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
Volatility over the past 5 years:
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.