*Official* Shiny Things club - Part 2

[Johnlinn]

Why do you use light coloured font on top of light coloured background?
Don't you find it hard to read?

I wanted to separate the weightage so i use diff colours but didn expect to turn out this way

 

[swordsly]

I wanted to separate the weightage so i use diff colours but didn expect to turn out this way

Readability is much more important, especially when you're asking a question.
I suggest you go edit your post for the people who will answer your question.

 

[Johnlinn]

Thanks for the suggestion, didn't know can edit, I have edited it!

 

[goldsilvercity]

sorry guys, hope someone can assist me.
how do I buy "5 year nominal government bonds" in interactive brokers? whats the ticker to find and buy?
thank you very much

 

[ehsevol]

Sorry, I'm sure this has been asked before... but I'm still confused whether I should be buying A35 or using CPF as the bond component of my portfolio, even after reading the book and lots of replies regarding CPF. Or are there other bonds that I can consider e.g. SSB, SGS? A35 seems to be heavily debated. For those who are using CPF, are we talking about the total combined balance? Bonds are confusing..

My 2nd question is... do you guys advise to sell part of your portfolio when the prices hit a nice high in order to lock in some profits, or hold onto it indefinitely? I actually sold off half of my G3B at 3.7x earlier in the year in order to allocate funds to IWDA after reading ST's book. I would think we should be looking to sell some part of our stocks during "good years" in order to capitalize on it?

 

[whoareuami]

Hi Shiny and fellow members,

I am new to investing and i have read through Shiny's book.
He mentioned that if one is investing less than $1k per month, should stick to POSB for local stocks/bonds ETF and Standard Chartered for overseas ETF.

My situation : Age 29, planning to invest 1k per month splitting between 45% ES3 45% IWDA and 10% A35 (i am including my cpf as bond allocation thus the lower percentage in A35). I will also be putting 10k as initial fund into above portfolio as well.

I should be choosing POSB and SC but i have a 100k bond maturity in 6 months time. I will be splitting all 100k among my portfolio at above percentage and POSB rate is a cause for concern. $55k for local stocks and bond ETF at a charge of 1% and 0.5% respectively($500) as compared to $55k into SC account at 0.2% ($110).

Trading frequency -is 3 trades every month into ES3 A35 and IWDA with above ratios

or 1 trade per month into each etf better ? (example 450 into ES3 Jan , 450 into IWDA feb, 100 into A35 march and repeat)



Thanks for listening. Any advice ?

 

[Shiny Things]

sorry guys, hope someone can assist me.
how do I buy "5 year nominal government bonds" in interactive brokers? whats the ticker to find and buy?
thank you very much

Mate, it's very clear that you don't have a clue what you're doing. You don't even know which country's bonds you're trying to buy or what economy you're trying to bet against. Step away from TWS.

(For anyone who's wondering what's going on here, here's where the discussion started.)

 

[Shiny Things]

Sorry, I'm sure this has been asked before... but I'm still confused whether I should be buying A35 or using CPF as the bond component of my portfolio,

If you're saving for retirement, you can count CPF as part of the bond component of your portfolio.

My 2nd question is... do you guys advise to sell part of your portfolio when the prices hit a nice high in order to lock in some profits, or hold onto it indefinitely?

Hold it indefinitely, because you don't know whether "a nice high" is going to turn into even higher highs. The idea behind regularly rebalancing is that it'll lead you to sell things that have gone up; you don't need to try to predict the market in order to sell some extra, because you'll most likely get it wrong.

I understand from reading ST's book that POSB-IS is the most cost-effective way to DCA into G3B but what's the most cost-effective way to put a lump sum into ES3?

G3B and ES3 are basically the same thing, though.

1) Although VWRD and IWDA are world etf, more than half of it invest in the USA market (1 single market), wouldn't it be high on geographical risk?

Righto, I think you're overcomplicating this a bit. You're trying to do too much right out of the gate.

Anyway, no, I don't think there's too much geographical risk in owning VWRD or IWDA. The majority of the world's market cap is in stocks that are listed in the USA, and those stocks have revenues and cashflows from all over the world. It's not like you're entirely exposed to the USA with those stocks.

2) IWDA vs VWRD: IWDA is accummulating and has a lower expense ratio (0.2%), VWRD has emerging market exposure, 3000+holdings (much more holdings than IWDA), and a lower exposure on USA market. Which one do you think is better and why?

I prefer IWDA, because accumulating dividends makes your portfolio a lot easier to manage; you don't have little bits of USD cash floating around all the time.

3)Which brokerage firm would be best to invest in given my situation in terms of costs and other factors?

I think I answered this a few times? If you have more than $100k to invest, or you're doing more than $1000 a month, use IB for your global stocks (IWDA) and Stanchart for your local stocks. If neither of those apply to you, then use Stanchart for your global stocks (IWDA) and POSB Invest-Saver for your local stocks.

4) Currently the price of both VWRD and IWDA is very high, is it a good time to buy it (although I know that we should not time the market)? should I split up into 2 portions to invest in with a few weeks gap?

Yeah, splitting it into two or three portions is totally fine.

5) Would the rebalance objective be effective or any recommendation?

Surprising but true: rebalancing based on "this position has gotten too big, I should reduce it" doesn't actually work any better than just rebalancing twice a year, and it means a lot more work because you have to monitor your portfolio every day.

6)Would it be overall more cost effective if we go to money changer to change sgd to usd and then deposit it into our bank account than suffering the poor exchange rate of bank?

Nope. If you're big enough, doing your FX through IBKR is much cheaper than using moneychangers.

[...portfolio snipped...]

So, a couple of thoughts.

1) Why REITs? Real estate is a pretty dismal asset class: it's got the high volatility of stocks, with the low returns of bonds.
2) You're over-allocating to small caps. You'll get a market allocation of small caps by just owning IWDA.
3) Why the pan-Asia bond fund instead of just Singaporean corporate bonds (MBH)? Owning bonds from other countries just gives you a ton of FX risk for no particular benefit.

8) portfolio 1: Will this be good? Kindly share with me as I am still a newbie.

9) Portfolio 2: 40% VWRD/IWDA, 40% STI ETF, 20% ABF Pan Asia Bond Index
Or I should go with the Portfolio 2, will it be a better management of risk and return and why? I am just uncomfortable with it heavily weighted in USA and Singapore, also sector wise it is heavily weighted on financial and technology.

You're WAY overengineering this, and it's going to end up too complex. Just use your portfolio 2, but use MBH (listed in Singapore) instead of the pan-Asia bond fund. If you don't like the Singapore overweight, hold less STI ETF and more IWDA, but don't be afraid of having a lot of US exposure; like I said above, owning US stocks doesn't mean you have US country risk.

10)I have an objective to acquire $1,000,000 or $6000 monthly dividend for early retirement. This strategy above I beleive is capital gain strategy. If you were me when you are 27 years old, what would you do to reach this target in the shortest possible time with a good management of risk and return?

At your age, I'd focus on getting good at your job and increasing your salary. If you can earn more, you can save more; and earning more and saving regularly is going to do a lot more for your retirement than quibbling about pan-Asian bonds vs Singaporean bonds or whatever.

That said, what you've got above is not a capital gain strategy. you're buying weird-ass Asian bonds and REITs, both of which are only good for yield, not for cap gains. You've got a yield strategy that you've convinced yourself is a cap-gains strategy. Your portfolio 2 is much better, and it'll be easier to get started with.

 

[Shiny Things]

or 1 trade per month into each etf better ? (example 450 into ES3 Jan , 450 into IWDA feb, 100 into A35 march and repeat)



Thanks for listening. Any advice ?

One trade per month is definitely better. Just invest the whole $1k in one stock each month; you'll have lower transaction fees, and by the end of the first year, you'll basically be at your target allocation.

 

[Ch3tah_39]

Hi guys just a question, notice that A35 dividend paid has been lower than G3B. However the price remain rather constant even now G3B is not performing well. Is it still a good option to continue monthly investment of A35, cause I also invested in SSB?

 

[BBCWatcher]

Hi guys just a question, notice that A35 dividend paid has been lower than G3B. However the price remain rather constant even now G3B is not performing well. Is it still a good option to continue monthly investment of A35, cause I also invested in SSB?

What are you trying to accomplish? What are the end goals, and when (how long from now)?

 

[Cherished]

Hi guys, I've seen some post recommending MBH instead of A35 as the bond component of the portfolio. Understand the fundemental idea is to DCA for a long period of time. Am i suppose to:

1. continue getting A35 and add MBH to my portfolio or
2. stop A35 and add MBH to my portfolio? or
3. simply ignore MBH.

Many thanks

 

[FrostWurm]

Hi guys, I've seen some post recommending MBH instead of A35 as the bond component of the portfolio. Understand the fundemental idea is to DCA for a long period of time. Am i suppose to:

1. continue getting A35 and add MBH to my portfolio or
2. stop A35 and add MBH to my portfolio? or
3. simply ignore MBH.

Many thanks

I'm guessing most people will suggest option 2

 

[goldsilvercity]

Mate, it's very clear that you don't have a clue what you're doing. You don't even know which country's bonds you're trying to buy or what economy you're trying to bet against. Step away from TWS.

(For anyone who's wondering what's going on here, here's where the discussion started.)

True enough. I’m still reading up on the threads in money mind. I’ll do
Long term accumulation of IWDA as it seems the best Low cost way.
Read up on best way to buy IWDA via my Interactive’s Brokers.
Just thought of taking this chance to diversify into USA government bonds to reduce impact if there is an incoming stock correction.

 

[Shiny Things]

Hi guys, I've seen some post recommending MBH instead of A35 as the bond component of the portfolio. Understand the fundemental idea is to DCA for a long period of time. Am i suppose to:

1. continue getting A35 and add MBH to my portfolio or
2. stop A35 and add MBH to my portfolio? or
3. simply ignore MBH.

Many thanks

Option 2.

Selling your A35 and moving the cash into MBH is an option as well, but it's going to be a bit expensive (you're crossing the spread twice, and paying two sets of brokerage fees). If you're going to be holding this money for at least 5-10 years, then it might be worth doing the switch.

True enough. I’m still reading up on the threads in money mind. I’ll do
Long term accumulation of IWDA as it seems the best Low cost way.
Read up on best way to buy IWDA via my Interactive’s Brokers.
Just thought of taking this chance to diversify into USA government bonds to reduce impact if there is an incoming stock correction.

Yeah, the thing is: you live in Singapore, and you're going to spend SGD when you retire. There's not a lot of reason for you to own (USD-denominated) US government bonds. For someone in your situation, the right hedge against a stock correction is SGD-denominated bonds, either government or high-grade corporate bonds—like what's in MBH. That's your hedge.

Hi guys just a question, notice that A35 dividend paid has been lower than G3B. However the price remain rather constant even now G3B is not performing well. Is it still a good option to continue monthly investment of A35, cause I also invested in SSB?

I'm a little confused. You're asking if you should continue buying bond ETFs, right? Are you at your target allocation for bonds; below it; or above it?

 

[kingsfall]

I understand from reading ST's book that POSB-IS is the most cost-effective way to DCA into G3B but what's the most cost-effective way to put a lump sum into ES3?

Hi, not sure if this question has been answered; forgive me if it already has...

I feel that DCA on a monthly basis for STI ETF is NOT a good idea using the POSB-IS (~1% charge)

Why I say it is because STI doesn't really fluctuate that much.

If I were to invest $500 using DCA using POSB-IS, at the end of the year I would have paid around $50 in charges (at a ~1% charge)

However, if I were to invest using the SCB on a bi-annual basis, I would only have spend around $20 in charges.

I know this amounts are quite insignificant for many people here, but as a young professional, I would like to save as much as possible.

What do you guys think?

 

[Shiny Things]

Hi, not sure if this question has been answered; forgive me if it already has...

I feel that DCA on a monthly basis for STI ETF is NOT a good idea using the POSB-IS (~1% charge)

Why I say it is because STI doesn't really fluctuate that much.

If I were to invest $500 using DCA using POSB-IS, at the end of the year I would have paid around $50 in charges (at a ~1% charge)

However, if I were to invest using the SCB on a bi-annual basis, I would only have spend around $20 in charges.

Ah, mate... I think your math might be a bit wonky? 1% of $500 is $5. I'm going to assume you meant "$500 per month", though, so you're asking "why pay $60/year in brokerage instead of $20?".

Anyway: there are two reasons why investing monthly, rather than going biannually and doing it yourself, is a good idea.

Firstly, money that's sitting on the sidelines isn't growing. If you assume the stock market goes up by even a conservative 5% per year, then by investing every six months instead of every month, you're missing out on more than $60 worth of gains each year by leaving your money in cash for those extra few months.

Secondly, putting your investments on autopilot takes a lot of the fear out of investing. Making that first purchase can be intimidating, and if you only do it once every six months, you won't get used to doing it: you'll likely end up talking yourself out of making the purchase, because "what if it goes down tomorrow?" or "oh man, it's gone up so much over the last six months, maybe it'll go down later and I can buy it cheaper". And those sort of instincts are natural, but they're the opposite of good investment strategy.

 

[makav31i]

Hi, not sure if this question has been answered; forgive me if it already has...

I feel that DCA on a monthly basis for STI ETF is NOT a good idea using the POSB-IS (~1% charge)

Why I say it is because STI doesn't really fluctuate that much.

If I were to invest $500 using DCA using POSB-IS, at the end of the year I would have paid around $50 in charges (at a ~1% charge)

However, if I were to invest using the SCB on a bi-annual basis, I would only have spend around $20 in charges.

I know this amounts are quite insignificant for many people here, but as a young professional, I would like to save as much as possible.

What do you guys think?

POSB Invest Saver is charging 0.82% and not 1% for G3B...So if you invest $500/month, you will pay $49.20 a year in fees...

If you take into account the cashback you get which is 3% or $15/month for investing with POSB Invest Saver, and the PayLah refund on your fees for using POSB Invest Saver, you are actually investing for free and even earn cashback if you use POSB Invest Saver...

Free + $180 cash given to you vs paying $20 in fees, which is better?

 

[kingsfall]

POSB Invest Saver is charging 0.82% and not 1% for G3B...So if you invest $500/month, you will pay $49.20 a year in fees...

If you take into account the cashback you get which is 3% or $15/month for investing with POSB Invest Saver, and the PayLah refund on your fees for using POSB Invest Saver, you are actually investing for free and even earn cashback if you use POSB Invest Saver...

Free + $180 cash given to you vs paying $20 in fees, which is better?

Yea I was referring ~1% as sub 1. I rounded the charges to $50.

Would you be kind enough to link the information you provided? I don't recall seeing any of such information. Thanks alot!

 

[BBCWatcher]

POSB Invest Saver is charging 0.82% and not 1% for G3B...So if you invest $500/month, you will pay $49.20 a year in fees...

No, that’s an old promotion that expired some time ago. DBS and POSB have shifted to a PayLah-based promotion, with sale charge rebates, but it’s only for unit trust investments via RSP. And that promotion (which is not attractive) ends September 30, 2018.

I have the same question kingsfall has: what promotion terms and conditions are you reading? Your description does not match what DBS wrote.