*Official* Shiny Things club - Part 2

[IronMac]

Hi ST and other experts, I'm sure you've heard of the FIRE movement. The assumption is that once you hit 25x (and correspondingly, a 4% annual withdrawal rate) of your projected annual expenses, you can pretty much quit your day job and retire.

Do you think such a portfolio target provides enough growth to last for the duration of one's retirement assuming one sticks to the planned withdrawal rate if retirement is say, in one's 40s or even 30s?

This FIRE sounds familiar but I can tell you that 25x or less with a decent return on the portfolio is good enough to retire upon.

 

[doody_]

For anything monthly, IBKR is always better because the fees will be US$10 (assuming less than US$16k per month), whereas with SCB it will be US$10.70 + 0.9% (assuming less than US$4k per month).

I assume the USD10.70 is the min commission? I'm already priority so it's not applicable. In that case, it seems there's not much difference for SCB Priority customers vs Interactive Brokers.

 

[isaacsayshi]

Hi all,

I started for myself a ibkr account but joint name with spouse just in case something happen to me.

I want to help wife setup a account and help her to invest as she is not keen on the procedure how to invest. Everytime I talk to her, she will start to yawn and says "you help me invest lah".

Could i have 2 separate account within 1 login/userid? ( so easier to manage for myself and her investment)

Or do i need to have 2 separate login for each of mine and her account?

Thank you in advance.

 

[BBCWatcher]

I started for myself a ibkr account but joint name with spouse just in case something happen to me.

That may not be a great reason for a joint account, but OK. (A joint account effectively cuts your household’s ability to hold U.S. estate taxable assets without U.S. estate tax consequences in half, for example.) It is a great reason for life and disability income insurance, for a living will, and for an emergency reserve fund that your spouse holds.

Could i have 2 separate account within 1 login/userid? ( so easier to manage for myself and her investment)

This question came up before. You and your spouse can create linked accounts if you both wish.

 

[ftpofmpo]

anyone knows of an irish domiciled global etf ex tech sector?

or a more defensive global etf?

 

[BBCWatcher]

anyone knows of an irish domiciled global etf ex tech sector?

You could buy IWDA or VWRA then simply add a bearish bet against the technology sector. For example, you could short sell VGT, Vanguard's Information Technology ETF.

or a more defensive global etf?

How about IUCS, a consumer staples ETF? It holds 37 stocks, and the largest holding is Procter & Gamble (~15.56% of the fund at last report).

I'm not necessarily recommending you do this, but I'm answering the questions you asked.

 

[limster]

anyone knows of an irish domiciled global etf ex tech sector?

or a more defensive global etf?

Bid offer spread of less than 0.01. Vested.

 

[wannabelazy]

Same here. I would pay for the Premium version but I can't see to find the link on it.

Within the app, go to settings, there's a premium button in that menu. I'm quite happy with the free version though

 

[orangbulu]

I read that gold backed etf gains are taxed as collectibles. In this case do I have to pay taxes if I sell GLDM at a gain?

 

[limster]

I read that gold backed etf gains are taxed as collectibles. In this case do I have to pay taxes if I sell GLDM at a gain?

please provide the link to what you read.

 

[orangbulu]

https://www.investopedia.com/articles/exchangetradedfunds/08/gold-etf-gold-futures-showdown.asp


Since investors cannot make a claim on any of the gold shares, ownership in the ETF represents ownership in a collectible under IRS regulations. That's because Despite gold ETF managers do not make investments in gold for their numismatic value, nor do they seek out collectible coins.

This makes long-term investment—one year or more—in gold ETFs subject to a relatively high capital gains tax. The maximum rate for long-term investments in commodities is 28%, rather than the 20% rate that is applicable to most other long-term capital gains. Exiting the position before a year to avoid the tax would not only diminish the investor's ability to profit from any multiyear gains in gold but would also subject them to a much higher short-term capital gains tax.

 

[kram62]

https://www.investopedia.com/articles/exchangetradedfunds/08/gold-etf-gold-futures-showdown.asp


Since investors cannot make a claim on any of the gold shares, ownership in the ETF represents ownership in a collectible under IRS regulations. That's because Despite gold ETF managers do not make investments in gold for their numismatic value, nor do they seek out collectible coins.

This makes long-term investment—one year or more—in gold ETFs subject to a relatively high capital gains tax. The maximum rate for long-term investments in commodities is 28%, rather than the 20% rate that is applicable to most other long-term capital gains. Exiting the position before a year to avoid the tax would not only diminish the investor's ability to profit from any multiyear gains in gold but would also subject them to a much higher short-term capital gains tax.

Well if you live in the US or are a US person that has to deal with the IRS, maybe.

Otherwise, you should rather check what applies in Singapore before being alarmed

 

[BBCWatcher]

Otherwise, you should rather check what applies in Singapore before being alarmed

I think I can answer that.

For a non-U.S. person a U.S. domiciled gold fund of any sort would ordinarily be U.S. capital gains tax free. However, distributions (dividends) from the fund, if any, would be subject to the 30% dividend tax withholding rate or a lower treaty rate if applicable. (There's no lower treaty rate for residents of Singapore.) And the fund would be subject to U.S. estate tax.

As always, check with a competent tax professional if you need real tax advice.

 

[beefjerky]

Hi all,

I started for myself a ibkr account but joint name with spouse just in case something happen to me.

I want to help wife setup a account and help her to invest as she is not keen on the procedure how to invest. Everytime I talk to her, she will start to yawn and says "you help me invest lah".

Could i have 2 separate account within 1 login/userid? ( so easier to manage for myself and her investment)

Or do i need to have 2 separate login for each of mine and her account?

Thank you in advance.

can I advice you to start her with baby steps. Get her to do posb rsp first. even 100/ month is fine to generate interest. then when the interest increases, she will automatically start to read up more abt finance, ask qn, then maybe can start with iwda

 

[jumboburger]

Small Cap ETF listed on LSE

Hi all,

I was checking to see if there were any Vanguard Small Cap ETFs listed on the LSE similar to the S&P 500 one like VUSD/VUSA. I came across 0A16, 0A17, 0LOE. Am abit confused. Can anyone enlighten me?

Sorry unable to post the actual links..

 

[Shiny Things]

Guys, exciting news, the big V launched a new ETF that might be a better option than IWDA without the hassle of EIMI.

Ticks all the boxes, domiciled in Ireland + Accumulative, just launched 2 days ago.

FTSE All-World UCITS ETF (USD) Accumulating (VWRA)

Ooh, this is interesting. And it's an alternate share class of VWRD, so it's got plenty of AUM; most brand-new funds are difficult to recommend because they don't have a lot of assets. Not gonna lie, this is intriguing, and it might solve the biggest problem with IWDA: people coming in and asking "but I want an allocation to emerging markets as well, what do I do?".

Hi all,

I was checking to see if there were any Vanguard Small Cap ETFs listed on the LSE similar to the S&P 500 one like VUSD/VUSA. I came across 0A16, 0A17, 0LOE. Am abit confused. Can anyone enlighten me?

Are you looking for US small-caps, global small-caps, something else...?

And why are you looking for small-caps specifically?

(snip WQDV screenshot)
Bid offer spread of less than 0.01. Vested.

Mate that is not an "ex-technology" fund. Cisco is #3 on their list of holdings!

I read that gold backed etf gains are taxed as collectibles. In this case do I have to pay taxes if I sell GLDM at a gain?

This, as everyone's already pointed out, only applies to US taxpayers.

do the local etf providers self index or pay the index providers?

They all pay to license the Straits Times Index or the MSCI Singapore index.

Hi ST and other experts, I'm sure you've heard of the FIRE movement. The assumption is that once you hit 25x (and correspondingly, a 4% annual withdrawal rate) of your projected annual expenses, you can pretty much quit your day job and retire.

Do you think such a portfolio target provides enough growth to last for the duration of one's retirement assuming one sticks to the planned withdrawal rate if retirement is say, in one's 40s or even 30s? (Assume RbR portfolio allocation and adjustments for life)

Nope. A 4% withdrawal rate is an artefact of pre-GFC days when you could get 5%+ yields out of the long bond and when people retired at 65. These days, when bonds only yield a couple of percent, a 4% withdrawal rate runs a much higher risk of running out of money - and the "retire early" devotees talk about retiring in your forties on that withdrawal rate, which is absolutely delusional. You're basically guaranteed to run out of money.

The other problem is that your projected annual expenses will pretty much always be too low. Growing old is expensive! Everyone - everyone - underestimates how much your medical expenses will cost when you get old. This isn't as much of a problem in Singapore where the default health coverage is pretty solid, but it is still something to think about.

You want to know the thing about early-retirement gurus? They're not actually retired, they're working just as hard as they used to when they had a desk job - it's just that they're cranking out books, podcasts, and TV appearances. So it's a bit disingenuous for them to say "oh I made enough money to retire at forty!" when it's immediately followed by "...and if you sign up for my multi-hundred-dollar course you can do the same!".

Hi everyone. If you have been DCA'ing into a bond ETF, have you thought about what to do if bond yield turns negative?
[...]
If we enter a negative bond yield environment:

• do we continue DCA'ing into negative yielding bond?
• or should we do differently?

Hmm. So I was going to be flippant and say "you wouldn't change strategy because every other bond-like place to put your money is going to have negative interest as well", but that's not strictly true.

The rule of thumb in Switzerland right now, where interest rates are nearly -1% in the front end, is that bank deposits only get charged negative interest when they're larger than 100,000 CHF. So what you'd probably do when bond yields got below about -0.5% (to make it worth all the headache) is you'd switch from bond ETFs to opening a bunch of bank accounts all holding 99,000 CHF.

That's a giant pain in the arse, though. And really: Swiss interest rates being ridiculously negative hasn't stopped people from wanting to own Swiss bonds. Swiss interest rates are ridiculously negative because so many people want to own Swiss bonds!

 

[hwckhs]

The rule of thumb in Switzerland right now, where interest rates are nearly -1% in the front end, is that bank deposits only get charged negative interest when they're larger than 100,000 CHF. So what you'd probably do when bond yields got below about -0.5% (to make it worth all the headache) is you'd switch from bond ETFs to opening a bunch of bank accounts all holding 99,000 CHF.

Thanks for answering my question. What you said makes sense. Looks like we have to search for and consider better alternatives.

 

[wannabelazy]

Nope. A 4% withdrawal rate is an artefact of pre-GFC days when you could get 5%+ yields out of the long bond and when people retired at 65. These days, when bonds only yield a couple of percent, a 4% withdrawal rate runs a much higher risk of running out of money - and the "retire early" devotees talk about retiring in your forties on that withdrawal rate, which is absolutely delusional. You're basically guaranteed to run out of money.

Thanks ST. How about a withdrawal rate of 3% then, as you prescribed in RbR? I guess the reason I'm asking is that I wouldn't really want to spend a moment longer at my day job if say I had some $2MM to my name that I could comfortably retire on, as opposed to slogging for years just so I'd end up with an extra million I don't actually need to sustain my desired lifestyle.

 

[ggdotcom]

Hi guys, not sure if this has been answered before but if i were to buy IWDA shares via Stan Chart, would the dividend be automatically reinvested?

 

[kram62]

Hi guys, not sure if this has been answered before but if i were to buy IWDA shares via Stan Chart, would the dividend be automatically reinvested?

Yes, the A in IWDA means Accumulating. As opposed to distributing. It is done at the fund level, so the broker doesn't matter.