*Official* Shiny Things club - Part 2

[BBCWatcher]

May I ask if putting part of the emergency fund into SSBs is a better choice (in your opinion) than leaving all of it in a savings account with additional interest rates (such as BOC SmartSaver, DBS Multiplier, Maybank SaveUp, etc.)?

If you can reliably get higher interest than SSBs offer, fantastic. Rules of thumb are just that.

How about the Phillip Money Market Fund? Since there’s full liquidity (if I read correctly), would it be a good place to park emergency funds?

That one, no. Its yield is much lower than SSBs, and you don't need instant liquidity for emergency months 2+.

 

[BBCWatcher]

Is it easier to withdraw cash from the bank than SSB

It's faster, and that's why SSBs are for emergency month two onward.

assuming u need the money asap when u face with emergency

You need some money in an emergency, and that's what an on demand ordinary bank account -- and/or, for those age 55 and older, on demand CPF savings -- is/are for. A single credit card, that you still pay in full every month, can also be useful but is optional. (CIMB's cards are nice since they're no annual fee for life.)

Don't over-interpret the word "emergency." This isn't a situation where one of your loved ones is kidnapped, the kidnappers are demanding ransom, and you're thinking of paying the ransom. In that event you'd be selling your entire stock portfolio, for example. No, this is for "ordinary" emergencies, if that makes any sense -- events such as loss of a job, and the bout of unemployment between jobs. It's your buffer for life's events, to avoid having to liquidate longer term assets (such as retirement savings) prematurely. Another example: your washing machine breaks, and you need to replace it unexpectedly. Another example: your spouse ends up in this hospital (perhaps with some loss of his/her income), and you have to take some unpaid time off, too. Maybe "urgencies" is a better word?

 

[BBCWatcher]

That ransom hypothetical reminded me of this old "Your money or your life!" joke here.

 

[longfart]

If you can reliably get higher interest than SSBs offer, fantastic. Rules of thumb are just that.


That one, no. Its yield is much lower than SSBs, and you don't need instant liquidity for emergency months 2+.

Thanks BBCWatcher!

 

[soulblader_89]

off topic a bit, I create the POSBSAYE account, but I realise I cannot stop the transferring of money once I set the date

Is there anyway to stop the account transferring money from main account or close the account?

Cannot find any option there leh

I go to the "Change MySavings Account (MSA) Instruction"

I die die have to put a number in the "Amount field"

Is there a way to close the account online? I realise once I set $50, I cannot tell them to stop liao

cannot enter 0 too, minimum must be $50

 

[appl888]

https://www.posb.com.sg/iwov-resources/pdf/bank/savings-accounts/posb-says/TnC-POSB-SAYE-ACCOUNT.pdf
21 to 23 for closure of acct
Best to go branch to ask

off topic a bit, I create the POSBSAYE account, but I realise I cannot stop the transferring of money once I set the date

Is there anyway to stop the account transferring money from main account or close the account?

Cannot find any option there leh

I go to the "Change MySavings Account (MSA) Instruction"

I die die have to put a number in the "Amount field"

Is there a way to close the account online? I realise once I set $50, I cannot tell them to stop liao

cannot enter 0 too, minimum must be $50

 

[worldtravellermac]

Hi ST,
what are your thoughts on this :

USD 5YNC1Y Steepener with first coupon fixed

Product highlights:

· USD denominated
· Structured to return principal at maturity
· First year coupon at 5.00%, no condition
· High coupon multiplier factor of 10x CMS 10-2 spread
· Callable after the 1st year
· Coupon payable subject to a minimum of 0.10% p.a. and maximum 8.00% p.a.
· Quarterly observation

The short end is likely to continue to go up and the curve may remain flat for a while. Yes, that’s why we have a nice coupon of 5% for year 1 while waiting for the curve to steepen after that. The longest period in the last 20 years where 10-2 CMS spread is less than 0.5 is 2 years and 5 months, from May 2005 to Oct 2007.

Let’s do the math.

Year 1 Coupon: 5% fixed, no condition
Year 2 to 5 Coupon: 10* CMS 10-2 spread, floored at 0.1%, capped at 8%, fixing in Arrears (which means coupon is determined at the end of each period)

Look at below historical 10-2 CMS Spread.

76.52% of the time in the last 20 years, the spread is higher or equal to 0.5. Which means coupon could fix at 5% (10* 10-2 CMS Spread) or higher 76.52% of the time.

88.09% of the time, the spread is higher or equal to 0.25. Which would be a decent result as average coupon over 5 years would be 3% (5% + 2.5% + 2.5% + 2.5% +2.5%).

63.98% of the time, the spread is higher or equal to 0.8, which would translate to coupon of 8%. But it’s not going to get there. The note would be early redeemed.

 

[soulblader_89]

so the best answer is just throw all the saving into CPF?

Not taken account of other stock/Bond investment tools

 

[BBCWatcher]

Worldtravellermac, where's the prospectus for what you're describing? I've found something UBS AG Jersey (!) issued in 2011 that expired in 2016 that seems broadly similar, but that cannot be what you're describing.

 

[jacky817]

erm, this para contains some inaccurate info...

1) You can cash top up any amount you like in your own SA, until your SA hits FRS. But only the first 7k gets tax relief. Seriously, if you are super cash rich, you can one-shot pump your SA until it reaches 171k if you like

2) You can similarly do cash top up to the SA of anyone you like, doesn't have to be a family member even. But only top up for: parents, parents-in-law, grandparents, grandparents-in-law, spouse and siblings; are eligible for tax relief. And for spouse and siblings tax relief, they have to have annual income less than 4k

3) There is no limit to OA. I don't know any way to "funnel" OA to SA, except through self-initiated CPF transfer

4) The part about there being no limit to SA is correct though

Hey thanks for the correction, my memory has failed me badly .

3) I think I meant to say this. Once your Medisave is full, it will be funneled to your SA. But if your SA has hit the Full retirement sum, that (medisave) amount will flow to your OA instead.

 

[worldtravellermac]

Prospectus is :
GOLDMAN SACHS 5-YEAR CALLABLE STEEPENER
STRUCTURED NOTES LINKED TO THE PERFORMANCE OF 10-
YEAR USD SWAP RATES OVER 2-YEAR USD SWAP RATES
(“NOTES”)
Product Features
 Issuer: Goldman Sachs International, London, UK.
 Return of Principal: The Notes are structured to return your initial investment amount to you on the Maturity Date or
upon optional early redemption by the Issuer (subject to the (i) Issuer/Guarantor’s credit risk and the occurrence of
any early termination event).
 Tenor: 5 years, subject to the occurrence of an Optional Early Redemption by the Issuer or any early termination
event.
 Underlying Asset(s):
(i) 10-Year USD Swap Rate, and
(ii) 2-Year USD Swap Rate, 11:00am New York time fixing as quoted on the Reuters page ICESWAP1 (or any
successor or replacement page), observed 5 U.S. Government Securities business days prior to the relevant
Interest Payment Date.
 Interest Rate: The Notes are structured to pay a fixed coupon of 5.00% p.a. for the first year. Thereafter, coupon
amounts are paid on the initial investment amount at the factor 10 x (10-Year USD Swap Rate – 2-Year USD Swap
Rate) subject to a Floor Level of 0.1% p.a. and a Cap Level of 8.00% p.a. if applicable, payable on each Interest Payment Date.

How does it work?
General
 The Notes are structured to return your initial investment amount to you on the Maturity Date or (if applicable) upon
Optional Early Redemption (subject to the (i) Issuer/Guarantor’s credit risk and (ii) the occurrence of any early
termination event.
Interest Payments
 For the [first year], the Note is structured to pay a fixed coupon of 5.00% p.a.. Thereafter, the coupon(s) payable on
the Notes are linked to the difference between the [10]-Year USD Swap Rate and [2]-Year USD Swap Rate observed
on a periodic basis for each Interest Period, determined as follows:
1000% *[(10 Year USD Swap Rate) – (2 Year USD Swap Rate)];
subject to a minimum Floor Level of 0.10 p.a.% and maximum Cap Level of 8% p.a. (if applicable).
Optional Early Redemption by the Issuer
You should note that the Notes contain an Optional Early Redemption feature, under which the Issuer may elect (at its
discretion) to early redeem the Notes on any specified optional Early Redemption Date by paying (a) your initial
investment amount and (b) any applicable interest to you.
Redemption at Maturity
 Assuming that (i) the Issuer/Guarantor does not default on its obligations under the Notes, (ii) no Optional Early
Redemption or early termination event occurs and (iii) you hold the Notes to maturity, the Issuer will be required to
return your entire initial investment amount to you on the Maturity Date.
 Depending on the performance of the Underlying Asset(s), the Issuer may also be required to pay an additional
return to you on the Maturity Date.

 

[fujitsu555]

Hi ST! I know you advocate index investing and I personally practiced that. But I'd still like to hear your views on this interesting portfolio approach : Free Lunch portfolio http://www.chaiwithpabrai.com/blog/the-free-lunch-portfolio

Thanks!

 

[peipei1]

Just curious, those people who were asking whether to do lump sum investment or split it out, during the beginning of the year, when markets were rocketing, what are you doing now? This seems to be a god send opportunity to deploy lump sums into the market. I have been increasing my allocation and have got my bonus as well, so most likely will increase even more, I guess my allocation will become like 40% to equities, up from 17% when I came to this thread.

Sent from Xiaomi REDMI NOTE 4 using GAGT

I like to hear some sharing on how our ST portfolio fellows been faring thus far? Market bull is so old, those in early have you locked in some profits, via assets reallocation to bonds? You still do it once a year or will you put more active management in times of see saw swings such as now?

I stopped adding to EIMI since the Jan crash.

 

[revhappy]

I like to hear some sharing on how our ST portfolio fellows been faring thus far? Market bull is so old, those in early have you locked in some profits, via assets reallocation to bonds? You still do it once a year or will you put more active management in times of see saw swings such as now?

I stopped adding to EIMI since the Jan crash.

I bought EIMI yesterday put my entire bonus and salary. Now EIMI is 33% of my holding.

Taking profits doesn't make sense. You can't time the markets. This is a great time for people like me who want to achieve our target allocation.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[revhappy]

Also the point about bull market being old doesn't really make sense. Earning and saving money is a continuous process, so investing also should be a continuous process. You could invest 8 years back, but then did you have so much money 8 years back? My networth was not even 10% of my current networth, 8 years back. So you need to invest as you generate those savings and it is continuous process. The world will always keep generating savings, it will only increase not decrease. So it doesn't make sense to take profits unless you need to use that money.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[Listopad]

any comments on SPDR® MSCI World Small Cap UCITS ETF (WDSC.LSE), with fund size of approx. GBP211m ? considering whether to add a small % allocation to this .

 

[BBCWatcher]

Blackrock has what looks to be exactly the same ETF -- it tracks exactly the same index -- listed as symbol WSML on the London Stock Exchange. But it has a lower annual management cost (important), and it's listed in U.S. dollars instead of British pounds (doesn't matter). The fund size (total assets under management) looks basically identical to that SPDR fund. Both AUMs are too small for my tastes, and thus these two funds are likely to have fairly wide bid-ask spreads and limited trading volume.

 

[Tornesoul]

wow part 2.

what can i say, its been hard to hold the IWDA/EIMI path personally.

Wished there was some auto DCA option in sg so i stop straying away.

 

[chankygigi]

Hi,

I am 28 and looking into expenses for HDB BTO, marriage and hopefully a newborn in 5 years' time.

I recall Shiny's recommendation is that if you require the funds between 3 - 5 years time, you should keep it in a mix of cash and bonds.

However, I have started investing into IWDA, ES3 and ABF 2 years ago and currently only has emergency fund in my bank.

Is it necessary/recommended to squeeze out perhaps $200 to DCA every month so as to capture the market movements while accumulating the funds needed for future expenses in cash?

 

[BBCWatcher]

Is it necessary/recommended to squeeze out perhaps $200 to DCA every month so as to capture the market movements while accumulating the funds needed for future expenses in cash?

I don't quite understand the question, but you are allowed to walk and chew gum at the same time. Your stock investing is for your long-term investment horizon, typically mostly for retirement with some university tuition savings for future children (over 20 years from now). If you've got some bills coming up in the next 3 to 5 years (housing down payment and "setup" costs, marriage, child) then you'd save toward those goals using such vehicles as Singapore Savings Bonds and a Child Development Account (for that future newborn, and to collect the matching government funds). Doing some of both is fine, even better than fine.