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Old 17-04-2017, 07:13 PM   #5900
Shiny Things
Supremacy Member
Join Date: Dec 2009
Posts: 7,709

1. For my case, i go for 30yrs sgs bond rather than A35. The only problem with this is its lack of liquidity.
See below re: bonds. You don't necessarily want interest-rate exposure from these things; the reason you want bonds is because they're less volatile than stocks. And A35 is pretty easy to trade: a lot easier (and with tighter spreads) than the individual bonds that it owns.

2. Why you did not go for VWRD? The only thing i can think of is auto-reinvest dividend feature.
Yep that's the reason. I figure Singaporean investors would rather not have to worry about little drips of US-dollar dividends sitting around in their accounts. VWRD is a great product, and I *heart* Vanguard, but having the dividends be reinvested makes life a lot easier for Singaporean investors.

3. For SG portion, i am using DBS vicker which has 0.18% for cash-upfront trading which i find it perfectly fine for my case. You ever consider it?
Yeah, and I'm re-evaluating the Singaporean brokerage lineup for the second edition of the book. The reason I ditched Vickers in the first edition was that they didn't have a cash-upfront offering at the time, and their minimum fees were stratospheric.

4. What about Gold and permanent porfolio? Although i agreed mostly with Brown's concept for PP, emotionally i am still very much reluctant to hold so much gold. Do is your view on gold as an asset?
I tend to agree with Uncle Wozza when it comes to gold: it's basically a shiny yellow rock. Gold doesn't pay dividends (in fact, because it costs money to store, it effectively has negative dividends); it doesn't grow like companies do; and it's subject to weird booms and busts on the back of nothing but investor sentiment.

The Permanent Portfolio's huge allocation to the shiny yellow rock is at least partly a function of back-testing. Gold did fabulously well in the decade between 2001 and 2011 because of the gigantic boom in commodities investment; commodity indices like the GSCI suddenly became investible, and the low interest rates after the dotcom bubble made commodities less unattractive as an investment destination (why would you own zero-interest gold when you could invest in short-term Treasuries paying 5%). So real money (hedge funds, SWFs, things like that) plowed titanic amounts of money into commodities without really understanding what they were doing. The Permanent Portfolio popped up in the early 2010s, and they found that gold had been a fabulous investment over the last decade, which seems to have been their backtesting period... but for the two decades before that it had been absolutely atrocious, flatlining between about $300 and $500 with absolutely no inflation protection or anything like that.

Anyway, I still think gold is kind of overpriced. I'd be a buyer at $600 (the inflation-adjusted equivalent of the $300-ish mark where it bottomed out in the nineties and early 2000s), but not up here.

5. I wanted to setup a seperate portfolio for my girl who is 2yrs old now using POSB with 100-200 per month untill she is 18 or 21 with a 90-10 allocation. Do you think i should seperate it like this from my portfolio?

Firstly, mazel tov!

Secondly, I'd say 90-10's a bit too aggressive. If you're trying to save for your daughter's college education, you're going to need that money in about 20 years; that's the equivalent of a 45-year-old saying they're going to retire at 65—so a more appropriate allocation is something like 65-35 stocks-bonds. Other than that, though, you've absolutely got the right idea.

For SGS, if only buying 30yrs bonds, you can just buy once a year or buy from SGX although the latest 30yrs bond is almost illiquid now. In my opinion, any bond less than 15yrs doesnt move significant enuf with interest rate movement.
The thing is, though, you don't necessarily want your bonds to move with interest rates; the reason you own bonds is because you want something that's dull and stable.

Just an update on my side since I adopted shiny's approach

I have several counters before the plan was executed. Since 2015, I have been buying es3 and a35. Needless to say I was very much under water for most of 2016 for es3. Although I continue to buy in, my pace slowed as I was worried it will go lower. Today, I finally broke even but unfortunately that also made me hesitant to buy above my average price. Guess such is an irrational investor's mentally.

Right now I'm still have about 40% of my assets in cash. It's not ideal but I'm trying to force myself to buy es3 periodically.
High five! Yeah, 2016 was a bit tough after the big 2015 selloff, but here's the thing: you're now in the black, and over the long term it's most likely going to keep ticking higher, which'll put you even more in the black. Incidentally, give me a shout if you're ever over in SF again; it was great to grab drinks that time.

can i just buy 10 shares of IWDA make it above the minimum 10 bucks?

LSE no minimum lots right?

is IWDA and SWDA the same thing? how come i can only find this on their website when i google IWDA?

Stamp Duty of 0.50% (Buy trades; GB ISIN shares only)
Stamp Duty of 1.00% (Buy trades; IE ISIN shares only)
Levy of 1 GBP for any transaction > GBP 10,000 (Buy & Sell trades)

does these stamp duty fees apply to us?

Yes; yes; sort of except IWDA's listed in USD and SWDA's listed in GBP, the google thing is a mis-feature; no, LSE stamp duty doesn't apply to ETFs.

I had two of the same questions, and thought I'd share my own conclusions.

You should calculate your own retirement amount with estimated inflation in mind. I play it safe by calculating annual inflation as 3%. I would add that the retirement amount is entirely dependent on your ability to earn and to save, and on your expected lifestyle. If your projected retirement amount seems insufficient, you should start calibrating those factors.
So this is a very fair question, and inflation-adjustment is one of the things I elided in the book because frankly it gets pretty complicated (how do you estimate future inflation in a country with no tradable inflation market, for example).

I tend to think that inflation's not as big an issue as a lot of people make it out to be. Even in Singapore, where inflation runs rampant occasionally because the MAS outsources its monetary policy role to Janet and co., you're still only talking about the difference between 2.5% and 1.5%.

That said, the solution to inflation-adjusting your retirement is just to save more. Putting more money in means you can take more money out, and the "more money out" bit is all you need to cover inflation: it means you're taking an inflation-adjusted amount out instead of a fixed amount. Unless someone comes in and completely cocks up monetary policy in Singapore (which I don't think is going to happen; I mean, I disagree with the MAS on their methods but not on their outcomes), you'll be fine if you save a bit more.

Hi Shiny Things, I have finished reading your book and I have a couple of questions.
[LIST=1][*]For POSB invest saver and other brokerage, we can’t guarantee the fees will stay the same for 30 years (or more). If a brokerage with better fees opens up in the future, or if the current brokerage I’m with increases their fees to the point that a competitor looks more enticing, would the best course of action to be to buy using the new brokerage, and sell using the old brokerage during the monthly buying and half yearly rebalancing?
Yes, but the odds are that new brokerages won't support "buy with one brokerage and sell with another", which is frankly a bit of a weird system (I've banged on before about why I think CDP is a weird system, and I can rewrite it if you'd like). And the long-term trend in fees is always going to be downward.

Anyway - my interest is in keeping things simple. If one brokerage happens to be cheaper for buys and another is cheaper for sells, that's kind of a pain in the proverbial compared to just keeping it all at one relatively cheap and simple broker.

[*]Wouldn’t rebalancing with POSB invest saver be very expensive compared to SCB, since it’s a flat 1% to buy and sell, especially if a lot of stocks/bonds are bought/sold when rebalancing? Or does rebalancing usually not require such huge amount of money being shifted from one ETF to another, since we are already ‘rebalancing’ each month by buying whatever the portfolio is short of?
Exactly. If you're buying whatever you're short of, then your six-monthly rebalancings won't typically be very large.

[*]If I were to use CPF OA/SA to replace the bond component of my asset allocation as suggested in the book, how do I rebalance my portfolio if it requires me to sell bonds to buy stocks?
This is a good question, and it's part of the reason why some people are reluctant to treat their CPF accounts as bonds instead of just treating them as "that thing over there". If you've got a lot of cash in your CPF and not a lot in your regular brokerage accounts, then there might come a point where it's tough to balance your portfolio—and that's fine! If that's the case, you can fix it up over a slightly longer time period by buying more stocks (ES3 and IWDA); eventually you'll get back into line.

Haha Shiny, if you were still living here, I'm sure you will recognize too that DBS/POSB savings account are the absolute worst of the pack when it comes to base and bonus interests payments.
Yeah, this is true, but I still don't know why you'd want to have accounts at a zillion different banks (or brokers, for that matter)? It makes it a giant pain to keep track of all of them.

I've certainly switched between banks in my life (pulled the plug on National Australia Bank for ANZ; pulled the plug on Stanchart and HSBC for DBS; in the process of pulling the plug on Chase for First Republic over here in the States; but I always close the old account on the way out so I don't leave a pile of zero-balance accounts floating around.

Hi ST, I am thinking of also investing into China index, say using 5% of the portfolio beyond following the rule in your book.

Is there any China ETF that is worth for consideration to invest in?
China raises a few of its own interesting questions. Do you specifically want to own onshore Chinese stocks (which trade at a wildly variable premium to the offshore HK/Taiwan listings)? Do you just want to own China-adjacent stocks? What's your reason for wanting to own "China"?

I know I'm being a bit pedantic, and to be fair I'm like three or four glasses deep of very good Riesling, but it's worth being able to answer these questions before you go out and buy "China", because when it comes to stock markets there's a lot of different Chinas out there. Anyway, tell me what you want to own (based on the questions above), and I'll tell you what to buy.
-- Brillat-Savarin

Dear Shiny and all esteemed investors out here, i have about 200k++ in cash, am 29yo this year and am intending to semi-retire by age 35 (May sounds absurd to most but please read on first).
Yeeeaahhhh no I read on and that's not going to happen. I'm 34 and I'm still at least a couple decades from semi-retiring. Not that I wouldn't like to buy a little place in Maui and nurture my consulting business, but that's not going to happen soon!

Right now, stock price is at an all time high
No they're not; the STI is still a good 10-20% below its all-time highs, and even the S&P 500 is about 5% off from its all-time highs.

, bond price is going lower due to rising interest rate.
No they're not, US 10s have gone from 123 to 126 in the last couple of months, and their yields have backed off from 2.4% to 2.2%.

Given the above situation, what should I do in the meanwhile?
Weeeelllll at the risk of being extremely rude, I think semi-retiring at 35 isn't going to happen, and you're playing an awful lot of faith in this assumption that there's going to be a gigantic market crash in the next few years that you can invest into. I think that's an unwise assumption to make, and you're better off slowly investing your money toward the allocation you want to get to. Obviously if there's a huge crash in the meantime you can move your money into the market faster.

I definitely do not want to continue putting my money in an ocbc 360 or uob 333 account where I am unable to reach more than 2% pa. Neither do I want to place my money in a timed deposit since interest rate still hovers around 1+%.
So here's the thing: you've got the right idea! Leaving your money in the bank earning 1-2% is miserable, and you can do a lot better than that.

Shall I go with an all weather permanent portfolio (An all weather permanent portfolio popularised by Harry Browne and is an allocation of 25% each to stocks, bonds, gold and cash to weather all possible economics scenarios) instead so that I do not have to wait for the next stock market crash? And switched to a 80% stocks 20% bonds allocation when the stock market crashes?
See above re: Harry Browne's inexplicable hard-on for gold and cash, but here's a thing to remember:

Generally, the doomsayers are wrong. Stocks, on average, go up. Bonds, on average, give you pretty decent returns too. Cowering in the corner waiting for the next crash is just going to end up with you waiting decades for an "investible" crash. You're better off being in the market, and buying more when the price goes down, than you are sitting in a corner waiting for a crash and trusting that your stomach will be strong enough to buy if we see another 2008. Because trust me, buying with both hands when the market's down 40-50% is a horrifying feeling.
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