*Official* Shiny Things club - Part 2

[Shiny Things]

Oh my
I didn’t know
Just happily pressed the return button a few more times
Chinese market way bigger than japan and their population ain’t shrinking

Lol, no worries. Anyway.

To be honest I don't think this is a very well-founded thesis. China's been a really tough investing climate lately. I think I mentioned this upthread, but the Chinese equity market is basically a bet on three things:

1. Chinese megacap tech (the "BAT" stocks, because it's mostly Baidu, Alibaba, and Tencent). These are already very richly valued; they're huge companies that have to get even huger, really quickly, to justify the growth rates that are already priced into the stock;
2. Chinese property developers. I don't have the stomach to go anywhere near these things; they seem to love skating right on the edge of spectacular collapse, they're hugely leveraged to property prices, and they exist only on the continued good grace of the Chinese government keeping land cheap and houses expensive; and,
3. Chinese banks. These things are disaster areas. The small-cap banks have horrific bad loan books; the large-cap banks are basically dumping grounds for the dud loans that the smaller banks can't handle. These are the reason the Chinese equity market looks so cheap: people think that the "E" side of the "P/E" ratio (and for that matter the "B" side of the PB ratio) is wildly overenthusiastic and it's going to take years or decades for the bad loans to work through the system.

As much as I love a good low-PE deep-value story, even I can't bring myself to overweight Chinese equities.

 

[SpeedingBullet]

SpeedingBullet, can I say for the commoners like us, since we can't invest in PERE, the closest investible asset we can get is REIT (Commercial, Industrial, Logistics, Data Center, Retail, Healthcare)?

Not so much of HDB, condo and shop house right ? Because this segment is more towards residential, which is rather unattractive in today's landscape.

So if you want core returns, invest in REITs.

Value-add/Opportunistic returns, invest in property developers. These guys give high returns but they have lumpy earnings, very hard to predict their cashflows.

Some shophouses, if invested at the right time and with the uplifting of rents, can give tremendous returns. Way better than sh1tty strata malls. You can even buy strata offices in Suntec if you had the cash.

There are a few options, like Astrea IV bonds are PE linked. There are some PE ETFs available, though they are not cheap in terms of expense ratio. There are some PE unit trusts around, I think listed on iFast, but I believe they require AI status and/or going through an IFA.

Astrea bonds and PE ETFs do not give PE returns.

For Astrea bonds, Temasek gets the huge 15-20% (I don't know what's their hurdle) IRR, and then they pass you the fixed 4%. You get bond returns.

PE ETFs only hold stocks of PE companies like BX, KKR, CG, OAK, etc. Shareholders of PE companies do not get PE returns - you are effectively an investor in the manager of the Funds, not the Fund(s). The manager makes money by charging fees to the Funds' investors , they do not get the returns of the Fund itself.

PE unit trusts? Never heard of them, doesn't sound promising too. Which PE manager will go out and beg for AI money when they can bag a billion from a pension fund?

 

[littleredboy]

Hi ST, I'm looking at the vanguard retirement target plan VTIVX. Do we do a DCA plan with them until the set retirement year?

 

[BBCWatcher]

Hi ST, I'm looking at the vanguard retirement target plan VTIVX. Do we do a DCA plan with them until the set retirement year?

VTIVX is a U.S. domiciled mutual fund, and it (and its siblings) are lovely in the right hands. It's appropriate for some U.S. persons, but it's not appropriate for non-U.S. persons for tax reasons.

I haven't found any low cost target date funds domiciled in appropriate jurisdictions that are broadly accessible to non-U.S. investors resident in Singapore. Has anyone else found anything along those lines?

 

[limster]

PE unit trusts? Never heard of them, doesn't sound promising too. Which PE manager will go out and beg for AI money when they can bag a billion from a pension fund?

the only one which is available on FSMOne is the RHB Private Equity Fund. No I wouldn't invest in it. But just goes to show that private equity is a wide term encompassing a whole lot of stuff, not all good....

https://www.thestar.com.my/business...stment-firm-and-launches-private-equity-fund/


London you may have more options, like Oakley Capital: LSE:OCI

 

[SpeedingBullet]

the only one which is available on FSMOne is the RHB Private Equity Fund. No I wouldn't invest in it. But just goes to show that private equity is a wide term encompassing a whole lot of stuff, not all good....

https://www.thestar.com.my/business...stment-firm-and-launches-private-equity-fund/


London you may have more options, like Oakley Capital: LSE:OCI

"“The fund will leverage on NB Private Equity’s global platform to the selected best of the best private equity strategies, including direct equity, direct private debt, opportunistic secondaries and specialty strategies. The fund serves a management fee of 2.5% of the net asset value per annum,” it said."

LOL, no wonder they can't raise capital from the usual PE sources. Nobody in their right mind will let them charge 2.5% on NAV p.a.

 

[Thoreldan]

Does it hurt if i stop my ib/iwda dca'ing for like 6-8 mths to have more cash flow in preparation for house moving ?

Alternatively i can get a small family loan (interest free) which i will repay immediately once i get the sales proceed of my current place.

 

[BBCWatcher]

Does it hurt if i stop my ib/iwda dca'ing for like 6-8 mths to have more cash flow in preparation for house moving ?

Sure, there's a cost. Calculating the cost is a bit tricky, though. I'll run through one example.

Let's suppose your long-term future yield on your investment portfolio is 7% per year and your yield on cash is 1% per year. That's a "yield gap" of 6% or about 0.5% per month. You're considering the cost of delaying 6 months worth of savings flow until the 7th month (I'll interpret "6-8" that way). In the 7th month you'll resume your savings. In that month you'll make your ordinary monthly investment plus the previous 6 months of investments, delayed. And let's suppose your monthly savings flow is $1,000/month, meaning that 7th month investment will be $7,000.

In this scenario you've got one month's worth delayed 6 months, another month delayed 5 months, and so on. Each month of delay should cost about $5 on average, you expect (0.5%/month). So it's $5*(6+5+4+3+2+1) = about $105. Plus the onward compounding of that loss since you never get that $105 back.

That's an average based on the assumptions above. Obviously your investment portfolio could shoot under or over your long-term yield forecast during this period of delayed investments, so the $105 estimate could be higher or lower in reality. But $105 (plus onward compounding) is a reasonable estimate of the cost with these particular parameters.

Alternatively i can get a small family loan (interest free) which i will repay immediately once i get the sales proceed of my current place.

That sounds great. Obviously $0 beats -$105.

 

[Thoreldan]

Sure, there's a cost. Calculating the cost is a bit tricky, though. I'll run through one example.

Let's suppose your long-term future yield on your investment portfolio is 7% per year and your yield on cash is 1% per year. That's a "yield gap" of 6% or about 0.5% per month. You're considering the cost of delaying 6 months worth of savings flow until the 7th month (I'll interpret "6-8" that way). In the 7th month you'll resume your savings. In that month you'll make your ordinary monthly investment plus the previous 6 months of investments, delayed. And let's suppose your monthly savings flow is $1,000/month, meaning that 7th month investment will be $7,000.

In this scenario you've got one month's worth delayed 6 months, another month delayed 5 months, and so on. Each month of delay should cost about $5 on average, you expect (0.5%/month). So it's $5*(6+5+4+3+2+1) = about $105. Plus the onward compounding of that loss since you never get that $105 back.

That's an average based on the assumptions above. Obviously your investment portfolio could shoot under or over your long-term yield forecast during this period of delayed investments, so the $105 estimate could be higher or lower in reality. But $105 (plus onward compounding) is a reasonable estimate of the cost with these particular parameters.


That sounds great. Obviously $0 beats -$105.

Thanks so much for the insights

 

[Shiny Things]

Does it hurt if i stop my ib/iwda dca'ing for like 6-8 mths to have more cash flow in preparation for house moving ?

Alternatively i can get a small family loan (interest free) which i will repay immediately once i get the sales proceed of my current place.

Normally I'd say "no, it's totally fine to pause your investments to make sure you've got enough cash on hand" - but hey, if you can get an interest-free loan to cover your actual expenses, that's always better.

Hi ST, I'm looking at the vanguard retirement target plan VTIVX. Do we do a DCA plan with them until the set retirement year?

Ah yeah - as BBCW pointed out, US unit trusts are not a great option for non-US investors (I believe for the same tax reasons that make US-listed ETFs a poor choice).

If there was a good, cheap Vanguard target-retirement option available outside the US, I'd be on that so quick it'd make your head spin.

 

[BBCWatcher]

If there was a good, cheap Vanguard target-retirement option available outside the US, I'd be on that so quick it'd make your head spin.

I believe you're a U.S. person (yes?), and thus you (personally) wouldn't.

For U.S. persons Schwab's target date index funds are a little better (lower cost) than Vanguard's at the moment.

 

[smart alex]

Sure, there's a cost. Calculating the cost is a bit tricky, though. I'll run through one example.

Let's suppose your long-term future yield on your investment portfolio is 7% per year and your yield on cash is 1% per year. That's a "yield gap" of 6% or about 0.5% per month. You're considering the cost of delaying 6 months worth of savings flow until the 7th month (I'll interpret "6-8" that way). In the 7th month you'll resume your savings. In that month you'll make your ordinary monthly investment plus the previous 6 months of investments, delayed. And let's suppose your monthly savings flow is $1,000/month, meaning that 7th month investment will be $7,000.

In this scenario you've got one month's worth delayed 6 months, another month delayed 5 months, and so on. Each month of delay should cost about $5 on average, you expect (0.5%/month). So it's $5*(6+5+4+3+2+1) = about $105. Plus the onward compounding of that loss since you never get that $105 back.

That's an average based on the assumptions above. Obviously your investment portfolio could shoot under or over your long-term yield forecast during this period of delayed investments, so the $105 estimate could be higher or lower in reality. But $105 (plus onward compounding) is a reasonable estimate of the cost with these particular parameters.


That sounds great. Obviously $0 beats -$105.

So many for the $105

 

[sbladerz]

Hi guys, seeking some opinion here.
I'm trying to help my parents plan for retirement.
My dad will be 57 yrs this Oct and hoping to retire by 65 (8 years time) while my mom is 55 this June. The aim is to generate more wealth now and live off their accumulated fund after 65.

Just a little background, parents have about 100k available to invest now.
Upon 65, my dad should be able to withdraw a further 450k from his cpf (OA+SA). He has already set aside the full retirement sum of 166k 2 years ago.

How should my parents invest now?
How should the portfolio change upon 65 years old when it's time to retire?

Appreciate your help alot. Thanks!

 

[sumos23]

interactive broker or standchart

Hi there, new to this thread and already benefitting greatly from all the discussion.
I'm intending to start my DCA strategy now - investing into ETF like VUSD.
I currently have a SC Priority banking status (ie no minimum sum required for buying shares / ETFs via their online banking platform.)

I keep reading the thread but wld definitely love for some help to determine whether i shd
a) continue using SC even though the FX sucks or
b) swop over to Interactive Brokers even though there's an inactivity fee of $10 + bearing in mind that i only want to do a $2k transaction per month.
I understand when you hit $100k, the fees are waived completely. it'll take me like 4 years to get there if i put in $2k/mth.... ...

would be so grateful to get your two cents.. thanks!

 

[tangent314]

Hi guys, seeking some opinion here.
I'm trying to help my parents plan for retirement.
My dad will be 57 yrs this Oct and hoping to retire by 65 (8 years time) while my mom is 55 this June. The aim is to generate more wealth now and live off their accumulated fund after 65.

Just a little background, parents have about 100k available to invest now.
Upon 65, my dad should be able to withdraw a further 450k from his cpf (OA+SA). He has already set aside the full retirement sum of 166k 2 years ago.

How should my parents invest now?
How should the portfolio change upon 65 years old when it's time to retire?

Hi, an important detail you left out is how much money your mom have in her CPF OA, SA and MA. Also, how your dad's $450k is split between his OA and SA. I guess we can assume his MA is at BHS. The $100k I assume is in cash.

The SA shielding hack will likely come into play and quite possibly the transferring of CPF from your dad to your mum. To use the SA shielding trick you really want to get your parents setup with a POEMS trading account each as soon as possible - this needs to be ready ideally at least a week before your mum turns 55.

Note that with your dad's RA already at FRS, he does not have to wait until 65 to withdraw his OA/SA. He can do it anytime. Don't do that immediately of course, you'll want to get the full plan ready first.

 

[tangent314]

Hi there, new to this thread and already benefitting greatly from all the discussion.
I'm intending to start my DCA strategy now - investing into ETF like VUSD.
I currently have a SC Priority banking status (ie no minimum sum required for buying shares / ETFs via their online banking platform.)

I keep reading the thread but wld definitely love for some help to determine whether i shd
a) continue using SC even though the FX sucks or
b) swop over to Interactive Brokers even though there's an inactivity fee of $10 + bearing in mind that i only want to do a $2k transaction per month.
I understand when you hit $100k, the fees are waived completely. it'll take me like 4 years to get there if i put in $2k/mth.... ...

would be so grateful to get your two cents.. thanks!

Generally we would recommend an accumulating fund instead of a distributing fund during your accumulating years. CSSPX is the recommended S&P500 fund that is accumulating.

Also we generally recommend a global ETF like IWDA instead of just focusing on S&P500.

Yes, you are hitting the US$100k target well before the 7-8 years point, so you should use IBKR. Note that US$10/month is a minimum monthly commission, not an inactivity fee.

 

[Shiny Things]

Hi there, new to this thread and already benefitting greatly from all the discussion.

Awesome, I'm glad we can help!

I keep reading the thread but wld definitely love for some help to determine whether i shd
a) continue using SC even though the FX sucks or
b) swop over to Interactive Brokers even though there's an inactivity fee of $10 + bearing in mind that i only want to do a $2k transaction per month.
I understand when you hit $100k, the fees are waived completely. it'll take me like 4 years to get there if i put in $2k/mth.... ...
would be so grateful to get your two cents.. thanks!

Yeah, I'd swap. At $2k a month, moving your execution to Interactive would save you ten bucks a month just on the FX.

I believe you're a U.S. person (yes?), and thus you (personally) wouldn't.

I mean, I wouldn't personally be able to because I don't enjoy getting reamed out by the IRS, but for Singaporean investors, heck yes a cheap target-date fund would be awesome.

 

[smart alex]

Generally we would recommend an accumulating fund instead of a distributing fund during your accumulating years. CSSPX is the recommended S&P500 fund that is accumulating.

Also we generally recommend a global ETF like IWDA instead of just focusing on S&P500.

Yes, you are hitting the US$100k target well before the 7-8 years point, so you should use IBKR. Note that US$10/month is a minimum monthly commission, not an inactivity fee.

wat is the disadvantage of S&P500 ETF? I seldom u guys discuss S&P500 here, rather more focus on IWDA

 

[BBCWatcher]

Hi guys, seeking some opinion here.
I'm trying to help my parents plan for retirement.
My dad will be 57 yrs this Oct and hoping to retire by 65 (8 years time) while my mom is 55 this June. The aim is to generate more wealth now and live off their accumulated fund after 65....

How about they nail down a pair of ERS-level CPF LIFE retirement income streams? At ages 56 and 54 it’d be hard to beat that offer. Your father can do that today — just top up his Retirement Account, preferably with cash, actually.

We get variations on this question a lot from 50-somethings — the “Oh dear, retirement is coming! What do I do?” question. And maxing out (or at least boosting) CPF really is the best deal going in that situation. That 4% interest spinning into lifetime retirement income really is sweet.

Assuming they do that, they’ll have a lot of CPF (bond-like) assets yielding rather well, and that’s great. However, it’s OK for near retirees and retirees to have about 30% of their wealth invested in stocks. Since they’re now at 0% (I assume), that’s what I’d do next, after maxing out CPF LIFE. And I wouldn’t use CPF SA+OA to do it, since that’s too sweet. (The SA part is earning 4%.) Instead I’d just use a portion of whatever monthly savings they can manage and invest it in a low cost stock index fund, such as IWDA via Standard Chartered or Interactive Brokers depending on the amount. And perhaps ES3 via Standard Chartered, although in this case with so much CPF banked I don’t think that’s too important. (IWDA is OK if it’s up to about 15% of their household wealth. I wouldn’t go much past that, since it should only be about half of that 30% I mentioned, in retirement.) VWRD is an alternative to IWDA and a rather good one in this case since it kicks off dividends, and fairly soon that’ll be useful (dividends) since that’ll supplement their income.

I suppose they could use the CPF Investment Scheme (OA) for ES3 or an equivalent STI fund, the lowest cost one they can find. If they’re going to do that I’d do it starting now, accumulating those local stocks over the next 6 to 12 months, since they’ll want to have as long a run as possible for those stocks. “Probably” this’ll end up yielding about 3.5%/year over the next couple decades, but that’s not guaranteed. I think it’s a reasonable bet, though, in moderation.

How does their insurance look? Do they have an Integrated Shield plan designed for public hospital B1 ward coverage, for example? They own their home, and there’s plenty of leasehold remaining?

They’re in pretty good shape, it appears. Just a little tweaking, and they should be in very good shape.

 

[Shiny Things]

wat is the disadvantage of S&P500 ETF? I seldom u guys discuss S&P500 here, rather more focus on IWDA

The disadvantage is that you're missing out on literally half of the world's stock market capitalisation, and some great diversification opportunities. You don't want to be all-in on the US stock market.