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How to Money

Investment accounts

Account types

First, do some research for investment accounts with a tax advantage; where the future gains won’t be taxed (or taxed at a reduced rate) or where you get a rebate on income taxes already paid. Many countries encourage investors to plan for their future and offer tax advantages to invest in a pension or retirement account. You can usually only access this money later in life.

My suggestion is to think of your investment account types as different “buckets” that you should fill up in different amounts over time. A simple portfolio might look like this:

Bucket one: retirement account bucket 🇺🇸 IRA/501k 🇬🇧LISA/SIPP/pension plan 🇿🇦 RA: Sygnia You might be able to contribute a percentage of your income or a fixed annual amount into this bucket. Some employers may also contribute an amount or percentage to these accounts. Pick the financial providers that offer the lowest-cost index fund investments. Max them out if you can.

Bucket two: tax-advantaged investment accounts 🇬🇧 ISA: Vanguard 🇿🇦 TFSA: Easy Equities These accounts have limits to how much you can deposit each year, but the gains/growth is never taxed. Choose the financial platform that offers the lowest-cost index funds. Max them out next.

Bucket three: Normal investment accounts. 🇿🇦 🇲🇽 🇬🇧 🇺🇸 Advanced trading account : IBKR 🇿🇦 Simple trading / low-cost ETF account : Easy Equities 🇬🇧 🇺🇸 Low cost ETF account: Vanguard You may have to pay tax on the growth, so this bucket gets filled next. Again, choose the platform that allows you to invest in the lowest-cost broad-market index funds.

Account types with a tax advantage

🇺🇸 IRA, Roth IRA, 501k

🇬🇧 Stocks and Shares ISA (Vanguard), Lifetime ISA (Nutmeg), Junior ISA (Vanguard), SIPP (Vanguard), or other company pension plan

🇿🇦 TFSA, RA, or company-provided pension plan. In South Africa, the financial provider of the lowest-cost index funds investments in an RA (retirement annuities) account is

Sygnia⁠

. The provider of the lowest-cost index funds investments in a TFSA (tax-free savings account) is

Easy Equities⁠

Accounts without a tax advantage

The advantage of these accounts is that you can sell your investments whenever you like, but it does mean that you will pay some tax on the growth.

🇺🇸 If you are both from the US (and lazy) I recommend using a robo-investor (which automatically invests your money each month) like

WealthFront⁠

Betterment⁠

. You’ll sacrifice some of your gains in fees, but there really isn’t a lot to do.

🇿🇦 🇲🇽 If you are from anywhere else (or not lazy) I recommend signing up for a regular investment account with

Interactive Brokers⁠

(IBKR) or any other one in your country of citizenship or residence that allows you to buy and sell low-cost index funds/exchange-traded funds (ETFs). In South Africa specifically, consider the USD account with

Easy Equities⁠

(EE). It has a great interface and you will be able to invest in the Vanguard S&P500 index fund (with low fees: a total expense ratio of only 0.03%). EE doesn’t allow you to purchase Irish-domiciled ETFs, IBKR does. (More on that in

Taxes⁠

)

🇬🇧 If you are from the UK, I recommend an account with Vanguard UK. They have the lowest-cost index funds on offer.

It usually takes a day or two to get your account set up, since you’ll need to provide some extra documents like proof of address and proof of ID.

Useful tips/links for navigating IBKR:

Interactive Brokers asks for a lot of information, set aside 30 minutes or so to sign up

You only need a cash account, not a margin account

If you select 1 year (or less) of experience, you might not be able to open an account

Helpful YouTube link (México):

CÓMO ABRIR TU CUENTA CON INTERACTIVE BROKERS⁠

⁠

To fund your IBKR account, sign in and click the fund/deposit button and follow the instructions. Below are some notes.

⬅️ You can add a US bank account (via ACH) and make automatic and recurring “pull” deposits from your bank account

➡️ If you add a USD bank account (via wire) or MXN account, you will need to sign into your bank account each month and initiate a “push” deposit from your bank account

🇿🇦 You should make USD deposits from South Africa using the Shyft app (this will give you the best ZAR/USD exchange rate). If you choose “South African rand” from the deposit options, they will only show you their offshore bank account details (meaning the deposit will leave your bank as ZAR but show up on Interactive Brokers as GBP or USD, after a bad exchange rate offered by your bank, unless you’re using Shyft.

🇲🇽 You can make MXN deposits right from your Mexican bank account! Click on the “SPEI” link to get the CLABE interbancaria (as in the video above). MXN deposits show up in an hour or so.

Currencies

You can easily convert between the supported currencies on Interactive Brokers. See the screen grab below for converting an MXN deposit to USD using the “Convert currency” feature in the app (or website):

⁠

Your account will have a default currency that is displayed and used for accounting purposes (like showing the value of your account in one currency), but your account could consist of cash, stocks, and index funds in multiple currencies.

Note that once your trading account is funded it just means the money is there; you still need to use the money in the account to buy ETFs/index funds.

Index funds deep dive⁠

⁠

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