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dogshed
Joined: 28 Apr 2006
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 Posted: Sat Jun 02, 2007 5:09 am Post subject: Stock investing in Korea |
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What are my options for investing in Korea?
If I send my money home to the US and use something like zecco then
I'm taking a hit on the exchange rate.
Of course if I make money on the Korean market and then send the money home I still take the hit.
Am I better off sending the money home and using NASDAQ and NYSE? |
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Ozabout7or8
Joined: 04 May 2007
Location: NZ
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| Posted: Sat Jun 02, 2007 6:35 pm Post subject: |
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I think that your best bet is to start investing into a globally diversified portfolio which will insulate you against not only currency fluctuations, but also economic fluctuations between different countries over time.
Have a look at some like Fidelity, or Vanguard that offer retail solutions for diversified portfolios that will take alot of the work away from you and still give you the results you want - stock market returns and diversified risk. |
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4 months left
Joined: 07 Feb 2003
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| Posted: Sat Jun 02, 2007 6:49 pm Post subject: |
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If you invest in the US you may have to pay US tax. How would you take a hit if you invested in Korea and sent your money to the US? The US dollar is pretty much falling against all currencies although it has strengthed in the last week or so.
If you are talking Fidelity or Vanguard Mutual Funds, I would invest in ETFs than mutula funds. Expenses are lower and long term performance is better.
I still think the resource sector is the place to be. Uranium, zinc, gold, cobalt, molybdenum... |
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dogshed
Joined: 28 Apr 2006
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| Posted: Sat Jun 02, 2007 7:23 pm Post subject: |
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| 4 months left wrote: |
If you invest in the US you may have to pay US tax. How would you take a hit if you invested in Korea and sent your money to the US? The US dollar is pretty much falling against all currencies although it has strengthed in the last week or so.
If you are talking Fidelity or Vanguard Mutual Funds, I would invest in ETFs than mutula funds. Expenses are lower and long term performance is better.
I still think the resource sector is the place to be. Uranium, zinc, gold, cobalt, molybdenum... |
If I open a brokerage account outside of the US I still have to pay US taxes because the income tax exclusion will not cover investment income.
I guess which direction the dollar goes has a lot to do with how much I make or don't make. |
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4 months left
Joined: 07 Feb 2003
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| Posted: Sat Jun 02, 2007 7:26 pm Post subject: |
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| What I meant was you may have to pay US taxes on your salary not the lower Korean taxes. Get someone to open an account for you in the US. |
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Ozabout7or8
Joined: 04 May 2007
Location: NZ
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| Posted: Sat Jun 02, 2007 7:28 pm Post subject: |
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| dogshed wrote: |
| 4 months left wrote: |
If you invest in the US you may have to pay US tax. How would you take a hit if you invested in Korea and sent your money to the US? The US dollar is pretty much falling against all currencies although it has strengthed in the last week or so.
If you are talking Fidelity or Vanguard Mutual Funds, I would invest in ETFs than mutula funds. Expenses are lower and long term performance is better.
I still think the resource sector is the place to be. Uranium, zinc, gold, cobalt, molybdenum... |
If I open a brokerage account outside of the US I still have to pay US taxes because the income tax exclusion will not cover investment income.
I guess which direction the dollar goes has a lot to do with how much I make or don't make. |
Not necessarily. You can diversify internationally so that the Won or $US direction doesn't bear too heavily on the performance of your portfolio.
Talk to the people at an investing advisors firm when you are looking to invest, about this very issue (FX rates) and they will show you some simple techniques to eliminate FX risk from your investments. |
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4 months left
Joined: 07 Feb 2003
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| Posted: Sat Jun 02, 2007 7:35 pm Post subject: |
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| Depends on what kind of returns you are looking for. If you want a stock, see if it is dual listed. But if you want a US stock that is only listed in the US there is not much you can do about currency. |
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Ozabout7or8
Joined: 04 May 2007
Location: NZ
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| Posted: Sat Jun 02, 2007 7:41 pm Post subject: |
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There is plenty you can do to eliminate currency risk even if you invest only in US stocks or in Korean stocks or some combination thereof.
The word is called currency hedging, and your financial advisor will advise you the cost which is usually quite cheap, and it may involve things such as FX options or borrowing in a certain currency. What they do is simply enter into contracts for options or loans on your behalf which are the opposite to your initial investment. It actually costs only a fraction of the total amount you are protecting, for example to protect a portfolio of $100,000 might cost a $3,000 option and you have eliminated all FX risk with another currency.
I suggest you try choosing a financial advisor at one of the BIG NAMES first and go from there. If you have the money they have expertise and all the answers. |
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4 months left
Joined: 07 Feb 2003
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| Posted: Sat Jun 02, 2007 7:45 pm Post subject: |
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| If you hedge you are still taking a risk if it goes the other way. I'm looking for an at least 30% upside so currency risk is not a concern for me at this time. |
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luvnpeas
Joined: 03 Aug 2006
Location: somewhere i have never travelled
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| Posted: Sat Jun 02, 2007 8:15 pm Post subject: Re: Stock investing in Korea |
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| dogshed wrote: |
If I send my money home to the US and use something like zecco then I'm taking a hit on the exchange rate.
Of course if I make money on the Korean market and then send the money home I still take the hit. |
What do you mean by taking a hit on the exchange rate? Do you mean paying commissions to exchange currency? In theory, its best to delay that for as long as possible, so you can put that money to work. But is it really very much money? I think I paid my Korean bank about 1% to wire money to my US broker.
On the other hand, if you invest in Korea (and it goes up) you are making more won instead of more dollars, so the bank fee you pay will increase when you convert it.
I think it's not worth worrying about, as long as you are sure you won't need to spend it in Korea. Converting to dollars, and then converting back again, is obviously to be avoided. |
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dogshed
Joined: 28 Apr 2006
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| Posted: Sat Jun 02, 2007 8:18 pm Post subject: Re: Stock investing in Korea |
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| luvnpeas wrote: |
| dogshed wrote: |
If I send my money home to the US and use something like zecco then I'm taking a hit on the exchange rate.
Of course if I make money on the Korean market and then send the money home I still take the hit. |
What do you mean by taking a hit on the exchange rate? Do you mean paying commissions to exchange currency? In theory, its best to delay that for as long asw possible, so you can put that money to work. But is it really very much money? I think I paid my Korean bank about 1% to wire money to my US broker. |
If I send the money home I can put some of it in an IRA. Depending on which kind of IRA I can pay taxes now or later. |
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luvnpeas
Joined: 03 Aug 2006
Location: somewhere i have never travelled
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| Posted: Sat Jun 02, 2007 8:21 pm Post subject: |
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| dogshed wrote: |
| If I open a brokerage account outside of the US I still have to pay US taxes because the income tax exclusion will not cover investment income. |
Can you say more about this? What do you mean, the income tax exclusion will not cover investment income? |
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Ozabout7or8
Joined: 04 May 2007
Location: NZ
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| Posted: Sat Jun 02, 2007 8:22 pm Post subject: |
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| 4 months left wrote: |
| If you hedge you are still taking a risk if it goes the other way. I'm looking for an at least 30% upside so currency risk is not a concern for me at this time. |
No, if you hedge you may lose some upside, I think that is what you mean, but you are not risking anything. What you are doing is taking away some risk. In investing risk = potential return, so by eliminating some currency risk you are also eliminating some potential returns.
Currency risk is always a concern and you obviously made your 30% gains while being exposed to currency risk which could have wiped out some or all of those gains.
If you currency hedge a protfolio, you eliminate the effect of currency fluctuations on your returns and you isolate the investments themselves as the ones you want to take risk on. If of course you want currency risk, and hence the chance to make currency gains then this is a conscious decision that you would make to do this.
Currency losses have wiped stellar gains off many a portfolio, and currency fluctuations can sometimes be quite large. |
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storysinger81
Joined: 25 Mar 2007
Location: Daegu
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| Posted: Sun Jun 03, 2007 4:11 am Post subject: Re: Stock investing in Korea |
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| dogshed wrote: |
If I send the money home I can put some of it in an IRA. Depending on which kind of IRA I can pay taxes now or later. |
You can only invest in an IRA if you have earned income that tax year. If you haven't worked in the US in a given tax year, you will not be able to invest in an IRA for that year. The only foreign income they exclude from that is for service men. Sorry. |
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dogshed
Joined: 28 Apr 2006
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| Posted: Sun Jun 03, 2007 4:25 am Post subject: |
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| luvnpeas wrote: |
| dogshed wrote: |
| If I open a brokerage account outside of the US I still have to pay US taxes because the income tax exclusion will not cover investment income. |
Can you say more about this? What do you mean, the income tax exclusion will not cover investment income? |
To be more specific you cannot include investment income on the 9555 form. |
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