My strategy/plan going forward

[qldfrog]

HIN

Holder
Identification
Number

meaning the ASX/CHESS identifies you as the beneficial holder

otherwise they would mostly likely be held in a trust structure

but you would have to dig into the fine print ( some ETFs do NOT hold any shares at all , only derivatives reflecting indirect exposure to the share movement , normally they are called 'synthetic ' )

In short, with an hin, you own legally the share and if your broker collapses, you still own them.
With no hin, you do not own them, just a promise on a value, probably a giant pool managed by a trust.
an extra risk

.

 

[RbNEO]

In short, with an hin, you own legally the share and if your broker collapses, you still own them.
With no hin, you do not own them, just a promise on a value, probably a giant pool managed by a trust.
an extra risk

.

Ah right, that's good to know. Thanks for that, I had no idea.

 

[Dona Ferentes]

Ah right, that's good to know. Thanks for that, I had no idea.

now you have the information, does this change what you may do, going forward?

 

[qldfrog]

now you have the information, does this change what you may do, going forward?

For what it is worth, i personally consider owning my own distinct CHESS/HIN critical once we are talking 6 digits.
I did select/reject brokers on this criteria

 

[RbNEO]

now you have the information, does this change what you may do, going forward?

I'm still confused, on how I'm going to invest in the s&p 500 if I'm facing FX risk (isn't it unavoidable because I'm trading foreign stocks?) and if I'm keeping 'everything local'

 

[divs4ever]

Ah right, that's good to know. Thanks for that, I had no idea.

yes tiny details like that are important in troubled times

dozens of onlookers will be grateful you asked that question

 

[qldfrog]

I'm still confused, on how I'm going to invest in the s&p 500 if I'm facing FX risk (isn't it unavoidable because I'm trading foreign stocks?) and if I'm keeping 'everything local'

However you set yourself, if you buy shares in the US, you will be exposed to the USD vs AUD.
That can go both ways...help or cost you.
Some ETFs add some "currency edged" in their formula but this is not a foolproof solution at all, just a smoothing exercise, and potentially costly

 

[divs4ever]

I'm still confused, on how I'm going to invest in the s&p 500 if I'm facing FX risk (isn't it unavoidable because I'm trading foreign stocks?) and if I'm keeping 'everything local'

well SOME ( locally domiciled ) ETFs are currency hedged ( however that safety costs you extra in the returns )

now investing overseas ( whether an Oz domiciled fund or US domiciled fund ) always incurs FX risk somewhere

i face all the time with my ASX-listed New Zealand stocks , but that is the trade-off i have to take when i invest there .

AND FX risk can be a good thing , say you have a weak currency ( like the Oz peso or Japanese yen ) both likely to trend lower against the US dollar ) your returns in USD are better when they get to YOU

what you really don't want is the Oz peso to strengthen because the US dollar collapsed ( unlikely but possible in the current climate ) if the both plummet together ( and gold heads towards $US 10,000 an ounce ) it is still comparatively OK for you

 

[RbNEO]

well SOME ( locally domiciled ) ETFs are currency hedged ( however that safety costs you extra in the returns )

now investing overseas ( whether an Oz domiciled fund or US domiciled fund ) always incurs FX risk somewhere

i face all the time with my ASX-listed New Zealand stocks , but that is the trade-off i have to take when i invest there .

AND FX risk can be a good thing , say you have a weak currency ( like the Oz peso or Japanese yen ) both likely to trend lower against the US dollar ) your returns in USD are better when they get to YOU

what you really don't want is the Oz peso to strengthen because the US dollar collapsed ( unlikely but possible in the current climate ) if the both plummet together ( and gold heads towards $US 10,000 an ounce ) it is still comparatively OK for you

What about the HIN, does that mean every time I invest in foreign stocks there is no HIN which means if that brokerage closes down I can lose my entire portfolio?

 

[rcw1]

What about the HIN, does that mean every time I invest in foreign stocks there is no HIN which means if that brokerage closes down I can lose my entire portfolio?

Example on what happens if you were to use Commsec:
Answer to your question: no unless in this case the Commonwealth Bank has a catastrophic failure then we are all pucked ...

When you purchase international shares through CommSec, your assets are segregated in the name of CommSec Custodial Nominees Pty Limited, and the platforms International Custodian - Interactive Brokers LLC is the legal owner. However, you retain the beneficial ownership of all the assets in your account.
Hope this makes sense.

Failing this ring this mob:
To find out more about where your international shares are held, please contact our International Supporton 13 15 19 or +61 2 8397 1206 if calling from outside Australia (open 24 hours, U.S. trading days).

Kind regards
rcw1

 

[RbNEO]

Example on what happens if you were to use Commsec:
Answer to your question: no unless in this case the Commonwealth Bank has a catastrophic failure then we are all pucked ...

When you purchase international shares through CommSec, your assets are segregated in the name of CommSec Custodial Nominees Pty Limited, and the platforms International Custodian - Interactive Brokers LLC is the legal owner. However, you retain the beneficial ownership of all the assets in your account.
Hope this makes sense.

Failing this ring this mob:
To find out more about where your international shares are held, please contact our International Supporton 13 15 19 or +61 2 8397 1206 if calling from outside Australia (open 24 hours, U.S. trading days).

Kind regards
rcw1

Thanks for that, that example is a bit confusing as I would just be going through interactive brokers as my broker instead of commsec

 

[qldfrog]

What about the HIN, does that mean every time I invest in foreign stocks there is no HIN which means if that brokerage closes down I can lose my entire portfolio?

HIN/CHESS are purely for the Australian market

 

[RbNEO]

HIN/CHESS are purely for the Australian market

Yep, some things are still not clear to me. I'll do some research and get back to you all if I still don't get it. I appreciate the advice from everyone!

 

[rolly1]

Yep, some things are still not clear to me. I'll do some research and get back to you all if I still don't get it. I appreciate the advice from everyone!

The SP 500 tracking etf will be covered by the HIN as it trades on the ASX. (code IVV)

 

[RbNEO]

The SP 500 tracking etf will be covered by the HIN as it trades on the ASX. (code IVV)

That's the answer I was looking for but was confused because I thought because s&p is a US index that there is no HIN number, but I guess the IVV is an Australian ETF that points to a US index?

 

[rolly1]

That's the answer I was looking for but was confused because I thought because s&p is a US index that there is no HIN number, but I guess the IVV is an Australian ETF that points to a US index?

Yes correct

 

[RbNEO]

Yes correct

Ah, thanks a bunch! That's all clear now! I think I got the terms "ETF" and "index" mixed up

 

[RbNEO]

Yes correct

Two/three other questions I had was, can I buy individual US shares the same way as a ETF to retain that HIN or is there no HIN and it's a risk I have to take? Or is it what @rcw1 said?

And when I go to buy the etf through interactive brokers, from the research I've done, I don't need to put in my HIN number that's just something that's on the CHESS system?

I did do some research, for some reason it said the IVV is a US ETF not a aus one, but blackrocks website says it used to be a US based ETF but now it's an AUS based ETF? Was a bit confused there - https://www.blackrock.com/au/products/275304/

I'm going down a bit of rabbit hole now, but I can see that on this post that IBKR had a crash and a client lost money. Seems to be another big risk here? As IBKR owns the shares and not me? Ugh, just gets more confusing. (refer to this post) https://www.aussiestockforums.com/threads/transferring-holdings-from-ib-to-commsec.19597/

 

[RbNEO]

Two/three other questions I had was, can I buy individual US shares the same way as a ETF to retain that HIN or is there no HIN and it's a risk I have to take? Or is it what @rcw1 said?

And when I go to buy the etf through interactive brokers, from the research I've done, I don't need to put in my HIN number that's just something that's on the CHESS system?

I did do some research, for some reason it said the IVV is a US ETF not a aus one, but blackrocks website says it used to be a US based ETF but now it's an AUS based ETF? Was a bit confused there - https://www.blackrock.com/au/products/275304/

I'm going down a bit of rabbit hole now, but I can see that on this post that IBKR had a crash and a client lost money. Seems to be another big risk here? As IBKR owns the shares and not me? Ugh, just gets more confusing. (refer to this post) https://www.aussiestockforums.com/threads/transferring-holdings-from-ib-to-commsec.19597/
View attachment 194771

I'm unable to edit this, so I just am adding some info, I just realised through interactive brokers there is a us and aus option for the IVV etf, "ARCA" is USA and "ASX" is US, I didn't realise till I searched it up so that confusion is settled.