. Performance has averaged about 12 per cent since 2008.

They can only make contributions to their RRSPs if they have Canadian income, or carry forward the deductions. Withdrawals from the plans or registered retirement income funds incur a 25-per-cent withholding tax (unless set lower by a treaty between Canada and the resident country).

When the couple sold their Toronto house several years ago, they put the proceeds into a Singapore-based account and invested in global stocks, bonds and commodities – tilted toward emerging markets. This worked well for years, but not so much in 2015.

Nonetheless, the decision to hold the investments in U.S. dollars was "a very good one," says Mr. Herrler, given the dollar's strong appreciation against other currencies. Also, there is no capital-gains tax in Singapore.

Mr. Herrler's last trade was to buy "another big chunk" of Apple's shares. "I continue to be a big believer and keep buying on the dips …"

Best move

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"My wife used to work for Cisco and, while we weren't big fans of the company's management, we thought the stock was undervalued. We have more than doubled our considerable investment."

Worst move

"I used to do the advertising for Nortel and I loved that company … so much that I rode the stock all the way to the bottom," Mr. Herrler says.

Advice

"I'm most pleased about our decision to depart mutual funds and get into dividend stocks …"

Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his Website.

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