*Official* Shiny Things club - Part 2

[Wonderer haha]

https://www.marketwatch.com/story/t...will-shake-your-views-on-investing-2019-09-27

Whoa. Any thoughts ?

 

[flowerpalms]

Stick to the 3 fund portfolio plan

No forex trading
No individual stocks
No reits

So I've followed ur RBR book - bought nikko, iwda, and a bond. Will keep buying them and rebalance the portfolio religiously too. Thank you very much for the great guidance and advice.

I've completed the passive investing sector of the portfolio. Now... what's next? What'd u recommend?

Posted from PCWX using kkj

 

[flowerpalms]

Firstly, please make sure that your 2k per month is also to 1 fund per month and don't split the amount between the 3 funds. So which means every month you pay for only 1 broker fee instead of 3.

Secondly, since you are investing 1k or more per month, your options are:
SCB for ES3 and MBH
IB for IWDA

However if your investment is below 1k, it will be:
POSB RSP for G3B and A35
SCB for IWDA

It doesn't matter your account is tied to POSB savings. I have a debit account with POSB too. But i opened a trading and US/SG settlement accounts, e saver account with SCB and transferred my money from POSB to the esaver account.
You then need the esaver account to transfer funds to trading and settlement accounts

Don't restrict yourself from investing in better local etf and bond out of convenience sake

Hello,

I am a complete beginner and am looking to start investing 2k every month into ETFs. I already have all the pre investment fundamentals covered i.e. 6 months emergency fund, debts and insurance. I saw that the recommended choice is between the POSB Invest Saver and the Standard Chartered Brokerage. Would the advise be for me to use SCB due to the lower fees of $10 compared to POSB's $20?

My account however, is tied to POSB and so was wondering if it would be better to simply use POSB for the convenience.

I still need to do more reading and so might have missed out subtle details.

 

[justwakeup]

Firstly, please make sure that your 2k per month is also to 1 fund per month and don't split the amount between the 3 funds. So which means every month you pay for only 1 broker fee instead of 3.

Secondly, since you are investing 1k or more per month, your options are:
SCB for ES3 and MBH
IB for IWDA

However if your investment is below 1k, it will be:
POSB RSP for G3B and A35
SCB for IWDA

It doesn't matter your account is tied to POSB savings. I have a debit account with POSB too. But i opened a trading and US/SG settlement accounts, e saver account with SCB and transferred my money from POSB to the esaver account.
You then need the esaver account to transfer funds to trading and settlement accounts

Don't restrict yourself from investing in better local etf and bond out of convenience sake

If you are using POSB IS and IBKR, it doesn’t matter if you split into 3 funds or lump sum into 1 every month, right?

 

[cytosine12]

Noob Question About SPDR Straits Times Index ETF

Hello Shiny!

I read your book "Rich By Retirement" recently, and you developed a very compelling system that I wanted to use. However, when I tried to sign up for a Maybank account, I realised that they have discontinued their Regular Investment Plan.


1) I plan to invest about $500/month. What would you suggest for people like me who just started working can only invest small sums but want to buy SPDR Straits Times Index ETF? The only other alternative I see is POSB Invest Saver, but it does not allow me to buy that particular ETF.

2) Additionally, I have a student loan debt incurred from CPF (2.5% interest annually) loan, which I plan to pay about $1000 per month. Any opinions on the ratio I am allocating between my loans and my investment?

Thank You and hope to hear from you.

 

[chickenessence]

Sure. I'll keep answering: the currency the ETF is denominated in does not matter. Given that, you should buy the USD listing (IWDA); you should NOT buy the GBP listing [SWDA].

Think about it this way. Imagine you've got IWDA (listed in USD), and SWDA (listed in GBP). They're both completely identical other than the currency they're quoted in; they both own a pile of stocks worth about fifty-eight bucks USD, or forty-seven pounds.

Now, let's say GBP doubles against the USD, and everything else stays equal (stocks don't move, no other currencies move, etc etc etc).

If that happens, the price of IWDA will stay unchanged, but the price of SWDA will halve.

Why? Because it's still the same pile of stocks - but the currency that they're being valued in is much stronger, so the stocks are worth less in terms of the currency they're being valued in.

So the pounds that SWDA is valued in are worth twice as much, but the price of SWDA has halved. Net net, nothing's happened.

Thanks Shiny.
I guess the simple conclusion even if I thought that GBP which is "low" at the moment and foresee GBP will strengthen, I still should not look at ETF that is in GBP currency. So just stick with IWDA which is in USD currency.

The SGD strengthened by 1% between the buy and the sell, so yes, that looks exactly right.

The assumption you seem to be making is that the SGD will only ever strengthen. But FX is a two-way market - it can go up or down.

Since 2012, USDSGD has gone from 1.25 to 1.40-ish. If you’d bought IWDA in 2012, the weakening SGD would have added about 10% to your returns over that time.

Lower return in term of SGD that we will be getting, either SGD strengthen or USD weaken.. So still there is some concern on the return?
But whatever it is, still advisable for us to continue to invest in IWDA (USD)?

---

Something that I have found for sharing:-
https://www.youtube.com/watch?v=K3flJjh00gA

https://www.bogleheads.org/forum/viewtopic.php?t=253158#p4003531
Any thoughts?

 

[AphoticFX]

Is there any difference for IWDA, VWRA and VWRD?

 

[BBCWatcher]

Is there any difference for IWDA, VWRA and VWRD?

Yes. First let's start with the similarities, and there are many. All three are Exchange Traded Funds (ETFs) domiciled in Ireland, traded on the London Stock Exchange, and quoted in U.S. dollars. They are passively managed, designed to track stock indices. Their stewards are two of the world's largest, most reputable fund managers, each with US$Trillions worth of assets under management: Blackrock (IWDA) and Vanguard. These funds are not appropriate for U.S. persons. Fund management expenses are low.

Turning now to the few differences, IWDA invests in most of the stocks listed and traded in the stock markets based in the world's developed economies. It is an accumulating fund (a.k.a. "capitalisation fund"), meaning the fund managers automatically use the net dividends to buy more shares of stocks on behalf of fund shareholders -- and without increasing the number of shares in the fund. LCWD is probably the most viable and most direct competitor/alternative to IWDA.

VWRA and VWRD invest in a somewhat broader variety of stocks: most of the stocks listed and traded in most of the world's stock markets (stock markets in both developed and developing economies). Like IWDA, VWRA reinvests net dividends within the fund (so that each fund shareholder gradually, steadily, automatically owns a claim to more shares of company stocks), while VWRD distributes net dividends to fund shareholders. VWRA/VWRD's expense ratio is a little higher than IWDA's expense ratio.

 

[Investnewbie82]

Yes. First let's start with the similarities, and there are many. All three are Exchange Traded Funds (ETFs) domiciled in Ireland, traded on the London Stock Exchange, and quoted in U.S. dollars. They are passively managed, designed to track stock indices. Their stewards are two of the world's largest, most reputable fund, each with US$Trillions worth of assets under management: Blackrock (IWDA) and Vanguard. These funds are not appropriate for U.S. persons. Fund management expenses are low.

Turning now to the few differences, IWDA invests in most of the stocks listed and traded in the stock markets based in the world's developed economies. It is an accumulating fund (a.k.a. "capitalisation fund"), meaning the fund managers automatically use the net dividends to buy more shares of stocks on behalf of fund shareholders -- and without increasing the number of shares in the fund. LCWD is probably the most viable and most direct competitor/alternative to IWDA.

VWRA and VWRD invest in a somewhat broader variety of stocks: most of the stocks listed and traded in most of the world's stock markets (stock markets in both developed and developing economies). Like IWDA, VWRA reinvests net dividends within the fund (so that each fund shareholder gradually, steadily, automatically owns a claim to more shares of company stocks), while VWRD distributes net dividends to fund shareholders. VWRA/VWRD's expense ratio is a little higher than IWDA's expense ratio.

Is price spread an issue / consideration between IWDA/LCWD/VWRA?

 

[popol]

Enquiry on 'Rich by Retirement' Book

Hi Josh
I have purchased and currently reading your 'Rich by Retirement' book and fully enjoying it. I got some questions. Appreciate your help in providing some insights.


1. Page 13:
The footnote states:
Here are the assumptions I made to get to that number, so you can check them yourself (the savings calculators at BankRate.com are very good). I assumed 35 years of savings, a 7% return on investments (less than what a 60-40 stocks/bonds portfolio has returned over the last 30 years) and 2% inflation.

a) In this example, we are trying to find out how much is the monthly contribution to achieve 1 million at age 65 for 35 years of savings at 7% return on investments. Why is inflation factored in? Inflation will be factored in only if we are looking at required expenses at retirement but here the inputs are only 1 million, 35 years and 5%.

b) I checked the bankrate.com website but couldn't locate the calculator used for the above computation. Could you please direct me to that calculator?


2. You advised to invest in STI ETF (ES3). In the past years, that ETF returns has been pretty low. Will you still advise to invest in it now?


3. For the Bond ETF, you suggested MBH instead of A35. A35 has higher liquidity compared to MBH. Will A35 be a better option?


4. Page 44: You mentioned using MayBank KE to invest in local Stock and Bond ETF. MayBank KE is a regular savings plan where a fixed amount is contributed every month to purchase the ETFs. How will we do rebalancing if we are using MayBank KE since we cannot sell a certain portion and purchasing of the ETFs is done every month?


5. I plan to invest $500 every month into the 3 ETFs. IWDA is currently ~ USD 57.68 (SGD 79.62). If I use Standard Chartered, brokerage fee will be USD10 which is ~3% of total amount paid. That is high. Will it be better that I invest $1,500 every quarter instead?


Thanks!

 

[Shiny Things]

Thanks Shiny.
I guess the simple conclusion even if I thought that GBP which is "low" at the moment and foresee GBP will strengthen, I still should not look at ETF that is in GBP currency. So just stick with IWDA which is in USD currency.

Exactly right.

Hello Shiny!

1) I plan to invest about $500/month. What would you suggest for people like me who just started working can only invest small sums but want to buy SPDR Straits Times Index ETF? The only other alternative I see is POSB Invest Saver, but it does not allow me to buy that particular ETF.

See below. Unfortunately Maybank cancelled the MIP a few weeks after I published the 2019 edition, which is a bit annoying... I like to think they got crushed under the weight of new signups.

2) Additionally, I have a student loan debt incurred from CPF (2.5% interest annually) loan, which I plan to pay about $1000 per month. Any opinions on the ratio I am allocating between my loans and my investment?

I'd pay that one down as slowly as you can. 2.5% is a very low interest rate; you want to take advantage of it.

If you are using POSB IS and IBKR, it doesn’t matter if you split into 3 funds or lump sum into 1 every month, right?

You wouldn't use those two in combination, though. IBKR's $10/month minimum monthly brokerage makes it too expensive for small investors; and POSB IS's 1% fee (with no minimum) makes it too expensive for large investors.

Small investors (under $1k/month SGD, and under $100k SGD total account value): use POSB IS for local stocks and Stanchart for global stocks.

Large investors (over $1k/month SGD, and/or over $100k SGD total account value): use Stanchart for local stocks and IBKR for global stocks.

I am a complete beginner and am looking to start investing 2k every month into ETFs. I already have all the pre investment fundamentals covered i.e. 6 months emergency fund, debts and insurance. I saw that the recommended choice is between the POSB Invest Saver and the Standard Chartered Brokerage. Would the advise be for me to use SCB due to the lower fees of $10 compared to POSB's $20?

If you're investing $2k a month (or any amount over $1k), the recommended choice is "Stanchart for your local stocks (ES3 and MBH), Interactive Brokers for your global stocks (IWDA)".

https://www.marketwatch.com/story/t...will-shake-your-views-on-investing-2019-09-27

Whoa. Any thoughts ?

The lede of the article is that this guy has discovered that US equity returns back in the 1800s were lower than people thought. That has absolutely zero effect on how you should invest today. You can ignore this article.

a) In this example, we are trying to find out how much is the monthly contribution to achieve 1 million at age 65 for 35 years of savings at 7% return on investments. Why is inflation factored in? Inflation will be factored in only if we are looking at required expenses at retirement but here the inputs are only 1 million, 35 years and 5%.

b) I checked the bankrate.com website but couldn't locate the calculator used for the above computation. Could you please direct me to that calculator?

1a) The inflation-adjusted return on investments is just the "nominal" return on investments minus the inflation rate. 7 - 2 = 5.

2) This one'll work.

2. You advised to invest in STI ETF (ES3). In the past years, that ETF returns has been pretty low. Will you still advise to invest in it now?

Yes, for two reasons:

1) You're going to retire in Singapore, so you want exposure to the Singaporean economy and Singaporean cost of living. The best way to do that is Singaporean stocks.
2) Stock markets (not individual stocks, note!) tend to be cyclical. Markets that underperform eventually outperform. The US stock market is trendy right now, but that won't last forever; emerging markets will have their day.

3. For the Bond ETF, you suggested MBH instead of A35. A35 has higher liquidity compared to MBH. Will A35 be a better option?

No. MBH would generally have higher returns over the long term, because it has a higher yield for relatively little extra risk.

4. Page 44: You mentioned using MayBank KE to invest in local Stock and Bond ETF. MayBank KE is a regular savings plan where a fixed amount is contributed every month to purchase the ETFs. How will we do rebalancing if we are using MayBank KE since we cannot sell a certain portion and purchasing of the ETFs is done every month?

Delete "MBKE" for "POSB IS", but otherwise - you basically have to change your POSB IS allocations in the month where you rebalance, then change it back.

5. I plan to invest $500 every month into the 3 ETFs. IWDA is currently ~ USD 57.68 (SGD 79.62). If I use Standard Chartered, brokerage fee will be USD10 which is ~3% of total amount paid. That is high. Will it be better that I invest $1,500 every quarter instead?

You should generally be buying one counter every month - whichever one you're short of compared to your target allocation. So it'll go something like:

Month 1: ES3 or G3B
Month 2: IWDA
Month 3: ES3 or G3B
Month 4: IWDA
Month 5: A35 or MBH.

If you do that for five months, you'll be at an 80/20 allocation. (If your target allocation is lower - say, 60/40 because you're 50 years old - you'd buy A35/MBH in more months, and ES3/G3B/IWDA in fewer months.)

 

[BBCWatcher]

FYI, Standard Chartered is not currently the low cost leader for local stocks.

 

[CestLaVies]

hey shiny, a friend introduced this book to me last week, love the simplicity. Learnt a lot from this book, picked up a few more books about investment this month but nothing came close to this. A lot of them were written for non-sg so a lot of advice are irrelevant. Thanks for writing this book!

I know we shouldn't time the market but my income isn't stable so I can't contribute the same amount every month. Im a self-employed, so there will be months I won't be making any income with some good months in between.

Im 33 this year, and I have a lump sum to invest after setting aside some cash for emergency. Should I split the sum into 4 parts and buy 77% stock and 23% bonds every month for 4 months? One of the books I read said that it's almost always better to invest immediately whenever I have the $ instead of timing the market. Hard to check that fact, how should I invest this lump sum smartly?

 

[BBCWatcher]

I know we shouldn't time the market but my income isn't stable so I can't contribute the same amount every month. Im a self-employed, so there will be months I won't be making any income with some good months in between.

I'm going to jump in with a suggestion or two.

Many people have variable income for one reason or another. That's perfectly common. Yet they somehow usually manage to pay their electric bills, mortgages, entertainment subscriptions (e.g. Netflix), Internet service bills, mobile phone bills, and so forth. How do they do that? Simple: they have a "buffer" account, an ordinary bank account of some kind.

You've accumulated a cool half million that's just sitting in a bank account, evidently. Now that's a buffer! Your idea for reducing that buffer looks good to me, but going forward one would think you should be able to pick some monthly savings number and "pay yourself" every month. Your buffer may wobble up and down due to your variable income, sure, but there should be some monthly savings flow amount that is sustainable on a long-term (or at least medium-term) basis, one would think. So start saving and prudently investing that number. Then, if your buffer ever gets too big again, do a couple things: (1) consider increasing your monthly savings flow amount to a new, higher plateau, and (2) make a few extraordinary additional investments to restore your buffer to a normal level.

 

[oopsies]

FYI, Standard Chartered is not currently the low cost leader for local stocks.

Hi which is the best? I had seen in the priority banking thread that Stanchart has the best brokerage rates?

 

[zoneguard]

Hi which is the best? I had seen in the priority banking thread that Stanchart has the best brokerage rates?

Saxo and fsmone both 0.08%, minimum $10 commission.

Prepaid accounts:
Maybank Kim Eng, POEMS, UOB KH all 0.12%, min $10.

 

[KiroFai]

Hi, I have been lurking in this thread for a long time. thanks to everyone's sharing I started my first step into global etf (IWDA). I just have a simple question regarding rebalancing.

1) So I intend to take CPF as my bond component, but currently it is out of proportion about 65% of my portfolio (probably cuz I contributed more to my CPF before I started investing), I think I should just ignore it and continue to regularly inject capital to my stocks component, is it ok? Meaning my cash portfolio is basically 100% stocks.

2) so I intended to go for 50-50 between domestic n global etf (50 sti, 45 IWDA, 5 EIMI (cuz emerging is supposed to be about 10% of global). If in future the ratio is no longer 50-45-5, will it still work if I rebalance normally by injecting funds to the losers? Or is it better to sell the winners (to lock in profit?)

I'm just curious because usually rebalancing is for stocks n bonds which r correlated. But since I can't really adjust my CPF, I'm not sure how will this play out..

Thanks for taking the time to read my query!

 

[Shiny Things]

You've accumulated a cool half million that's just sitting in a bank account, evidently. Now that's a buffer! Your idea for reducing that buffer looks good to me, but going forward one would think you should be able to pick some monthly savings number and "pay yourself" every month. Your buffer may wobble up and down due to your variable income, sure, but there should be some monthly savings flow amount that is sustainable on a long-term (or at least medium-term) basis, one would think. So start saving and prudently investing that number. Then, if your buffer ever gets too big again, do a couple things: (1) consider increasing your monthly savings flow amount to a new, higher plateau, and (2) make a few extraordinary additional investments to restore your buffer to a normal level.

Honestly this is pretty good advice; I can't really top it. Your strategy for reducing your half-a-million lump of cash is very good; and then once you've got that fully invested, you can basically invest as the money comes in, after you keep aside money to top up your emergency fund and pay for your day-to-day expenses.

You might need a bigger cash buffer than most people because your income's so lumpy, but other than that, your strategy will work fine.

 

[Shiny Things]

1) So I intend to take CPF as my bond component, but currently it is out of proportion about 65% of my portfolio (probably cuz I contributed more to my CPF before I started investing), I think I should just ignore it and continue to regularly inject capital to my stocks component, is it ok? Meaning my cash portfolio is basically 100% stocks.

Yep, that's fine.

2) so I intended to go for 50-50 between domestic n global etf (50 sti, 45 IWDA, 5 EIMI (cuz emerging is supposed to be about 10% of global). If in future the ratio is no longer 50-45-5, will it still work if I rebalance normally by injecting funds to the losers? Or is it better to sell the winners (to lock in profit?)

Rebalancing always involves selling the winners and buying the losers; that's totally normal.

In your case, I wouldn't bother with an allocation to EIMI until your portfolio gets bigger, otherwise you're just going to be running up transaction costs to buy it and it won't make any appreciable difference to your portfolio returns. (There's no rule that says what kind of allocation to emerging markets you have to have, incidentally. Smaller investors can get by without any explicit allocation to EMs.)

 

[applecrisp]

Hi, wanted to hear if u guys have any views on passive indexing bubble. Seems like a few ppl are talking abt it most notably michael burry.