Reader Case: Moving to the UAE

Today’s reader case comes from a reader contemplating a move abroad and is wondering how this might speed up their journey to FIRE. Let’s find out!

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Hi,

I loved your book and blog (binge read it) but now I’m also very confused on how to structure my portfolio and if I’ve messed up. I immigrated to Canada in 2021,  I’m currently in Toronto and plan to leave Canada by 2026. If I visit I plan to never stay long enough to reach tax residency status again. I would likely establish residency in the UAE OR live a nomadic lifestyle. I have over $200K in my non-registered account now (rrsp, tfsa and fhsa maxed out). 

Here’s my info to help you assess my situation

• Your gross/net annual family income:   In 2024  Base salary: $139K,  with commission: $190K
• Your monthly family spending: Rent: $915, Other: 685, Travel: 333; Total = $1,933
• For any debts you have, please include: No Debt
  The interest rate
  • Your minimum monthly payment
• Any fixed assets you have (house, car, etc.): None
• And investments or savings you have (cash, bonds, stocks, etc.) :
  Portfolio in Canada (Wealthsimple) as of March 2025: TFSA- $35,701 FHSA- $20,907, RRSP- $58,604, Non-registered -$197,722.63. This portfolio is 97% stocks and 3% bonds which comes from holding VGRO (an all in one etf with 80% stocks and 20% bonds).
  Portfolio in UAE (under my parents but my funds) as of March 2025: $91,092 90% stocks, 10% bonds. 

I am aiming to become financially independent with a $1M portfolio. I’d love your help to answer these questions

1. Would an 80% stocks 20% bonds asset allocation help me live off this portfolio forever (if i include yield shield and the dividend income etfs you’ll had) or is this too aggressive? If i run into a recession after the initial 5 years of retirement I’d use the strategies you mentioned to avoid drawing down a lot from my portfolio.

2. Do you think all-in-one etfs like vgro or v80A are good alternatives to having multiple etfs? I would like to move to an 80% stocks, 20% bonds allocation, with yield shield built in. I’m unsure where to put my additional contributions to achieve this.

3. Since I have ~200K in my non-registered, would I have to pay departure taxes when I leave or is there a way to further tax optimize my funds? I will max RRSP, FHSA and TFSA for 2025 and 2026 before I leave Canada, but I think I’d still have some leftover funds in my non-registered

4. Lastly, I have about 16 holdings in my canadian portfolio (5 individual stocks, and the rest are a bunch of etfs like vfv, veqt, vgro, xeqt, voo etc..) with over 87% in US stocks, ~10% in international stocks and 3% in bonds. I have about $10K each in private equity (in rrsp) and private credit offerings (non-registered) in Wealthsimple but I’m thinking of moving that into etfs now.  All of this was bought early on in my investing journey before I came across more quality educational content lol.

My UAE portfolio is as follows: The bond component is about 4% and stocks make up the rest. Equities are ETFs like cspx (ireland-domiciled version of s&p500 to avoid US estate taxes), vwra, v80A etc. The stock allocation looks like 51% Us stocks, 33% international and 16% canadian stocks. I tried linking my brokerage accounts to Passiv but because it created so many portfolios (1 each for an rrsp, tfsa and for both brokerages) and I’m feeling overwhelmed on how to simplify this and setup a portfolio like yours, especially if you don’t recommend the all-in-one etf approach in my scenario.

I initially weighted things heavily towards US and equities since I was bullish on their performance and wouldn’t want to lock in my paper losses by selling them right now when there is a market correction. Using retirement calculators, I have 6 years to go until retirement assuming a 7% return year over year. Would I be on track to achieve this? If not, what could I change to get there within 6 years or earlier? (in terms of asset allocation, tax efficiency and factors within my control)

I also just listened to your podcast on Passiv where you share you don’t recommend all-in-one etfs for the wrapper fees and tax inefficiencies. I plan to move out of Canada to achieve fire sooner than the 6 years it’s currently expected to take me, so I was considering them because I’d have to use a brokerage like IBKR which has fees for buying/selling and I read that in the accumulation stage I’d rack up more fees with this since I’d be buying and rebalancing 4 ETFs. Wealthsimple which I currently use doesn’t have commissions and living in the UAE I wouldn’t have to deal with tax efficiency matters. The quarterly auto-rebalancing also sounded easier and like I’d have to put less thought into what to buy and sell. I’ve been transferring whatever is leftover after expenses to my ‘family’ portfolio in UAE held under my family’s name abroad since I don’t want to keep adding to my non-registered account and pay huge capital gains tax or departure taxes to move it down the road.

So given that, would you still not recommend them for my situation?

Thank you so much!

UAEExpat

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I love these international cases. Most people live, work, and retire in the same country, but as FIRECracker and I have discovered during our nomadic travels, the ability to relocate unlocks all sorts of different optimizations due to the way different countries’ tax systems interact with each other. The UAE is an especially interesting in this way since they don’t have an income tax.

First of all, let’s take a look at UAEExpat’s overall numbers to make sure they make sense.

And that means it’s time to MATH SHIT UP!

Summary	Amount
Income	$139k gross, $110k net (base salary)
Expenses	$1933 monthly, $23,196 annual
Assets	$197,722.63 (non-reg) + $35,701 (TFSA) + $20,908 (FHSA) + $58,604 (RRSP) + $91,092 (UAE) = $404,027.64

From a high level, we can see that UAEExpat is doing awesome at the savings game. He’s earning quite a good salary (even more with commissions), his spending is impressively low for Toronto, and he’s amassed a little over $400k, which is really good progress towards his goal of $1M in investable assets. Crucially, he’s also not planning on staying in Canada, so he’s not interested in buying a house.

Putting his base salary into a tax calculator and assuming he’s maxing out his RRSP and FHSA, his after-tax earnings would be around $110k. At this trajectory, he should be able to put away $110k – $23,196 = $86,804 per year. This puts his $1M target at…

Year	Balance	Savings	ROI	Total
1	$404,027.64	$86,928.00	$24,241.66	$515,197.30
2	$515,197.30	$86,928.00	$30,911.84	$633,037.14
3	$633,037.14	$86,928.00	$37,982.23	$757,947.36
4	$757,947.36	$86,928.00	$45,476.84	$890,352.21
5	$890,352.21	$86,928.00	$53,421.13	$1,030,701.34

…about 5 years.

So everything appears to be on track so far for millionaire status. But as our reader has mentioned, he’s planning on leaving Canada next year, possibly to become nomadic, or possibly to live in the UAE. How does this affect things?

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

Simplify

The biggest issue I can see here is an overly complicated portfolio structure, consisting of dozens of holdings spread out over many accounts. I’ve been in this situation before early in my investing career, and it makes managing my money super confusing, so consolidating your holdings should be the first thing we do here.

To do that, we have to decide on an overall asset allocation for your portfolio. After all, you have to decide what your end game is before you can’t make progress towards it. An 80% equity allocation is quite aggressive, but if you’re in the accumulation phase, being aggressive makes sense (assuming you have the mental fortitude not to sell in a downturn).

That being said, once you hit FIRE, you will enter the sequence-of-return risk period of early retirement. I’ve written extensively in my book and on this blog about strategies to mitigate that, but in a nutshell, downshifting to a less aggressive allocation (like 60% equity, 40% bonds) for the first 5 years and employing strategies like the Yield Shield have helped us survive those rocky years without hammering our portfolio.

As for whether he should hold each asset class separately like us or use an all-in-one fund like VGRO. I like managing it as separate funds because it lets me optimize my holdings within our tax advantaged accounts, and it’s easier to change our asset allocations later without having to sell everything and incur massive capital gains taxes. However, if our reader is planning on moving to a country with no income taxes, then much of these benefits don’t apply anymore. So in this particular case, go for the all-in-one fund. Simple is better.

Expat Taxes

The next thing any soon-to-be expat should be aware of is Canada’s departure tax. When you leave the country, Canada assesses a departure tax equal to any unrealized capital gains you have in your registered account. That means that you could be hit with a large tax bill when you leave.

The solution to this is to gradually harvest any capital gains you have while you’re still here. Capital gains suck if they’re realized all at once since it may push you into a higher tax bracket. By spreading out your capital gains taxes over multiple years, you can strategically realize it within a tax bracket of your choosing rather than all at once. UAEExpat’s tax bracket is quite high right now, but if he, for example, is planning on quitting his job after he hits FIRE, it might make sense to go nomadic while staying a Canadian tax resident for a year just so you can realize your capital gains at a low tax bracket before you leave.

Another thing to be aware of is that once you leave, your RRSP’s withdrawals will be subject to a 25% withholding tax. Because the UAE has no further income tax, this 25% withholding tax becomes a flat tax on the entire RRSP account. It still makes sense to max out our reader’s RRSP contributions since his working tax bracket is higher than 25%, which means he’s still coming out ahead, but it’s important to account for this 25% in his FIRE number. Right now, his RRSP balance is $58,604, meaning 25% of that, or $14,651 will be lost to tax. This amount needs to be added to his FIRE target so that he’s left with $1M after paying this amount.

Conclusion

It’s no surprise that FIRECracker and I love to travel, but what really blew our mind is that travelling, when done correctly, can supercharge your journey to FIRE either by lowering your cost of living or changing how your investments are taxed. The middle east is a great example of the latter, as countries like the UAE don’t charge income taxes at all, preferring to finance their government using a combination of sales and corporate taxes.

If you’re interested in learning more about this topic, my good buddy Steve Cronin runs a blog called DeadSimpleSaving, where he writes about investing specifically in the UAE.

Our friend Kyle Prevost also supercharged his FIRE journey by moving to Qatar, and wrote a free e-book about it here. Check it out here!

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

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