*Official* Shiny Things club - Part 2

[FinalDestiny...]

Less than 1k you should be using SCB instead of IB

Will it be worth the transfer fees of my current 7k worth of IWDA to SCB?

Or should I just start afresh with SCB and leave my existing IWDA in IB. However, the inactivity fee will still kick in..

 

[flowerpalms]

You leave your 7k in IWDA and stop DCA also no point

Will it be worth the transfer fees of my current 7k worth of IWDA to SCB?

Or should I just start afresh with SCB and leave my existing IWDA in IB. However, the inactivity fee will still kick in..

 

[BBCWatcher]

Less than 1k you should be using SCB instead of IB

No, if you're transacting anything monthly (or more often) then Interactive Brokers will be lower cost.

 

[3dfxplayer]

SWRD and LCWD have the same TER (0.12%) and AUM ($300M). I'll include it in the comparison below.

Saving
If you buy SWRD/LCWD, you will save 0.2% - 0.12% = 0.08% annually, which amounts to:
- 1.61% over 20 years, or
- 3.25% over 40 years

There is some saving, but not as big as saving say 0.5% annually (10.48% over 20y, 22.08% over 40y).

Cost
SWRD/LCWD's larger spread over IWDA's implies a hidden cost. Below is a snapshot of current bid/ask prices:
- IWDA: 57.050 / 57.080 (spread = 0.0526%)
- SWRD: 20.720 / 20.765 (spread = 0.2172%)
- LCWD: 10.444 / 10.452 (spread = 0.0766%)

SWRD's spread premium is 0.2172% - 0.0526% = 0.1646%
LCWD's spread premium is 0.0766% - 0.0526% = 0.0240%

The cost is one-time (not per annum). Surprisingly, LCWD has a much tighter spread than SWRD.


I am not making any recommendation. Just trying to quantify the saving and cost, so that you can make an informed decision. If you buy SWRD/LCWD, you should not mind that they are smaller funds ($300M AUM) compared to IWDA ($18B AUM).

0.08% annually is really nothing unless you are investing at least 5 figures at a time, most people here are investing small amounts of money regularly and paying far more in fees related to fx conversion and commissions. I mean stanchart has a $10 minimum and thats already 1-2% for a regular monthly investment of $500-1k, and we haven't even included the cost of fx conversion.

 

[flowerpalms]

We go by monthly less than 1k or more than 1k here

No, if you're transacting anything monthly (or more often) then Interactive Brokers will be lower cost.

 

[BBCWatcher]

We go by monthly less than 1k or more than 1k here

I don't know who "we" is, but it doesn't include basic math.

 

[Shiny Things]

No, if you're transacting anything monthly (or more often) then Interactive Brokers will be lower cost.

Transacting anything monthly at Interactive Brokers, let's be clear.

For anyone who's getting headspins from this: the reason I say "POSB / SC if you're doing under $1k a month" is that you're not going to be buying IWDA every month - you're going to be buying it every two or three months. And if you're not buying global stocks every month, then Stanchart will work out cheaper than IBKR.

Should I still continue with IBKR or move the whole lot to Standard Chartered as I have around 7k with IBKR. My monthly investment is <$1000 a month.

Uh... so it's not optimal, but you've gone through the process with IBKR, you might as well stick with them.

Hi shiny, do you have any views on using cpf oa to invest? If do, what to incest in?

WHOA that is a Freudian slip right there. Is there something you want to tell us, duckyboi?

Just hypothetically speaking. If you had $100k cash today, with an expectation of 10% returns p.a. but with certain degree of certainty you won't lose any of your capital with an investment horizon of 5 years. How are you going to play it. Or do you think its impossible?

Oooh boy you could go deep on this one. What's "a certain degree of certainty"? It doesn't sound like "certainty". What's the expected loss if it doesn't return all its capital? Is there upside skew as well as downside? Welcome to mathematical finance 101.

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.

Yeah, we saw that article come across the wires when it was released (if you search the thread for "burry" you'll find the discussion). Basically there is no "bubble" in passive investing. Michael Burry's a smart guy but he's gone a bit outside his area of expertise here.

1) Thank you for the insightful reply. So even though I don't have a bond component to rebalance with, it will still work if I just do it with shares even though they might all be related?

Basically, yeah.

2) May I know how much is considered big? I started with only STI for the past 3 years and have about 40k in it right now (at 1k/mth, increasing by 100 annually due to pay increment/dividends). I decided to use ibkr as I'm investing 1.2k into iwda monthly. And since ibkr has minimums of 10/mth it shouldn't rack up transaction fees if I buy iwda+eimi every month right?

Yes, though here's a thing to note - you don't need to buy IWDA/EIMI every month. Just buying one counter per month is fine. (This is what I recommend to every size investor, even though it doesn't make too much difference at IBKR.)

3) And also since my portfolio is so skewed right now, if sti experience a correction, would I miss an opportunity to buy low since if I follow the ratio, I should theoretically just keep buying iwda+eimi until it matches the ratio?

Yeah, technically, but I wouldn't worry too much about this - just work on getting to a balanced portfolio first.

 

[KiroFai]

Thanks for your kind advice shiny!

 

[nyl3v3]

Not at all. This is a good question, though it’s one where the answer will vary a bit depending on who’s asking it. Some people are saving to buy a house, some are saving for retirement (that’s why I called the book “Rich By Retirement”), some for their kids’ education...

The same strategy works pretty well in most cases, and it’s simple to follow.

(As a side note: I wouldn’t say inflation in Singapore is “ever-increasing”. Inflation in Singapore is pretty low, all things considered, and it’s actually been negative pretty recently!)

Thanks Shiny Things! Yeap, BBCW has corrected that part about "ever-increasing" inflation.

Can I ask if we can make use of how these ETFs were doing since inception to extrapolate how much we will get by time we retire? Definitely there are ups and downs, so what else should I look out for?

 

[peipei1]

Hey shiny and bbc, what are your thoughts on usmv etf? It is US markets-only low volatility etf that perform between spy500 and qqq nasdaq in the past 5 years. This is good right since Nasdaq is outlier overbought due to growth tech stocks. Iwda 5 years returns is also 50% less than usmv, so even with withholding tax, usmv is stronger. It's average volume is 4m daily while iwda is only 280k.

During last OctDec crash, usmv loss is only 50% of nasdaq and spy, also less loss compared to iwda.

Usmv feels like a secret etf waiting to get popular. Our robo advisers should consider that instead of spy

 

[hwckhs]

But what puzzles me is that this is essentially a maths question. All you need to calculate this yourself are...

Agreed. Many questions in this thread are maths questions. Instead of trusting others to give the correct answer/recommendation, people should start punching the calculator more often. You can learn quite a bit (at least validate your knowledge) by making your own calculations.

 

[limster]

Transacting anything monthly at Interactive Brokers, let's be clear.

For anyone who's getting headspins from this: the reason I say "POSB / SC if you're doing under $1k a month" is that you're not going to be buying IWDA every month - you're going to be buying it every two or three months. And if you're not buying global stocks every month, then Stanchart will work out cheaper than IBKR.

This is something that some people seem to be missing out.

But what puzzles me is that this is essentially a maths question. All you need to calculate this yourself are:
(1) The commission rates (easily available on the websites) (including the minimums)
(2) The Fx spread (not on their website, have to read HWZ, for ease of reference call it 0% for IBKR and 0.4% for SCB).
(3) Your expected buying pattern

If an investor is unable to calculate which brokerage is cheaper for his/her own buying pattern, then perhaps stick with SCB, because I wouldn't recommend IBKR for someone who is unable to calculate the above (Yes, I managed to do the calculations myself before opening an IBKR account and I don't have a maths degree ).

Someone without a computer science degree could reduce (1)-(3) into an excel spreadsheet where you key in your annual buying pattern and it can tell you whether to pick SCB or IB... (you could do that for the endless tiered or fixed questions too....) If Shiny has a book website, maybe he should put something like that on the site.

 

[hwckhs]

Someone without a computer science degree could reduce (1)-(3) into an excel spreadsheet where you key in your annual buying pattern and it can tell you whether to pick SCB or IB... (you could do that for the endless tiered or fixed questions too....) If Shiny has a book website, maybe he should put something like that on the site.

@cfleee shared his spreadsheet not long ago - at the top of page 441.

https://forums.hardwarezone.com.sg/...*-shiny-things-club-part-2-a-5813566-441.html

 

[Shiny Things]

But what puzzles me is that this is essentially a maths question. All you need to calculate this yourself are:
(1) The commission rates (easily available on the websites) (including the minimums)
(2) The Fx spread (not on their website, have to read HWZ, for ease of reference call it 0% for IBKR and 0.4% for SCB).
(3) Your expected buying pattern

If Shiny has a book website, maybe he should put something like that on the site.

Yeah, basically. I recommend "$1000 a month or $100k" as a rule of thumb, because it's close enough to the right answer.

I think the tricky thing is that a lot of people don't realise that you don't need to buy all three counters every month, even though I thought I made that pretty clear up and down the thread and in the book. If anyone has any suggestions for how to make it clearer...?

. It's average volume is 4m daily while iwda is only 280k.

Usmv feels like a secret etf waiting to get popular.

Hey Peipei. This one is a fair question, it deserves a fair answer: but that answer is NO, not in general and not for Singaporean investors in particular.

Firstly, remember - Singaporean investors generally shouldn't own US equities directly, because of the unfavourable dividend tax treatment.

Also, minimum-vol in general and USMV in particular is absolutely not a "secret ETF waiting to get popular". Minimum-vol strategies are wildly popular and wildly overbought. Minimum-volatility became trendy in late 2016 because people were using it as a place to "hide out" - they saw "minimum volatility" in the name and thought "oh, that sounds good, volatility scares me, I want fewer volatilities, in fact I want a minimum of volatility".

In practice, what happened is—you guessed it—everyone rushed into min-vol strategies after they'd outperformed. USMV is basically flat with the SPX YTD, and underperformed it by nearly five percentage points in the huge rally earlier this year.

Can I ask if we can make use of how these ETFs were doing since inception to extrapolate how much we will get by time we retire? Definitely there are ups and downs, so what else should I look out for?

Mmm... nah, I don't recommend doing this, not least because for bonds, the last thirty years have been the biggest bull market in history. If you project those returns out into the future you'll get some eye-popping returns but you'd also be predicting 10-year bond yields somewhere around -10%, which... not gonna happen.

A good rule of thumb, I think, is to expect 2-3% returns on bonds and 5-7% on stocks.

 

[Geeezz]

Hey Peipei. This one is a fair question, it deserves a fair answer: but that answer is NO, not in general and not for Singaporean investors in particular.

Firstly, remember - Singaporean investors generally shouldn't own US equities directly, because of the unfavourable dividend tax treatment.

Also, minimum-vol in general and USMV in particular is absolutely not a "secret ETF waiting to get popular". Minimum-vol strategies are wildly popular and wildly overbought. Minimum-volatility became trendy in late 2016 because people were using it as a place to "hide out" - they saw "minimum volatility" in the name and thought "oh, that sounds good, volatility scares me, I want fewer volatilities, in fact I want a minimum of volatility".

In practice, what happened is—you guessed it—everyone rushed into min-vol strategies after they'd outperformed. USMV is basically flat with the SPX YTD, and underperformed it by nearly five percentage points in the huge rally earlier this year.

fair to say with minimal volatility we are missing put on the upside as well? in the long run the expected returns will be lesser? i read that they include stocks in the index with the least volatility.

 

[Shiny Things]

fair to say with minimal volatility we are missing put on the upside as well? in the long run the expected returns will be lesser? i read that they include stocks in the index with the least volatility.

You'd expect that the returns would be lower, yeah. Recently the returns to min-vol stocks (in the US at least) have actually been higher, just because of the weight of money chasing minimum-volatility strategies, but that's not a sustainable trend: it won't last forever.

 

[duckyboi]

Transacting anything monthly at Interactive Brokers

WHOA that is a Freudian slip right there. Is there something you want to tell us duckyboi?

Heh obviously, i meant invest.

Whats your view on cpf investing, and what do we invest it in?

 

[proton91]

How much should I be investing monthly into IB to justify the monthly fees?

Is IB still a good choice if i prefer to accumulate my savings and invest every 3 months?

 

[Shiny Things]

Firstly, does anyone else remember the "yield curve inverting!" freakout?

Looks like that was the biggest head-fake of the year. The US yield curve has now fully un-inverted, and anyone who sold their US stocks when the 2s-10s inverted back in August has lost about 5% if they buy back right now.

Moral of the story: don't let yourself get freaked out by headlines.

How much should I be investing monthly into IB to justify the monthly fees?

Is IB still a good choice if i prefer to accumulate my savings and invest every 3 months?

If you're investing $1k a month total, then IB for global stocks and Stanchart for local stocks is the right choice.

You should be accumulating and investing every 2-3 months anyway, so that you're not running up high fixed transaction costs on your monthly purchases.

 

[Shiny Things]

Heh obviously, i meant invest.

Whats your view on cpf investing, and what do we invest it in?

Leaving your CPF mostly in cash is a pretty good option. CPF cash pays interest rates that are well above market; it's literally free money.