*Official* Shiny Things club - Part 2

[Shiny Things]

Hi ST,
For "global stock", presumably we can choose IWDA. But what about "global bond"? Is IUAA a good choice?

Thanks

This is a difficult one, and opinions vary.

For my consulting clients who need a "non-SGD bonds" slug, I usually recommend mostly USD bonds; I'm very reluctant to allocate to EUR, JPY, or CHF (and now AUD!) bonds that yield three-fifths of diddly squat; the yields on those bonds aren't adequate compensation for the currency risk.

I usually lean toward high-grade corporate bonds for the entirety of the fixed-income allocation. I think the yield pickup over govvy bonds for the extra credit risk is worth it. This'd point you toward something like LQDA: iShares UK's USD IG corporate bond ETF, the accumulating-dividends class (LQDE is the distributing-dividends equivalent).

I'll change this recommendation up depending on individual circumstances, but LQDA is a good starting point.

As for other classes of bonds:

• Govvy bonds are too conservative. Live a little.
• A small allocation to high-yield bonds can be useful if the customer has a yield target they need to hit, because they need a certain level of income.
• US muni bonds aren't appropriate for overseas investors, because you can't take advantage of the tax concessions.
• I don't know enough about mortgage bonds: I don't have a meaningful view on interest rate volatility, and US mortgage bonds are explicitly a short position on interest-rate vol. Don't get me started on MREITs, though. Yuck.

 

[tjieming]

Hi, thanks for the great information from this thread so far.

In addition to my usual index investments, I have a small amount that I would like to put towards specific stocks (ie, GOOGL).

Is there any difference between buying them on NMS (Nasdaq) or SWX (Swiss stock exchange)? Which would be a better option for the Singaporean investor?

 

[dullthings]

Apart from long term view on the portfolio, I’m still trying to understand the volatility on the typical 20/40/40 MBH/IWDA/STI portfolio.

Looking through the 2008 data for stock and bond ETFs, am I right to suppose that our typical 20/40/40 allocation will see a maximum and transient drawdown of -30% at the deepest stage of a financial crisis?

Just asking so that I can understand how our portfolio might move. Of course, I know we are supposed to buy and hold and also to rebalance to ride through financial crises.

 

[CWL84]

FSM1 just came out with their own rsp plan and it is alot cheaper than posb invest saver. For local etfs, 0.08% or min sgd 1 to invest but there is minimum sgd 10 to sell. ST, what are your thoughts on their rsp?

 

[decibel.]

Hi is it recommended to keep ratio at 80% IWDA and 20% G3B? Because I'm planning to put $15300 p.a into SRS and use that to buy G3B for each year. In this case to reach the ratio, I need to invest $61200 into IWDA but I don't have that much savings how? Or 100% G3B is good enough since I'm planning to invest for next 30 years.

Sent from HUAWEI VOG-L29 using GAGT

 

[cassowary18]

Hi is it recommended to keep ratio at 80% IWDA and 20% G3B? Because I'm planning to put $15300 p.a into SRS and use that to buy G3B for each year. In this case to reach the ratio, I need to invest $61200 into IWDA but I don't have that much savings how? Or 100% G3B is good enough since I'm planning to invest for next 30 years.

Sent from HUAWEI VOG-L29 using GAGT

50:50. Also, you can use your SRS to buy MBH.

 

[Shiny Things]

Hi, thanks for the great information from this thread so far.

In addition to my usual index investments, I have a small amount that I would like to put towards specific stocks (ie, GOOGL).

Is there any difference between buying them on NMS (Nasdaq) or SWX (Swiss stock exchange)? Which would be a better option for the Singaporean investor?

Always buy the home listing (Nasdaq, in this case). I have no idea what the liquidity's going to be like on the SWX cross-listing, but I'm 99% sure it's going to be a lot worse.

FSM1 just came out with their own rsp plan and it is alot cheaper than posb invest saver. For local etfs, 0.08% or min sgd 1 to invest but there is minimum sgd 10 to sell. ST, what are your thoughts on their rsp?

Nope. FSMOne charges dividend handling fees. Nope nope nope.

Hi is it recommended to keep ratio at 80% IWDA and 20% G3B? Because I'm planning to put $15300 p.a into SRS and use that to buy G3B for each year.

Don't do that then. Put less money into your SRS.

This is a genuine problem with SRS: there are no good options for investing in global stocks.

Apart from long term view on the portfolio, I’m still trying to understand the volatility on the typical 20/40/40 MBH/IWDA/STI portfolio.

Looking through the 2008 data for stock and bond ETFs, am I right to suppose that our typical 20/40/40 allocation will see a maximum and transient drawdown of -30% at the deepest stage of a financial crisis?

Just asking so that I can understand how our portfolio might move.

To be totally blunt, 2008 was an epic event. The maximum drawdown on a 20/40/40 portfolio, from the absolute ding-dong high in October 2007 to the absolute weeping-wailing-and-gnashing-of-teeth low in March 2009, was about 50% (including reinvested dividends).

But here's the thing. That assumes you piled in 100% at the absolute ding-dong high in 2007—and even if you did that, if you were literally the worst trader in the world, you'd still have been all the way back to flat by mid-2013.

If you just started investing in October 2007, and regularly bought the same amount each month, you'd have been buying all the way down and all the way back up. You'd have been buying SPY at seventy bucks; buying the STI at 1,600... and you'd have been back to flat by, my guess, the end of 2010.

 

[BBCWatcher]

US muni bonds aren't appropriate for overseas investors, because you can't take advantage of the tax concessions.

No, they get the U.S. tax break on U.S. munis, too. The problem is that municipal bond yields have that U.S. income tax free treatment priced into them because U.S. investors in high U.S. tax brackets find them attractive and bid accordingly. Which is pretty silly for international investors who enjoy the portfolio interest exemption on U.S. corporate and federal government bonds, which would thus have higher yields (ceteris paribus).

There's also the fact that there probably isn't a non-U.S. domiciled U.S. municipal bond fund, so there'd be U.S. estate tax involved on munis via a U.S. fund (for those who are concerned about U.S. estate tax). And the market for individual munis is pretty opaque and illiquid, so funds are really quite important when investing in U.S. munis.

For U.S. persons like me, a high quality/low cost U.S. municipal bond fund can make some sense (strictly outside U.S. tax advantaged accounts). For international investors, no, not really.

 

[cassowary18]

Nope. FSMOne charges dividend handling fees. Nope nope nope.

Correct me if I am wrong, but the dividend handling fee only applies to US based stocks and ETFs right? So if you buy MBH or ES3 there you should be fine. They don't offer Irish domiciled ETFs anyway.

https://secure.fundsupermart.com/fsm/new-to-fsm/pricing-structure

 

[thegreatjedi]

http://richbyretirementbook.com/

Thanks for the link! Will definitely buy it.

 

[flowerpalms]

Wise choice ever

Thanks for the link! Will definitely buy it.

 

[Brown24]

Hi ST, FSMOne do not charge dividend handling fees for STI ETF based on my understanding from talking to them. Pls correct me if I'm wrong.

 

[commie_rick]

Correct me if I am wrong, but the dividend handling fee only applies to US based stocks and ETFs right? So if you buy MBH or ES3 there you should be fine. They don't offer Irish domiciled ETFs anyway.

https://secure.fundsupermart.com/fsm/new-to-fsm/pricing-structure

yes. dividend handling fee is only for us listed etf or stocks

 

[crystalnox]

Hi ST, FSMOne do not charge dividend handling fees for STI ETF based on my understanding from talking to them. Pls correct me if I'm wrong.

Yeah I think he’s referring to the non-SGX stuff.

 

[Brown24]

Yeah I think he’s referring to the non-SGX stuff.

But the question posted earlier was comparing POSB invest saver (apparently only hv SGX stuff,) and FSMOne, so just want to confirm I didn't understand the fees structure wrongly. Thanks

 

[CWL84]

Yep, I was referring to our sg ETFs. Looks like FSM1 just trounced the competition with their own RSP .

 

[CWL84]

Hi ST, FSMOne do not charge dividend handling fees for STI ETF based on my understanding from talking to them. Pls correct me if I'm wrong.

I can double confirm. They have just replied my email saying local domiciled etfs are not subjected to dividend handling fees.

 

[intime]

Yep, I was referring to our sg ETFs. Looks like FSM1 just trounced the competition with their own RSP .

I feel it will be even better if fsmone also allow rsp (same low fees) for individual stocks like ocbc bcip and poems rsp.

 

[CWL84]

You can try suggesting to them. They seem receptive to other suggestions such as LSE access.

 

[Okenba]

You can try suggesting to them. They seem receptive to other suggestions such as LSE access.

FSM got LSE access meh?