Here (click) is the follow up article on PP by Teh Hooi Ling.
The Permanent Portfolio Strategy - A reasonable return low volatility Strategy
- Thread starter WindBoi
- Start date
Value for Gold ETF in Yahoo! Finance is in USD, last traded at US$152.44. In Yahoo! Finance, GLD and O87.SI are both referring to same Gold ETF - GLD is Gold ETF traded on NYSEARCA during U.S. trading hour, and O87.SI is traded on SGX during Singapore trading hour.
You can open CDP and bank's respective brokerage account in DBS and UOB, and probably in most other banks with brokerage. You can also open brokerage directly at some non-bank brokerages, such as Phillips Securities, Limt & Tan etc. You can google "singapore brokerage comparison" for comparison.
Yes if you open SCB trading account you can trade ES3 and O87. Advantage is they do not have minimum commission so it is cost effective for smaller value trades. 2 disadvantage are: 1. I think cannot buy Singapore governemnt bonds in SCB (since need to custodize SGS bonds in CDP), and 2. unlike most other brokerages, these shares will not be custodised with CDP so you are subjected to counterparty risks if SCB has problems or they do something risky to your shares custodised with them.
SCB can be used initially when your investment capital is small to minimise brokerage. As your investment capital grows larger, you probably want to shift your shares to other brokerage so you can custodise and 'own' your shares more securely to minimize potential counterparty risks.
If i were you, i would open a DBSV Cash-upfront Account with minimum commission of $18 so that my shares will be custodised in CDP - one-time commission fee is less important, more important is to have worry free investment, and low yearly cost (management fees) for long term investing. I would also open a Phillip Cash Management Account (PCMA) to deposit cash for my cash component - excess cash there will automaticlly be enrolled in Phillip Money Market Fund at no extra charge, and cash deposit and withdrawal takes only one working day by ATM or internet banking.
For bonds its straight forward, buy PH1S (SGS 30 year bonds) at Singapore stock exchange using most brokerage. For cash component use PCMA as mentioned above, currently yielding at about 0.59% p.a.
Further info pertaining to the investment assets buying can be found here (click).
Fine print note: above are just my opinions, not recommendations for you as you have to do your due diligence and decide what to do for yourself.
Last edited:
myth_shenhua
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I really thank you for your insightful and helpful reply.
regarding rebalancing, I understand the various methods you mentioned for gold/stock/cash, however, the part for bonds is a little ambigious.
How does one rebalance bond?
regarding rebalancing, I understand the various methods you mentioned for gold/stock/cash, however, the part for bonds is a little ambigious.
How does one rebalance bond?
Epps24 February 2013 11:54
"As a simple guide, when rebalancing into bonds, normally i would keep things simple and buy the exact same bond if difference in maturity date between existing and new 30 years bond is less than 5 years apart. If an investor is more sophisticated, he/she can also analyse if the newer 30 year bond is offering much higher yield and then choose accordingly. Below is my layman answer to your second question, hope you have some knowledge of bonds to understand it:
If the two 30 years bonds are issued 6 months apart, then logically speaking their price will be different by a few dollars at least.
The price difference is not important, what is important is that the two bonds will have same yield and the same percentage increase/decrease in returns say 2 years later - since both bond are half year apart only, practically they are almost the same bonds. If one bond is slightly cheaper than the other, more people will buy the cheaper bond and push up its price.
So when is one bond considered cheaper than the other? When both bonds have very close and similar maturity dates, their yield should be practically the same, so in this case, the bond with higher yield should be the cheaper bond.
First, you should know that bond price and bond yield are mathematically and inversely correlated - when bond price goes up, bond yield goes down - when more people buy higher yield bond, its price goes up and yield goes down and become more expensive. Second, both bonds with similar maturity will be issued with different yield, so on a short term basis, they can have different prices but have same yield. Third, if one bond has higher yield than another, more people will buy the higher yielding (cheaper) 30 year bond, push up its price, and lower its yield, thus ensuring both bonds have similar yield.
Practically speaking, for both bonds with similar maturity dates (6 months apart only), you should be using bond yield to compare both bonds instead of price. In this case, either one of the 2 bonds can be bought because they should have practically same yield and same magnitude of price increase/decrease in the future. In which case, you probably want to stick to always buying the same bond as previously bought so that it is easier to track performance.
If both 30 years bonds have big difference in their time till maturity, you may wish to calculate which bond has higher yield and act accordingly. On the other hand, we as average investor can also keep things simple by investing in the same bond, then when the bond is approaching 20 years remaining till maturity, then we can sell off all these 20~21 years bonds and buy all into latest 30 years bonds. As average investor, we do not have to analyse about bond yield in so much details just to squeeze that 0.3~0.5% more in long term returns. Either way, as long as you buy long term bonds (20+ to 30 years), any maturity period between 20+ to 30 years will work, so you don’t have to be so particularly precise about choosing based on bond pricing or yield. "
Taken from Epps blog in the comments section. ( Cant link it for some reason)
Hope you dont mind Epps!
Cheers
"As a simple guide, when rebalancing into bonds, normally i would keep things simple and buy the exact same bond if difference in maturity date between existing and new 30 years bond is less than 5 years apart. If an investor is more sophisticated, he/she can also analyse if the newer 30 year bond is offering much higher yield and then choose accordingly. Below is my layman answer to your second question, hope you have some knowledge of bonds to understand it:
If the two 30 years bonds are issued 6 months apart, then logically speaking their price will be different by a few dollars at least.
The price difference is not important, what is important is that the two bonds will have same yield and the same percentage increase/decrease in returns say 2 years later - since both bond are half year apart only, practically they are almost the same bonds. If one bond is slightly cheaper than the other, more people will buy the cheaper bond and push up its price.
So when is one bond considered cheaper than the other? When both bonds have very close and similar maturity dates, their yield should be practically the same, so in this case, the bond with higher yield should be the cheaper bond.
First, you should know that bond price and bond yield are mathematically and inversely correlated - when bond price goes up, bond yield goes down - when more people buy higher yield bond, its price goes up and yield goes down and become more expensive. Second, both bonds with similar maturity will be issued with different yield, so on a short term basis, they can have different prices but have same yield. Third, if one bond has higher yield than another, more people will buy the higher yielding (cheaper) 30 year bond, push up its price, and lower its yield, thus ensuring both bonds have similar yield.
Practically speaking, for both bonds with similar maturity dates (6 months apart only), you should be using bond yield to compare both bonds instead of price. In this case, either one of the 2 bonds can be bought because they should have practically same yield and same magnitude of price increase/decrease in the future. In which case, you probably want to stick to always buying the same bond as previously bought so that it is easier to track performance.
If both 30 years bonds have big difference in their time till maturity, you may wish to calculate which bond has higher yield and act accordingly. On the other hand, we as average investor can also keep things simple by investing in the same bond, then when the bond is approaching 20 years remaining till maturity, then we can sell off all these 20~21 years bonds and buy all into latest 30 years bonds. As average investor, we do not have to analyse about bond yield in so much details just to squeeze that 0.3~0.5% more in long term returns. Either way, as long as you buy long term bonds (20+ to 30 years), any maturity period between 20+ to 30 years will work, so you don’t have to be so particularly precise about choosing based on bond pricing or yield. "
Taken from Epps blog in the comments section. ( Cant link it for some reason)
Hope you dont mind Epps!
Cheers
No problem Gughie. Here is the question for the above long answer about bonds rebalancing.
1. Usually, buy the same 30 year bonds when bond value drop significantly below 25%.
2. If the 30 years bond has been around for 8 to 10 years already, means bonds is 20~22 years left till maturity, then sell away this bond and buy new 30 years bonds with 25~30 years left till maturity.
3. Same as other assets, buy enough bonds on the SGX to rebalance bonds back to 25% ratio when necessary.
Hi, I have a query in re-balancing, with respect to bonds. Suppose you bought sgov 30 yr bonds with maturity on 1 Apr 2042. In a scenario, where assuming you had to buy more bonds to rebalance the portfolio, do you buy exactly the same bond with the exact same maturity date ?
While it is obvious to buy/sell the same etf for the gold/stock index components, it is less obvious to me for bonds as the sgov could issue other 30 year bonds with similar but not exact maturity dates like 1 oct 2042. Given the long time horizon for long bonds, can one reasonably expect the price of the 2 bonds mentioned to be identical ?
While it is obvious to buy/sell the same etf for the gold/stock index components, it is less obvious to me for bonds as the sgov could issue other 30 year bonds with similar but not exact maturity dates like 1 oct 2042. Given the long time horizon for long bonds, can one reasonably expect the price of the 2 bonds mentioned to be identical ?
The short answer will be:
1. Usually, buy the same 30 year bonds when bond value drop significantly below 25%.
2. If the 30 years bond has been around for 8 to 10 years already, means bonds is 20~22 years left till maturity, then sell away this bond and buy new 30 years bonds with 25~30 years left till maturity.
3. Same as other assets, buy enough bonds on the SGX to rebalance bonds back to 25% ratio when necessary.
WindBoi
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So this guy took the effort to help track some lazy portfolio. While they are not the permanent portfolio, they are buy and forget portfolios.
Tracking the Lazy Portfolios
you can take a look at their allocations at my site
Tracking the Lazy Portfolios
you can take a look at their allocations at my site
autumm
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Just a suggestion. CIMB starsaver yields 0.8% interest.
So this guy took the effort to help track some lazy portfolio. While they are not the permanent portfolio, they are buy and forget portfolios.
Tracking the Lazy Portfolios
you can take a look at their allocations at my site
They are among the best portfolios available. Too bad most of it is not localized. Unless I earn USD and retire in the US, these will be perfect.
I'm using CIMB Starsaver as well. The high yield is a plus but I have no idea why they are not in the direct credit scheme for dividends. SCB is in this scheme though. My wife and I DCS into SCB instead. Our savings are plowed into CIMB. We can track savings going in and invested money since CIMB Starsaver can directly debit into CIMB Securities. SCB tracks all the dividends collected. At the end of the year, we transfer them over.
BTW, we opened the account earlier and enjoy the 0.9% rate.
WindBoi
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hi genie why is usd a big factor
Well it makes things easier.
Using local currency for investment because you are retiring locally makes sense. You don't need to go through the hassle of changing all that money back.
This is not an argument against investing globally. This should be the way but not your entire portfolio in a foreign currency.
fergieisking
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sry nvr invested b4. like to ask this noob qn. if i have $9000 and plan to split $3000 each into gold etfs, sti etfs and bonds, is that considered 3 transactions or 1, provided i buy all of them at the same time?
3 transactions.
anyone has this article in BT on 2 March?
Mecisteus
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i just found out this. a good news for those who want to start a Regular Savings Plan with unit trusts. A good alternative for small investment amounts at much lower costs and slippages than ETF.
Say Goodbye to Sales Charges on all RSP from now on! | Fundsupermart.com
Say Goodbye to Sales Charges on all RSP from now on! | Fundsupermart.com
I think there is probably still up to 0.5% platform fees per year.
Article here. Need subscribe to read full article though.
Mecisteus
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unfortunately yes you are right. i didnt see that portion.
Thanks. Read this earlier...I was hoping to read the 2nd half of this article.
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