I see IB now has a "lite" plan with no account maintenance fee?
Not available to Singaporean investors yet, unfortunately.
Hi Josh
Thanks for your responses to my earlier questions. I got some additional questions.
1. In your 'Rich by Retirement' book, page 91. FU money is computed as Monthly Expenses divided by 3%. In the example, Monthly Expenses is $3,200. That is the required amount today. Shouldn't we adjust that amount for inflation when we retire in X years,
1) Yearly expenses / 3%, not monthly;
2) No, because "f*ck-you money" is the amount of money you need to be able to say "f*ck you" to your boss
right now. That does make it a bit of a moving target.
2. In your book, your suggested strategy is to invest in IWDA, Local Stock ETF and Local Bond ETF. Why don't you also consider an Emerging Market ETF?
Mostly because an emerging-market ETF isn't going to make up a big percentage of your portfolio (it's like 10% of your 'stocks' allocation at most, so call it 5-8% of most people's total portfolio?). That's not a lot; and in most cases, it won't make a huge difference to your total returns - but it
will significantly increase the amount of commissions you pay.
3. I understand that IWDA dividends are reinvested. How does it actually work internally?
Instead of the dividends being passed on by the fund to its shareholders, the fund manager uses the dividends to buy more of the stocks that the fund owns. That's pretty much it.
4. I buy IWDA on the London Stock Exchange. Which services provides live prices?
Google Finance is fine*
5. Ascott Residence Trust is combining with Ascendas Hospitality Trust. What is the implication for a holder of Ascott Residence Trust?
Thanks!
No idea tbqh; I hardly ever look at single-stocks, I've realized I'm just not that good at them.
Industrial and economic data have been weak since beginning of this year but global indices are holding well. It's hard to time the market when the real and financial markets are not moving in line. Just stick with the plan and carry on
Yeah, honestly, this is pretty good advice. The stock market and the economy are not the same thing.
How many % of your portfolio are kept in Cash as warchest, if you don't mind me asking?
None.
I have a lower salary, have all my basics covered such as Emergency Funds, no debts etc.
So whenever i saved up an extra 4-5K, i would look for stocks to buy in and hold, so technically I don't really have extra money to whack during Financial Crisis.
Am i doing things wrong?
Nope, you're doing it fine. There are two things to remember:
1) When you have a balanced stock-and-bond portfolio, your portfolio itself is your war-chest. If bonds are weak, then you'll sell stocks to buy bonds as part of your regular rebalancing; if stocks are weak, then you'll sell bonds to buy stocks. Either way, you end up buying the thing that's cheap and selling the thing that's expensive.
2) The 2008 financial crisis was a once-in-a-lifetime event. If you're waiting for a similar magnitude of crisis before you start buying, you're going to be waiting a long time.
A question to ask, ST.
I agree with your concepts of buy and hold, with the indexes that you have recommended.
But let's say we have a financial crisis right now, should we still be holding on to our stocks tight?
Yes - and if anything, you should be buying more. Anyone who bought stocks during the '08 financial crisis has done pretty well for themselves after ten years of capital growth and dividends.
I pull out this anecdote a lot, but I still have the trade ticket for a clip of SPY that I bought in March 2009 at $72 a share.
When something is on super cheap sale, surely you should be buying not selling?
Last GFC I bought lots of stocks cheap and since then I have been collecting dividends from those stocks every year. This is the power of passive income!
This!
Hi ST and BBC,
Been reading up about ETFs like AOM, AOR from ishares. It seems they provide a diversified allocation in a single fund. Their expense ratios looks reasonable. Are they suitable for Singaporeans? Are there any hidden fees? Or do we have anything similar available?
1) No, unfortunately. There's a lot of funds out there that are fine for US taxpayers, but not suitable for non-US taxpayers (because of the unfavorable dividend tax treatment on US shares).
2) Nope.
3) Nope. There are robo-advisors in Singapore that do similar things, but there aren't any that I'd be ready to recommend yet. All of them have some sort of failings.
Am intending the invest both in SRS and in Cash.
Would there be a difference in the broker I choose? Which would you advise and why?
In terms of what to invest in, I am thinking more of overseas ETFs. Likely a Global Irish domiciled ETF. Since this is sold in the London Stock Exchange, how would this impact my choice of broker? Which broker would be cheapest for UK listed ETFs? Do they deal with both Cash and SRS?
So we go over this pretty often. For your cash account, the rule is:
* If you have $1000 a month or more to invest, or you have an account value over $100k: use Stanchart for local stocks, and Interactive Brokers for global stocks (your overseas ETFs);
* If you have less than $1000 a month to invest and your account value is less than $100k: use POSB IS for your local stocks, and Stanchart for your global stocks.
For the SRS account, they're all equally meh. DBSV is fine.
If I can invest $1000 a month for a year. What is the most hassle free long term investment I can make?
I was thinking of 80% POSB Invest Saver STI ETF and 20% REITs. Keen to hear any comments.
You're going to be investing for a lot longer than a year.
You're very well suited for a simple three-fund portfolio like the one we advocate here. It gives you some stock exposure; some global exposure so you're not 100% concentrated in Singapore; and some bond exposure, so you've got some protection if and when stock markets dip. It'll be better than what you suggested - more stable, more diversified, and almost as easy to implement.
