*Official* Shiny Things club - Part 2

[fixture]

Hi. Noob here UK passport under 25 interested in interactive brokers. Have 35000GBP and 12500SGD investible. Looking to buy iShares/vanguard Ireland domiciled ETF. Unsure if I should buy it in GBP or USD on London stock exchange. Don't think I will ever live in UK. Free financial advisor consultation told me GBP is undervalued currently and advised not to sell.

What are pros/cons of IWDA+EIMI Vs VWRD

Pros/cons of lump sum buy Vs DCA for etf?


Also is 12500SGD SSB emergency fund a good idea? Pros/cons of SSB Vs having bond ETF in IBKR?

Also thank you guys been reading these 2 shiny threads for 1 week. A lot of information here thx all. Will continue to learn

 

[BBCWatcher]

Have 35000GBP and 12500SGD investible. Looking to buy iShares/vanguard Ireland domiciled ETF. Unsure if I should buy it in GBP or USD on London stock exchange. Don't think I will ever live in UK. Free financial advisor consultation told me GBP is undervalued currently and advised not to sell.

When you exchange any currency for stocks (or a stock fund), you don’t own the currency any more. You own shares of stocks. So whether you start with U.S. dollars, British pounds, Indian rupees, or South African rand doesn’t particularly matter.

That FA is suggesting you hang onto British pounds because they might appreciate in value relative to other currencies. That’s a speculative bet, a form a casino gambling. It might happen, or it might not. (If the U.K. crashes out of the European Union with no deal, I wouldn’t bet on that happening.) That’s very strange advice for a 25 year old looking to invest these funds for retirement which will occur 35+ years from now. So no, I don’t like that idea.

In your case, since you already have one of the currencies that the exchange will accept to buy the particular fund(s) you’re interested in buying, you would use British pounds directly. Thereafter, if you’re converting Singapore dollars, probably U.S. dollars since that’s the more popular (and thus very slightly lower cost) currency.

What are pros/cons of IWDA+EIMI Vs VWRD

There are lots of discussions about that. Both approaches are viable, and the differences are slight. It depends on what you prefer.

Pros/cons of lump sum buy Vs DCA for etf?

Well, you’re going to be dollar cost averaging soon enough because presumably you’re earning an income and will use a portion of that for your regular investing. So that answer is easy: do that.

For the lump sums you have now, you could buy all at once if you like, or you can take a few months to buy (6 to 12 let’s suppose). The latter has some psychological advantages since you’re going to be buying cheaper shares if the market suddenly tanks, but it doesn’t really matter much in terms of outcome since this is 35+ year money, I assume.

Also is 12500SGD SSB emergency fund a good idea? Pros/cons of SSB Vs having bond ETF in IBKR?

This one is a bit interesting. If you have a right of abode in the United Kingdom (you do) but not in Singapore — if you’re in Singapore on an Employment Pass, for example — then you would keep some emergency reserve funds in Singapore dollars, but they’d be predominantly in the best ordinary bank account you can find. The other portion of emergency reserve would be in British pounds. So I’d split this reserve in some fashion, if my assumptions are correct.

If, on the other hand, you’re in a serious relationship with a Singaporean, maybe even engaged, expect a LTVP (maybe even passed the Pre-Marital LTVP Assessment), LTVP+, and eventual possible PR.... Well, that’s a different scenario, and so SSBs are more interesting, and also probably because they’d be useful wedding/honeymoon savings vehicles.

But I would like to eliminate eimi due to its small allocation that will make managing difficult and the extra cost involve. So I will put in 150k into iwda and es3 only in period of 6 months or ??

Or you could pick the single counter VWRD which includes emerging markets. And since you’ve got a relatively smaller monthly buy, that’d be one trade instead of two, so you cut down on commissions. You still have the option to “batch up” purchases into bi-monthly or quarterly buys if you want. Or concentrate on IWDA and buy EIMI only very occasionally.

Therefter after the 65/35 is met, I will continue to put in 833/mth into iwda(ib),es3(maybank),mbh(maybank). What do mean by im a little bond heavy? Then whats is the textbk suggestion? So good to go?

You could be at an 80/20 stocks/bonds split. But if you feel uncomfortable with that, maybe 70/30?

 

[sks888]

Or you could pick the single counter VWRD which includes emerging markets. And since you’ve got a relatively smaller monthly buy, that’d be one trade instead of two, so you cut down on commissions. You still have the option to “batch up” purchases into bi-monthly or quarterly buys if you want. Or concentrate on IWDA and buy EIMI only very occasionally.
You could be at an 80/20 stocks/bonds split. But if you feel uncomfortable with that, maybe 70/30?

It seems quiet here. Did I ask at the wrong thread? Anyway after looking thru it, seems like what you have suggested 70/30 is the sweet spot and vwrd will let me achieve the 100kusd in IB easier, less one eimi hassle and prevent paying high comm for the smaller portion of eimi even I am doing it bi yearly. If I read correctly, the the fx spread of 0.005 from scb for every 100k,500 is given to them. Can be thrown back to reinvest or go for tour. What I dun understand is on what basis the 65% was spit into
12% ES3 47% IWDA 6% EIMI? Also may i know what is the max commisson or charges per year interms of % that you all will pay to a broker?
If based on what you allocation is, my 70/30 will give me
13%($26866) es3 57%($117799) ,vwrd =$144666(70%). Should vwrd be bought by IB fixed pricing into 6-12 mths ? Thereafter tiered pricing monthly. Monthly breakdown 13%($107.6) es3, 57%($475.4)vwrd ,30%($250)mbh?. Also pondering between Maybank mip or posb rsp for sti, all the sifu here, what are your thoughts?

 

[ay caramba!]

Hi ST and all,

I just finished reading your book, Rich By Retirement - It was great, thank you for writing it and sharing your knowledge!

I still have a few questions - if you could help me understand, that would be much appreciated!
1. You mentioned that JP Morgan maintains a "patchwork quilt" chart that tracks the performance of different asset classes. I couldn't find it. Do you know where to find this?
2. Do you know if there is any research on comparing the performance of an all equity ETF (world or S&P500 for example) compared with a mixed (&rebalanced) equity ETF with bond ETF? I have to say I am still not 100% convinced that a mixed&rebalanced portfolio would perform better than and 100% equity ETF. (Warren Buffet really doesn't like bonds).
3. Do you know of a tool to use to track our investment performance, including broker fees, dividends, stock splits, etc?
4. What Term insurance would you advise? Any reading on this that you would recommend? Is it better to buy the Term insurance directly from an insurer (Axa, Aviva, etc) or through my bank?
5. What & how to choose a hospital insurance? Any reading on this that you would recommend?
6. If I have an insurance given by my company (I am an employee of that company), is it enough, or do we need to buy an extra hospital insurance?
7. I am still very interested in investing. Do you have recommendations on other books to read on the subject?

Thanks a lot for all your insights!

 

[Shiny Things]

May I also know whats the recommended allocation between sti etf, iwda and eimi.

I still go for the ol' 50-50 local-global. Within your stock allocation, which should be balanced out by a bond allocation: 50% STI ETF; 50% IWDA.

Once you get above about six figures, so you're purchasing a meaningful amount of emerging-market stocks: 50% STI ETF, 45% IWDA, 5% EIMI.

If you've only got a $10k portfolio (for example), you're going to have five hundred bucks' worth of EIMI. It's really not worth the effort and the transaction costs. So: once you get up to a bigger portfolio, then you can put 10% of your "global stocks" allocation toward EIMI.

Hi ST and all,

I just finished reading your book, Rich By Retirement - It was great, thank you for writing it and sharing your knowledge!

I still have a few questions - if you could help me understand, that would be much appreciated!
1. You mentioned that JP Morgan maintains a "patchwork quilt" chart that tracks the performance of different asset classes. I couldn't find it. Do you know where to find this?
2. Do you know if there is any research on comparing the performance of an all equity ETF (world or S&P500 for example) compared with a mixed (&rebalanced) equity ETF with bond ETF? I have to say I am still not 100% convinced that a mixed&rebalanced portfolio would perform better than and 100% equity ETF. (Warren Buffet really doesn't like bonds).
3. Do you know of a tool to use to track our investment performance, including broker fees, dividends, stock splits, etc?
4. What Term insurance would you advise? Any reading on this that you would recommend? Is it better to buy the Term insurance directly from an insurer (Axa, Aviva, etc) or through my bank?
5. What & how to choose a hospital insurance? Any reading on this that you would recommend?
6. If I have an insurance given by my company (I am an employee of that company), is it enough, or do we need to buy an extra hospital insurance?
7. I am still very interested in investing. Do you have recommendations on other books to read on the subject?

Thanks a lot for all your insights!

Glad you enjoyed the book! A’s to your Q’s:

1. The most recent one is on slide 60 of JPMAM’s Guide to the Markets
2. Sure! You can play with the numbers yourself on https://www.portfoliovisualizer.com/ ; note that I don’t argue that a balanced portfolio would have better absolute returns than an all-equity portfolio. The balanced portfolio gives you most of the returns with a lot less volatility.
3. Not off the top of my head. Interactive Brokers does this in its reports, but I don’t know what the state of other brokers’ performance reporting is like.
4. I’ll defer to BBCWatcher on 4, 5, and 6, though I will say direct-purchase term life is the way to go. Get a quote from www.comparefirst.sg, and then buy from there.
5. (actually #7): Oooh, where to start. My usual recommendation for investing is A Random Walk Down Wall Street, by Burton Malkiel. If you like scandal-literature, or the “how not to do it” genre, go for “When Genius Failed”; the implosion of LTCM was twenty years ago now, but it’s still as relevant as ever.

Hi. Noob here UK passport under 25 interested in interactive brokers. Have 35000GBP and 12500SGD investible. Looking to buy iShares/vanguard Ireland domiciled ETF. Unsure if I should buy it in GBP or USD on London stock exchange. Don't think I will ever live in UK. Free financial advisor consultation told me GBP is undervalued currently and advised not to sell.

Normally the answer is “USD”, but because you’ve already got the pounds in your account, there’s no sense paying an additional FX spread to convert to USD. Just buy the GBP-listed counters.

What are pros/cons of IWDA+EIMI Vs VWRD

Six of one, half a dozen of the other, really. Buying VWRD means you only pay one set of brokerage fees instead of two; but IWDA and EIMI reinvest their dividends, which means you don’t have little bits of cash floating around whenever you have a dividend payment.

Pros/cons of lump sum buy Vs DCA for etf?

Depends on whether you have a lump sum to invest. If you have a lump sum to invest, then buying a lump sum is what you should do. If you’re investing from a paycheck that comes in every two weeks or every month, then dollar-cost-averaging is what you’ll do.

Also is 12500SGD SSB emergency fund a good idea? Pros/cons of SSB Vs having bond ETF in IBKR?

Sure! I personally think for emergency funds (which are separate from your regular investment funds), the best place to put them is in a high-interest bank account. Put the money in there and don’t crack it unless you need it.

I am surprised that the people here are generous giving free invaluable advice. I read some the pages but could not finish extensive materials in short span of time. And I already order the book by Shiny (Thanks for showing the path and starting this thread!) and on the way..

Hey, no worries. If I’ve saved a few people a few thousand or tens of thousands of dollars over their investing lifetime, I’ve done my job.

So to cut things short, here are my questions:
Sorry that some of the questions might have been repeated. I will retire in sp. I looking at 65stks/35bonds portfolio. Had bought 63k singapore saving bonds in span of 6 months. Another 150k on hand. I had opened a scb trading acc but thought ib might be better?

You’ll want both. Stanchart for buying Singaporean stocks (because IBKR won’t let you buy Singaporean stocks if you’re a Singaporean resident), and IBKR for everything else.

Am I too overweight for iwda since it has running high for 10 years? Can set less to iwda and more percent to eimi (20%) and sti(60%)

Nah. Don’t set your percentages based on whether you think the market is cheap or expensive, because most likely, you’ll be wrong. It’s best to set your percentages based on your time to retirement, and the allocation you’ll need when you retire.

I personally think you’ve got the right idea. Just set your percentages based on the rules you already understand, and make sure you rebalance once a year, because you’re on the glide path toward retirement; so your percentage of bonds should be increasing every year.

Hi all gurus here,
I have been spending time reading this thread and there are simply way too much good info in here and i am still trying to digest in baby steps. From what i gathered in here as well as website, the POSB-IS does not allow a single lump sum investment right, but i can log in to change the RSP amount (to the amount that i want, say $100,000) temporarily for that month, and after the deduction, i switch it back to the regular saving amount (of say, $100)?

Yep, but if you’re investing $100,000 in one hit, you should be buying via Standard Chartered instead. You’ll pay a lot less than 1%.

2. The nikkio STI ETF G3B has been around for about 9 years, and the average return is about 10.81% from factsheet, does that means that the average return per year is 10.81%.

The fact sheet should say “before fees” or “after fees”. That 10.81% number is after fees.

That said, don’t bank on getting 10.81% per year every year. That 9-year window includes some great years (like 2009 and 2010). A more realistic expectation for equities is 5-7% per year, and for bonds it’s 2-3% per year.

Look at the risk rewards tradeoff. Consider also capping your exposure. Ideally diversify outside SG. Sharpe ratio = (Rp-Rf)/sigma p[…]

You miiiiigggghhhhttttt be making this just a bit too complicated?

I'm keen to get started with your method of ETF investing. The problem right now for me is that I'm overexposed to the SG market.

I have about 110k worth of stock of which 16k is STI ETF. Accumulating that by DCA with Poems' savings plan(unfortunately). I also have an interactive brokers account that I forgot about for some years. If i consider my cpf as my bond portfolio, what's the best way to get into IWDA? Should I sell my stock and start from scratch? I don't have a huge amount for investment every month, about 7-800.

Would appreciate any opinions from the other experts here too. Thanks in advance!

Nah, the easiest thing to do is just to:

1. Sell down some of that stock, I’m guessing you’ve got a lot of weird single names in your portfolio; flog those off and move it into ES3 or IWDA.
2. Once you’ve got an initial lump sum that you’re ready to invest, buy ES3 and IWDA over the course of a few months. Since you already own some STI, you’ll want to purchase more IWDA than ES3, so that your portfolio ends up balanced.
3. You might or might not want to tilt your monthly purchases toward IWDA, as well. Basically set your target percentages of IWDA and ES3 first, and then aim for those.

you reckon your suggestion re: 50% ES3 /50% IWDA would differ if one's bond portion is large enough to sustain drawdown for good number of years. would you then perhaps suggest having a much smaller% of ES3 or maybe not even having it ?

Oh yeah, totally. If you’re absolutely loaded, to the point where you can live off the bond coupons, then you absolutely would have a higher bond allocation; no sense taking risk if you don’t have to. (Alternatively, if you want to pass your money on or set up a permanent endowment, then you might have a higher equity allocation, because you have a longer investment horizon and can afford to take more risk. It’s all about what your goal are, at that level.)

 

[wannabelazy]

Unfortunately CPF is against it: SA top-ups are limited to the Full Retirement Sum (FRS). On sks888's 55th birthday a Retirement Account top-up to the Enhanced Retirement Sum (ERS) is possible. But that won't be available for another 11+ years.

Hi BBCW, been slowly reading up on all your CPF-related posts, they've been extremely helpful and eye-opening. Would like to ask a question about CPF optimisation. Right now my 30y housing loan has 300k remaining. Monthly repayments are covered by my monthly CPF contributions, with some left over. My spouse and I have a combined ~155k in our OAs, and ~65k in our SAs. We're both in our early 30s, but I'm the only one working right now and for the foreseeable future. If we're not concerned about using OA monies to purchase any more property, should we be using it all to top up our SAs or should we instead use it to offset the housing loan? Which would be the better choice?

 

[EagleToThesSky]

Hi BBCW, been slowly reading up on all your CPF-related posts, they've been extremely helpful and eye-opening. Would like to ask a question about CPF optimisation. Right now my 30y housing loan has 300k remaining. Monthly repayments are covered by my monthly CPF contributions, with some left over. My spouse and I have a combined ~155k in our OAs, and ~65k in our SAs. We're both in our early 30s, but I'm the only one working right now and for the foreseeable future. If we're not concerned about using OA monies to purchase any more property, should we be using it all to top up our SAs or should we instead use it to offset the housing loan? Which would be the better choice?

What is the rate of your housing loan and how many years is it fixed for? I believe BBC's suggestion would be to keep the loan if the rate is low, but keep some load in OA (probably not 155K) or SSB or SGS so that you can pay off the loan if the interest rate increases to a point where it is beneficial to accelerate payment. Of course, do consider the penalty for accelerated payment if any.

Just curious, 155k in OA sounds high for a couple in early 30s. Did you top up cash to all three accounts?

 

[BBCWatcher]

Right now my 30y housing loan has 300k remaining. Monthly repayments are covered by my monthly CPF contributions, with some left over. My spouse and I have a combined ~155k in our OAs, and ~65k in our SAs. We're both in our early 30s, but I'm the only one working right now and for the foreseeable future. If we're not concerned about using OA monies to purchase any more property, should we be using it all to top up our SAs or should we instead use it to offset the housing loan? Which would be the better choice?

OK, I think I'd do something like this -- and I'm assuming your Medisave balances are both pretty high or up to the Basic Healthcare Sum.

1. You can make cash top-ups to your and your spouse's Special Accounts with tax relief (for you), and that's probably a good idea. Tax relief is nice.

2. Run this sort of calculation: how much would you need in your Ordinary Accounts to service your mortgage for, say, 12 months (or, say, 24 months if you want to be ultra conservative), and with the interest rate 1% higher than it is now (since your mortgage interest rate could increase). Let's suppose that figure is $80K for sake of argument. Then keep that $80K in your OAs, as the portion of your emergency reserve fund to service your mortgage, and transfer the rest into your SAs. It's better if your non-working spouse transfers the first OA dollars to his/her SA since he/she isn't working and getting compulsory contributions. So your spouse's SA should run ahead of yours in this arrangement, but depending on your calculation and "surplus" OA funds you might be doing some OA transfers into both SAs.

3. You can continue to do some small OA to SA transfers to maintain your emergency reserve cushion, as OA funds accumulate in your account.

4. Later, after your SAs are full (Full Retirement Sum), and when you reach the point where you still have "too much" OA accumulating, then you could take a look at the CPF Investment Scheme (OA) to see if there's something reasonable and low enough cost that could reliably beat 2.5% over at least a medium term time horizon.

 

[wannabelazy]

What is the rate of your housing loan and how many years is it fixed for? I believe BBC's suggestion would be to keep the loan if the rate is low, but keep some load in OA (probably not 155K) or SSB or SGS so that you can pay off the loan if the interest rate increases to a point where it is beneficial to accelerate payment. Of course, do consider the penalty for accelerated payment if any.

Just curious, 155k in OA sounds high for a couple in early 30s. Did you top up cash to all three accounts?

Thank you for your reply. Our interest rate is currently 1.95% I think, it's tied to FD rates. We were fortunate enough to not need to use our OA balances for the downpayment on our home. How would you determine that the interest rate has increased to a point where it's beneficial to accelerate the payment? All I can think of is that interest over time sounds like it'll really add up.

 

[BBCWatcher]

How would you determine that the interest rate has increased to a point where it's beneficial to accelerate the payment? All I can think of is that interest over time sounds like it'll really add up.

You don't worry about it below 2.5%, the Ordinary Account interest rate. CPF contributions are required while you're working in Singapore, your OA pays 2.5%, your mortgage is lower, and...no problem. You wouldn't accelerate repayment. You'd just enjoy the higher OA interest.

Above 2.5%, the decision gets more interesting. If (for example) your SAs are full, you've got OA piling up, and you don't think you can beat 2.5% reliably in the CPF Investment Scheme (OA), then yes, use OA funds to accelerate repayment -- and I'm assuming no penalty here.

Using cash to accelerate repayment is a different decision point. If you think you can beat the mortgage interest rate reliably, then let the mortgage keep running at normal pace. If not, accelerate repayment with cash.

....But anyway, net net, you don't even really worry about it below 2.5% if you're flush with current and future OA.

 

[EagleToThesSky]

Thank you for your reply. Our interest rate is currently 1.95% I think, it's tied to FD rates. We were fortunate enough to not need to use our OA balances for the downpayment on our home. How would you determine that the interest rate has increased to a point where it's beneficial to accelerate the payment? All I can think of is that interest over time sounds like it'll really add up.

To determine whether the interest rate is high enough, I would just compare to my lowest yielding asset that makes sense to be liquidated, so emergency reserve fund etc should not be touched. If the loan interest is higher, then just use the lowest yield fund to accelerate payment of the loan, of couse considering cost of accelerated payment. For example, if you follow BBC's advise and leave like 80k in your OA, then when the loan rate comes to 2.5% or even higher, just use all your OA fund to pay for the loan if you can do that without incurring high cost. You can certainly do that for HDB loan, but it seems that yours is bank loan. So you need to consider the costs associated with the accelerated payment.

For me, if you have enough monthly income to cover the loan at say 4%, I would transfer all OA to SA to enjoy the 4% risk-free interest, until when the rate raises to maybe 3% and keep raising. Maybe this is when you start thinking again whether you should use OA to pay for the loan as the interest might increase to over 4% and money in SA cannot be used for this purpose. of course, before this, you should have used up your lower yielding fund for loan payment, like your spare cash in a bank account.

 

[StarSeven]

Hi I'm not sure if this has been asked before but has anyone examined the use of DBS MCA and IB? Would that result in a lower cost?

 

[revhappy]

Hi I'm not sure if this has been asked before but has anyone examined the use of DBS MCA and IB? Would that result in a lower cost?

No. Best way to get money in and out of IB is in SGD and do whatever conversion necessary, within IB. So DBS MCA, don't need the MC part of it.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

 

[BBCWatcher]

Hi I'm not sure if this has been asked before but has anyone examined the use of DBS MCA and IB? Would that result in a lower cost?

No, it doesn't help. IB is really, really low cost to convert currency, and it's free to send and receive Singapore dollars with IB. (When withdrawing Singapore dollars from IB it's best to use a bank in Singapore that doesn't charge incoming telegraphic transfer fees, out of an abundance of caution. CIMB, BOC, Citibank, and ICBC are among the banks in Singapore that don't charge incoming wire fees. However, reportedly the banks that do charge such fees aren't always charging them with IB transfers.)

If you somehow end up with a foreign currency in a Singapore bank, that's too bad since the bank will somehow collect its pound of flesh. But your best bet is generally to pay the wire transfer fee to send the currency to IB's custodial account in the matching currency zone. For example, if you've got Australian dollars stranded in Singapore, then you could wire them to IB's custodial account in Australia.

 

[EagleToThesSky]

If you somehow end up with a foreign currency in a Singapore bank, that's too bad since the bank will somehow collect its pound of flesh. But your best bet is generally to pay the wire transfer fee to send the currency to IB's custodial account in the matching currency zone. For example, if you've got Australian dollars stranded in Singapore, then you could wire them to IB's custodial account in Australia.

Hi BBC, how is this implemented? Do we not only have one account with IB? For example, for singapore investors, the account is in USA. How do you open an account in Australia?

Thank you!

 

[limster]

I have US$ in my SCB account, and I use my SCB US$ Debit mastercard to make purchases on ebay using paypal.sg, there are no additional charges, and i get 2% cashback.

Some say that there is a 0.8% overseas transaction change so the cashback becomes only 1.2%, but payments using paypal.sg seems to be treated as local transactions without such a charge.

 

[beefjerky]

What do you guys think of this article?
https://www.forbes.com/sites/greatspeculations/2018/09/19/are-we-headed-for-a-passive-index-meltdown/amp/
Basically saying passive index being a bubble

 

[revhappy]

What do you guys think of this article?
https://www.forbes.com/sites/greatspeculations/2018/09/19/are-we-headed-for-a-passive-index-meltdown/amp/
Basically saying passive index being a bubble

The URL is already a giveaway, it says great speculations.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

 

[311290]

Want to understand what you mean by cheap baht.

Because of the SGD:THB exchange rate?

When i compare 2.9% annual interest rate is higher than SG home loan rate maybe that's what.

Really appreciate the advise.

No, a reasonable forecast is that IWDA should yield something like 6% on a long-term basis. Bearing in mind that we’ve had one heck of a terrific bull run in the stock market over the past several years, IWDA has yielded nearly 10%/year since fund inception over 5 years ago. It’s not reasonable to assume this sort of bull market will endure for years or decades into the future, but much greater than 2.9% is a reasonable forecast.

So no, a prudent investor would not accelerate repayment on a 2.9% mortgage. That’s still inexpensive money.

If that mortgage is adjustable rate, then you’d probably want to organize some defenses against that particular risk, but that doesn’t mean you would accelerate repayment now. On the other hand, if there’s a penalty to accelerating repayment, you really don’t want to accelerate repayment on a 2.9% mortgage.

Yes, those are cheap baht, and (if I've understood your earlier description correctly) 2.9% fixed for 40 years on Thai baht is really, really quite special. I would not be accelerating repayment on that mortgage!

 

[wannabelazy]

OK, I think I'd do something like this -- and I'm assuming your Medisave balances are both pretty high or up to the Basic Healthcare Sum.

1. You can make cash top-ups to your and your spouse's Special Accounts with tax relief (for you), and that's probably a good idea. Tax relief is nice.

2. Run this sort of calculation: how much would you need in your Ordinary Accounts to service your mortgage for, say, 12 months (or, say, 24 months if you want to be ultra conservative), and with the interest rate 1% higher than it is now (since your mortgage interest rate could increase). Let's suppose that figure is $80K for sake of argument. Then keep that $80K in your OAs, as the portion of your emergency reserve fund to service your mortgage, and transfer the rest into your SAs. It's better if your non-working spouse transfers the first OA dollars to his/her SA since he/she isn't working and getting compulsory contributions. So your spouse's SA should run ahead of yours in this arrangement, but depending on your calculation and "surplus" OA funds you might be doing some OA transfers into both SAs.

3. You can continue to do some small OA to SA transfers to maintain your emergency reserve cushion, as OA funds accumulate in your account.

4. Later, after your SAs are full (Full Retirement Sum), and when you reach the point where you still have "too much" OA accumulating, then you could take a look at the CPF Investment Scheme (OA) to see if there's something reasonable and low enough cost that could reliably beat 2.5% over at least a medium term time horizon.

Hi BBCW. Just wanted to say thank you so much for your input and demystifying all this for us. I just discussed all this with my spouse and she is really thankful to you for your advice too. We've done some Excel projections and we're almost embarrassed we didn't think to see to all of this sooner.