Reader’s Case: Moving to the UAE

The tramp quit his engineering job from a major Silicon Valley semiconductor company, 33. He now travels the world, seeking knowledge from other wealthy people so that he can teach people how to be financially independent of themselves.

The reader case today comes from a reader who intends to move abroad and wants to know that this might speed up their journey to fire. Let’s find out the answer!

Hello,

I love your books and blogs (Breaking Reading), but now I also have a look at how to build my portfolio and whether it’s screwed up. I immigrated to Canada in 2021 and am currently in Toronto and plan to leave Canada by 2026. If I visit, I plan to never stay long enough to reach tax residence status again. I might establish a residence right in the UAE or live a nomadic lifestyle. Now, I have over $2 million in unregistered accounts (RRSP, TFSA and FHSA maximization).

Here is my information to help you evaluate my situation

• Your gross/net annual household income: 2024 base salary: $139K, commission: $190K
• Your monthly household expenses: Rent: $915, Others: 685, Travel: 333; Total = $1,933
• For any debt you have, please include: No debt
  interest rate
  • Your minimum monthly payment
• Any fixed assets you own (home, car, etc.): None
• And the investments or savings you have (cash, bonds, stocks, etc.):
  Canadian portfolio (Wealthsimple) As of March 2025: TFSA-$35,701 FHSA-$20,907, RRSP-$58,604, Unregistered – $197,722.63. The portfolio holds 97% of VGRO shares and 3% bonds (all 80% ETFs and 20% bonds).
  UAE’s portfolio (According to my parents, but my funds) As of March 2025: $91,092 90% stock, bonds 10%.

My goal is to be financially independent through a $1 million portfolio. I hope your help answer these questions

1. 80% stock 20% bond asset allocation will help me rely on this portfolio forever (if I include the Shield and the dividend income ETF you will have), or is it too radical? If I had a recession after my initial 5 years of retirement, I would use the strategies you mentioned to avoid drawing a lot from my portfolio.

2. Do you think an all-in-one ETF such as VGRO or V80A is a good choice for having multiple ETFs? I want to move to 80% stock, 20% bond allocation, with yield built in. I’m not sure where to make the extra contribution to achieving this.

3. Since my unregistered has ~200k, I have to pay the issuance tax when I leave, or is there a way to further tax optimization for my funds? I will have the largest RRSP, FHSA and TFSA in 2025 and 2026 before leaving Canada, but I think there is still some remaining funds in my unregistered

4. Finally, I have about 16 holdings in my Canadian portfolio (5 separate stocks, the rest is a bunch of ETFs like VFV, VEQT, VGRO, VGRO, XEQT, VOO, etc.), with more than 87% of U.S. stocks, about 10% of international stocks and 3% of bonds. I have about $10,000 in my private equity (in RRSP) and private credit products (unregistered) but I’m considering moving it into an ETF right now. All of this was purchased early in my investment journey before I encountered better educational content.

My UAE portfolio is as follows: the bond component is about 4%, and the rest of the stocks are composed. Stocks are ETFs such as CSPX (the S&P500 version of Ireland-Pomiciled version to avoid US estate tax), VWRA, V80A, etc. Stock distribution looks like 51% of U.S. stocks, 33% of international stocks and 16% of Canadian stocks. I tried linking my brokerage account to Pastiv, but because it creates many portfolios (1 for RRSP, TFSA and two brokers), I’m overwhelmed with how to simplify this product and set up a portfolio like yours, especially if you don’t recommend a one-to-one ETF approach in my case.

Initially, I had severely weighted both us and the stock’s performance and didn’t want to sell paper losses immediately when the market corrected. Using a retirement calculator, I still have 6 years until I retire, assuming that the annual return rate reaches 7%. Will I hope to achieve this? If not, can I get there 6 years or earlier? (In terms of asset allocation, tax efficiency and my control factors)

I also just listened to your podcast on Passiv and you don’t recommend any all-in-one ETFs that are packer fees and tax-ineffective. I plan to move out of Canada and shoot faster than I currently expect to take me for 6 years, so I’m thinking about them because I have to use a broker like IBKR, which has the fee for buying/selling fees, I read that in the accumulative phase I’ll charge more because I’ve charged more since I bought and rebalancing the 4 ETF. The wealth I currently use is simple and has no commission and lives in the UAE and I don’t have to deal with tax efficiency matters. The sound of automatic fights in the quarter is also easier, like I don’t have to think less about what I buy and sell. After I didn’t want to continue to increase my unregistered account and pay a huge capital gains tax or departure tax to move it onto the road, so I kept moving everything left to the UAE’s “family” portfolio, held in the UAE under my family’s name.

So, given that, do you still not recommend them?

Thank you so much!

uaeexpat

I like these international cases. Most people live, work and retire in the same country, but as I and I discovered during my nomadic trip, the ability to unlock various optimizations can be resettled due to the way the tax systems in different countries interact with each other. The UAE is particularly interesting in this way because they do not have income taxes.

First, let’s take a look at the total number of Uaeexpats to make sure they make sense.

This means it’s time to learn math!

From a high level, we can see Uaeexpat performing well in savings games. His salary is high (or even more committees), Toronto spends less, and his spending amassed over $400,000, which is indeed his advancement in his goal of $1 million investable assets. Crucially, he doesn’t intend to stay in Canada either, so he is not interested in buying a house.

Put his basic salary into a tax calculator and assume he maximizes RRSP and FHSA, his after-tax income will be about $110,000. On this trajectory, he should be able to raise $110k – $23,196 = $86,804 per year. This makes his $1 million target…

…About 5 years.

So, everything seems to be on track so far. But as our readers mentioned, he plans to leave Canada next year, possibly becoming a nomadic or possibly living in the UAE. How does this affect things?

As always, this information is for general knowledge only. Anyone planning such initiatives should consult a tax professional with knowledge about cross-border tax plans before implementing any changes.

simplify

The biggest problem I can see here is an overly complex portfolio structure that includes dozens of holdings, distributed across many accounts. I’ve been in this situation early in my investment career, which makes my money managing my money super confusing, so consolidating your stake should be the first thing we do here.

To do this, we must decide on the overall asset allocation of your portfolio. After all, you have to decide what the final game is before you can make progress. 80% equity allocation is very positive, but if you are in the accumulation stage, it makes sense to be proactive (assuming your mental perseverance is not sold in a downturn).

That being said, once you catch a fire, you will enter a retirement risk period of early retirement. I’ve written about strategies for mitigating this in books and blogs, but in the first 5 years, lowered distributions (such as 60% equity, 40% bonds) and adopted strategies like year shield to help us survive those rock eras without slapping our portfolio.

As for whether he should hold each asset class separately like we did, or use an all-in-one fund like VGRO. I like to manage it as a separate fund because it allows me to optimize my holdings in a tax-promoted account and to change our asset allocation later without selling all the items and taking on a large capital gains tax. However, if our readers plan to move to a country without income tax, most of these benefits will no longer apply. Therefore, in this special case, please choose an all-in-one fund. Simple and better.

Foreign tax

Next, what anyone about to become an expat should be aware of is the Canadian issuance tax. When you leave the country, Canada assesses that the issuance tax equals any unrealized capital gains you have in your registered account. This means you may be clicked by a lot of taxes when you leave.

The solution is to gradually reap any capital gains you get when you are here. If capital gains are realized immediately, as they may push you to higher tax rates. By spreading your capital gains tax over the years, you can strategically realize this within the tax scope of your choice, rather than at once. UAEEXPAT’s tax rates are high now, but for example, if he plans to quit after he catches fire, it may make sense for nomads to leave the Canadian tax resident for a year so that you can recognize your capital gains at low tax rates before leaving.

Another thing to note is that once you leave, RRSP withdrawals will be subject to a 25% withholding tax. Since there is no further income tax in the UAE, this 25% withholding becomes a unified tax on the entire RRSP account. Since his job tax rate is above 25%, it still makes sense to say our RRSP contribution to the maximum, which means he is still leading, but it is important to make up 25% of his fire figure. Currently, his RRSP balance is $58,604, which means 25% of it and the tax rate is $14,651. This amount needs to be added to his fire target so that he can leave $1 million after paying the payment.

in conclusion

It’s no surprise that I love traveling, but what we really shocked is that if we complete the trip correctly, we can experience the journey of firing by reducing the cost of living or changing the way we invest. The Middle East is a good example of the latter, as countries like the UAE do not charge income tax at all, but use a combination of sales and corporate taxes to fund the government.

If you are interested in learning more about this topic, my friend Steve Cronin runs a blog called DeadSimplysinging, where he writes about investing in the UAE.

Our friend Kyle Prevost also enhanced his fire journey by moving to Katar and wrote a free e-book here. Check it out here!

Have you considered moving to another country to save on taxes? How did it solve it for you? Let’s hear it in the comments below!

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