*Official* Shiny Things club

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cowboycaleb

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Just wanted to share. Around 18 months ago, I knew very little about investing. So I read every post in this thread, asked questions and read ST's book from start to end several times.

Then I opened an account with IB and also with SC. Dumped all of my cash as per the 'plan' and never looked back.

From time to time, IB sends me alerts on my phone that my portfolio is up x% and sometimes it's down y%. It doesn't make any difference. I just follow the plan.

After the longest time, I calculated and checked my position, and I've made a nice profit. Which of course will be reinvested as I follow the 'plan'.

Thank goodness for this forum.
 

Morning Sunshine

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“Accumulating ETFs will not drop this way since they never go ex-dividend, and simply increase in price due to rise in NAV.”

Does this mean that the market will price in the NAV? Thus the share price will increase by the same amount as the undistributed dividend?
 

MikeDirnt78

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Hi, may I have some suggestions/advice on which of the following would be a better choice?

1. Invest $500/mth on G3B using POSB Invest-Saver, or
2. Invest $1000 every 2mths on ES3 using SCB

I’ve noted down some pros and cons for both but am still unable to decide. Would appreciate if you could share your preference and supporting reasons. Thank you in advance!

I would go for (1).

It enforces the discipline in your plan.
 

anizee

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I’m not a fan of buying my own company’s stock as my job security, salary and bonus already depend on the company doing well. Beware concentration risks.

But at 15% discount, hmmm... sounds enticing. I would want to know the historical one-year volatility of the stock; is it less than 15%? Plus, what are the US tax implications of selling it after one year?

I would maybe set aside some money to punt on it, and maybe roll any profits to the next year and buy some more, but I wouldn’t put any meaningful amount into it. But that’s just me.

Yea I know your concerns, but it has been doing well historically, for the past 10 years, so just wondering if I should replace the IWDA portion with this for the next few years or so while I still work here and enjoy the 15% discount. I won't stay forever though :p

Volatility over the past 5 years:
29q13t2.jpg
 

wealth_farmer

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Hi, may I have some suggestions/advice on which of the following would be a better choice?

1. Invest $500/mth on G3B using POSB Invest-Saver, or
2. Invest $1000 every 2mths on ES3 using SCB

I’ve noted down some pros and cons for both but am still unable to decide. Would appreciate if you could share your preference and supporting reasons. Thank you in advance!
I would go for option 1 as well. Like MikeD said, it enforces the discipline. By automating the process, you take the emotions out of the investment process every month. This plan is effective but it's so boring that you will try to "spice things up" by trying to be clever and time the market; please try your best not to do that.

And also if you really want to nitpick on expenses, using POSB-IS that way works out to be cheaper than SCB cos POSB-IS charges 1% and that's it, whereas SCB's $10 brokerage will also incur SGX fees, and then there's 7% GST on top of all that; it's a minor point though.
 

wealth_farmer

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“Accumulating ETFs will not drop this way since they never go ex-dividend, and simply increase in price due to rise in NAV.”

Does this mean that the market will price in the NAV? Thus the share price will increase by the same amount as the undistributed dividend?
The cash dividends which are not distributed, are used to buy additional shares of the underlying index component stocks. This increases the value of each share of the ETF since there are more underlying shares of the index component backing each share of the ETF, but this doesn't mean that the share of the ETF will increase in price because obviously the underlying share components of the index that have just been purchased would fluctuate in value. That's how I understand the mechanics of accumulating ETFs to work, MM gurus please correct me if I'm wrong.
 
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Bizaxx

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Just wanted to share. Around 18 months ago, I knew very little about investing. So I read every post in this thread, asked questions and read ST's book from start to end several times.

Then I opened an account with IB and also with SC. Dumped all of my cash as per the 'plan' and never looked back.

From time to time, IB sends me alerts on my phone that my portfolio is up x% and sometimes it's down y%. It doesn't make any difference. I just follow the plan.

After the longest time, I calculated and checked my position, and I've made a nice profit. Which of course will be reinvested as I follow the 'plan'.

Thank goodness for this forum.

Can I know how do you actually calculate your position at any one point in time?
 

longfart

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I would go for option 1 as well. Like MikeD said, it enforces the discipline. By automating the process, you take the emotions out of the investment process every month. This plan is effective but it's so boring that you will try to "spice things up" by trying to be clever and time the market; please try your best not to do that.

And also if you really want to nitpick on expenses, using POSB-IS that way works out to be cheaper than SCB cos POSB-IS charges 1% and that's it, whereas SCB's $10 brokerage will also incur SGX fees, and then there's 7% GST on top of all that; it's a minor point though.

Thank you for pointing out that POSB-IS’s 1% is nett. I thought both of them will incur SGX fees and GST. That’s another pro point for POSB-IS.

Would investing in G3B instead of ES3 be less effective/profitable in the long run, given the ES3’s fund size is currently abt 2.75x (pls correct me if I got this figure wrongly) that of G3B’s?

Since I should rebalance the % of stocks and bonds on a bi-/annual basis, is POSB-IS flexible enough for such rebalancing? If it’s not, how else can I rebalance?

I understand that the shares purchased through POSB-IS cannot be transferred to CDP. Should this restriction be a concern if there’s ever a need to transfer my holdings to my dependent? Also, is there a possibility of POSB imposing a selling fee that is higher than other brokers in future, and we have no choice because we’re “locked in”?
 
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MikeDirnt78

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“Accumulating ETFs will not drop this way since they never go ex-dividend, and simply increase in price due to rise in NAV.”

Does this mean that the market will price in the NAV? Thus the share price will increase by the same amount as the undistributed dividend?

Prices of ETFs are controlled by the market. It's price can trade at a discount or premium to the NAV of the fund. For more information, read this.

https://advisors.vanguard.com/VGApp/iip/site/advisor/etfcenter/article/ETF_PremDisc

NAV of ETFs will depend on the underlying of the funds. ie number of shares and market price.

If a fund holds 100 shares of XYZ at a market price of $1, it's NAV will be $100.

If XYZ declares 3% dividends, then NAV will remain at $100 for a accumulating fund.

For a distributing fund, NAV will drop to $97 and fund holder receives $3.

The above example assumes share XYZ falls by the dividend amount and in the absence of tax and transaction cost.
 

unhinged_loon

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Thank you for pointing out that POSB-IS’s 1% is nett. I thought both of them will incur SGX fees and GST. That’s another pro point for POSB-IS.

Would investing in G3B instead of ES3 be less effective/profitable in the long run, given the ES3’s fund is currently abt 2.75x (pls correct me if I got this figure wrongly) that of G3B’s?

ES3 is ~$3.4x right now.

Both track the same index so their returns will be more or less the same when dividends are included.
 

revhappy

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Yesterday I bought another 5k SGD worth IWDA, not at the bottom, but somewhere in the middle of the upmove. This is a good time to do creeping acquisitions, for people who have a large chunk to invest.

Sent from Xiaomi REDMI NOTE 4 using GAGT
 

BBCWatcher

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Quick question everyone, what should be the proportion of IWDA vs local ETFs?
That depends on your personal situation. For example, if you're saving for retirement, do not expect to retire in Singapore, and do not expect non-trivial Singapore dollar expenses in retirement (such as supporting a grandchild in Singapore), then your local ETF holdings should probably be zero. None of the local ETFs are going to be as attractive (in cost and other terms) as IWDA, so zero would be a good answer in that scenario.

As another example, if you're a U.S. person, neither is appropriate for you.

What's your situation?
 

BlackRozeInc

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Hi, may I have some suggestions/advice on which of the following would be a better choice?

1. Invest $500/mth on G3B using POSB Invest-Saver, or
2. Invest $1000 every 2mths on ES3 using SCB

I’ve noted down some pros and cons for both but am still unable to decide. Would appreciate if you could share your preference and supporting reasons. Thank you in advance!

Personally I picked route 2.

For a few reasons:

1) POSB IS only has 2 counters, G3B and A35. If in the future I want to invest in another counter, i.e. VWRD, i'd have to open up a broker account somewhere (most likely SCB for relatively low cost investment).

2)As others has mentioned, once hit 200k on SCB, you get Priority (did i understand this right?), means no more minimum fee, which might help in the future when the amount i invest monthly goes up. Although the point which wealth_farmer brought up about SCB fees also includes SGX charges and GST is valid.

3)I agree for the discipline portion when it comes to investing. However, personally I feel that automation =/= discipline. Its like working out, to get that dream bod, you'd have to regularly and religiously exercise and maintain your diet. And this discipline will help when I break out from the G3B+A35 portfolio.

Then again this is my personal view. Nothing wrong with option 1 either.

BTW I did start Invest-Saver on the advise of the members here for my child as it was simple and fits my needs for his future. Smallish capital, local counters, long term horizon, etc.

So bottomline, I guess it depends on your needs and comfort level.
 

softwareengineer

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Personally I picked route 2.

For a few reasons:

1) POSB IS only has 2 counters, G3B and A35. If in the future I want to invest in another counter, i.e. VWRD, i'd have to open up a broker account somewhere (most likely SCB for relatively low cost investment).

2)As others has mentioned, once hit 200k on SCB, you get Priority (did i understand this right?), means no more minimum fee, which might help in the future when the amount i invest monthly goes up. Although the point which wealth_farmer brought up about SCB fees also includes SGX charges and GST is valid.

3)I agree for the discipline portion when it comes to investing. However, personally I feel that automation =/= discipline. Its like working out, to get that dream bod, you'd have to regularly and religiously exercise and maintain your diet. And this discipline will help when I break out from the G3B+A35 portfolio.

Then again this is my personal view. Nothing wrong with option 1 either.

BTW I did start Invest-Saver on the advise of the members here for my child as it was simple and fits my needs for his future. Smallish capital, local counters, long term horizon, etc.

So bottomline, I guess it depends on your needs and comfort level.

How can we find the rate of returns of POSB IS G3B over the last 5-10 years?
 

wealth_farmer

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Yea I know your concerns, but it has been doing well historically, for the past 10 years, so just wondering if I should replace the IWDA portion with this for the next few years or so while I still work here and enjoy the 15% discount. I won't stay forever though :p

Volatility over the past 5 years:
29q13t2.jpg

That's the price chart? It's not the volatility figure I was talking about; it should be a single number in percentage that shows historically how much price will swing (both up and down) in a year. It's a backwards looking figure, and it can't forecast future price movement, but at least it'll tell you if the 15% discount is enough buffer for you to punt on.

And definitely no, I won't use one single stock (especially my company's stock) to replace the IWDA portion. With IWDA, you get diversification which is an important component of your risk control. If you're so inclined, please read "A Random Walk Down Wall Street" and also "Winning the Loser's Game"; both are excellent books that makes the point for diversification very compellingly.

Would investing in G3B instead of ES3 be less effective/profitable in the long run, given the ES3’s fund size is currently abt 2.75x (pls correct me if I got this figure wrongly) that of G3B’s?

Since I should rebalance the % of stocks and bonds on a bi-/annual basis, is POSB-IS flexible enough for such rebalancing? If it’s not, how else can I rebalance?

I understand that the shares purchased through POSB-IS cannot be transferred to CDP. Should this restriction be a concern if there’s ever a need to transfer my holdings to my dependent? Also, is there a possibility of POSB imposing a selling fee that is higher than other brokers in future, and we have no choice because we’re “locked in”?

G3B and ES3 should both return the same amount as they are both tracking the STI. The things I look out for annually (when both funds release their audited fund statements) is

1.) what is their tracking error? All things being equal, the smaller the tracking error, the better. A fund with a bigger tracking error implies that it is bad at trade execution and position management which will ultimately lead to the following point,

2.) what is the expense ratio? A bigger fund can usually afford to charge a smaller fee percentage due to the larger AUM.

I think right now G3B and ES3 are still considered comparable so I don't have a preference for one over the other. However once I feel that the tracking error of one is getting out of hand, I will become less inclined to accumulate positions in that ETF when I need more STI exposure.

Rebalancing POSB-IS requires a bit more manual work but it's not particularly difficult. You don't have to rebalance to the exact second decimal place percentage or the exact dollar value to the cent. POSB-IS currently lets you change the amount in $100 steps, and that close enough is good enough.

Speculating about future changes is not productive. You should just make sure your will is drawn out properly. Fee structure can also change, but we should just focus on what we can control in the here and now.

Personally I picked route 2.
3)I agree for the discipline portion when it comes to investing. However, personally I feel that automation =/= discipline. Its like working out, to get that dream bod, you'd have to regularly and religiously exercise and maintain your diet. And this discipline will help when I break out from the G3B+A35 portfolio.

Research has shown that willpower is a finite resource that we utilise daily, like a muscle that will fatigue with more reps. That's why when coming up with a fitness regime, we should train first thing in the morning because delaying it usually results in sub-optimal outcome. Agree that automation is not equal to discipline, however continuing the exercise regime analogy, automation is like laying out your workout clothes and running shoes the night before next to your bed to cut out any excuses for not doing it the next morning. Everyone is different, and we should just stack the odds in our favour as much as we can depending on our personal characteristics.

How can we find the rate of returns of POSB IS G3B over the last 5-10 years?

You can just look at the STI because G3B returns is basically the STI returns, plus/minus any tracking error.
 

BlackRozeInc

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Research has shown that willpower is a finite resource that we utilise daily, like a muscle that will fatigue with more reps. That's why when coming up with a fitness regime, we should train first thing in the morning because delaying it usually results in sub-optimal outcome. Agree that automation is not equal to discipline, however continuing the exercise regime analogy, automation is like laying out your workout clothes and running shoes the night before next to your bed to cut out any excuses for not doing it the next morning. Everyone is different, and we should just stack the odds in our favour as much as we can depending on our personal characteristics.

Very true. To minimise that fatigue, i do utilize some automation, such as an automatic transfer from my salary crediting account to my SCB account, akin to your "laying out your workout clothes and running shoes the night before next to your bed to cut out any excuses for not doing it the next morning" analogy. So the investment portion is just the workout.

But in the end, it is as what you mention, the needs and requirements are different for each individual. So its up to them to decide on a system that fits their needs.
 
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