Official Shiny Things thread—Part III

[cassowary18]

With bank interest rates crashing, is it time to consider putting your emergency funds in MMF like Stashaway Simple?

 

[megdang]

Sorry, yes meant if the 80% stocks 20% bonds for 30y old still hold true now? Don't have a portfolio, so have nothing to rebalance currently Thanks for the advice.

You said you've already read the book right? So why would you ask this question again? It says clearly in the book that
Stock portion = 110 - age

 

[thisislife]

Sorry, yes meant if the 80% stocks 20% bonds for 30y old still hold true now? Don't have a portfolio, so have nothing to rebalance currently Thanks for the advice.

i 100% in stocks...so...not true for me

 

[polar27]

When the book was written, bonds were probably performing better than the current bond projections. With the current revisions to the bond yields, wanted to seek feedback on getting bond products now as per the ratio suggested when I don't have any portfolio to begin with.

You said you've already read the book right? So why would you ask this question again? It says clearly in the book that
Stock portion = 110 - age

 

[BBCWatcher]

With bank interest rates crashing, is it time to consider putting your emergency funds in MMF like Stashaway Simple?

It had to read what you wrote several times because you got it exactly backwards. Crashing interest rates are a reason to pull money out of Stashaway Simple, not to put it in. Stashaway Simple invests in funds that closely track Singapore dollar market interest rates for highly liquid savings. So if you're upset with low interest rates on savings, you'll also be upset with Stashaway Simple's yield. (Maybe even more upset because there's a fund management fee in the mix.)

 

[megdang]

When the book was written, bonds were probably performing better than the current bond projections. With the current revisions to the bond yields, wanted to seek feedback on getting bond products now as per the ratio suggested when I don't have any portfolio to begin with.

The book aims to guide people to save and invest for RETIREMENT which for most of us will be in next 20-30 years.

Will you let an event happen in 1 year to affect your 30-year plan?

No right? Then no change, follow the rule.

 

[razoreigns]

Read Shiny things book, which is nicely written BTW.... Wondering if the allocation to bonds 80% stocks 20% bonds for a beginner, 30 y old investor still holds true given bond yields have dwindled currently? Might it be better to go for complete stocks now and rebalance portfolio with addition of bonds when bond yields pick up? Appreciate any feedback. Thanks!

Investing is not all about performance. It's certainly not striving for returns at any cost. The aim instead is to obtain the best risk adjusted return, according to your risk appetite and current life stage.

IMO, once you start on your investment journey, bonds have a place in your portfolio. It doesn't matter how bonds are doing now - it is meant to serve as a long term counter weight to equities and reduce overall portfolio volatility. 110-age is a portfolio allocation suggestion. Adjust it according to your own risk tolerance. If you can stomach the volatility, you can allocate 100% to equities. I know someone in his late forties who has been doing that monthly since he was 20+.

 

[crystalnox]

Investing is not all about performance. It's certainly not striving for returns at any cost. The aim instead is to obtain the best risk adjusted return, according to your risk appetite and current life stage.

IMO, once you start on your investment journey, bonds have a place in your portfolio. It doesn't matter how bonds are doing now - it is meant to serve as a long term counter weight to equities and reduce overall portfolio volatility. 110-age is a portfolio allocation suggestion. Adjust it according to your own risk tolerance. If you can stomach the volatility, you can allocate 100% to equities. I know someone in his late forties who has been doing that monthly since he was 20+.

Was he indexing or just bought into a portfolio of blue chips manually?

 

[razoreigns]

Was he indexing or just bought into a portfolio of blue chips manually?

Indexing.... like most, not full time investors or traders.

 

[CarlJung]

After reading a few books (and keep reading) I am almost convinced to put my saving in a defensive portfolio of

60% VWRA (via Saxo)
40% bond (via FSM)

but on the bond part I am very confused
a. should I go for a single ETF like MBH?
b. split 50-50 between MBH an A35? If so, why?
c. are those ETF overpriced now that everybody is running for shelter buying bonds?

any idea / suggestion are very much welcome
also in regard of the equity part.
I am on my 40's.

 

[zoneguard]

60% VWRA (via Saxo)
40% bond (via FSM)

but on the bond part I am very confused
a. should I go for a single ETF like MBH?
b. split 50-50 between MBH an A35? If so, why?
c. are those ETF overpriced now that everybody is running for shelter buying bonds?

Saxo charges 0.12% custody fee for ETFs so you'll find nobody recommends them to buy ETFs here. You either go with SCB or IB depending on your trade sizes. cflee has posted a calculator on the brokerage charges , do a search for it.

Shiny recommends MBH , I didn't follow his advice though due to my personal risk profile and went with A35 instead. You have to decide yourself.

 

[CarlJung]

Saxo charges 0.12% custody fee for ETFs so you'll find nobody recommends them to buy ETFs here. You either go with SCB or IB depending on your trade sizes.

Under $100k Saxo was cheaper than IB, I didn't know about SCB, I'll check it out. Thanks.

 

[ftpofmpo]

us stock market has returned to october levels last year, things are irrational, should we offload our stocks?

 

[CarlJung]

Indeed, the market seems too optimistic. Personally I think I will $ average in a span of 12 months.

 

[cassowary18]

It had to read what you wrote several times because you got it exactly backwards. Crashing interest rates are a reason to pull money out of Stashaway Simple, not to put it in. Stashaway Simple invests in funds that closely track Singapore dollar market interest rates for highly liquid savings. So if you're upset with low interest rates on savings, you'll also be upset with Stashaway Simple's yield. (Maybe even more upset because there's a fund management fee in the mix.)

Why of course... Makes a lot of sense.

 

[polar27]

Hi Shiny and friends,

Know you mentioned not to buy whole life policies and not to get any policies with critical care illness riders etc.

I have none of such policies at the moment, except for the basic hospitalisation plan that was recommended.

Can I seek some guidance though:

I am in my early 30 yrs, and have been looking at a whole life policy covering me for a total of 200k for life and critical illness (any stage). Just to clarify further, the insurance policy will pay off a total of 200k for any stage of CI and/or on passing on, and the coverage is for whole life and I will be buying term life for additional coverage during working years.

And the total outlay from me is about 50k over the ten years, with me paying about $400 per month (rounded off for ease of calculation).

Sorry if I overloooked something, but why can't a whole life policy (with the added benefits of any stage CI riders) providing returns be viewed as a sort of bond? I know it is not as liquid as bonds, but correct me if I can think of it as a "investment" that pays 200k for a 50k investment?

In my simplistic mindset, if I put away 50k by 2030, and even if this amount gets compounded by a nominal 2-3% interest per year, a whole life policy (with CI illness coverage of any stage) seems comparable to a bond and helps with a diversified portfolio?

The insurance will not replace normal investments, and therefore, I am exploring to put away 1.6k a month to investments and 400 a month to insurance "investment"?

Thanks for the suggestions guys

 

[BBCWatcher]

I have none of such policies at the moment, except for the basic hospitalisation plan that was recommended.

What about Disability Income Insurance (DII)?

"Was recommended" is doing a lot of heavy lifting there. Who recommended the hospitalization plan you have?

I am in my early 30 yrs.... I will be buying term life for additional coverage during working years.

Do you have any dependents? You don't need life insurance unless you have at least one genuine dependent and cannot self-insure. A dependent is someone who would be in serious financial distress and at risk of falling below an "acceptable" lifestyle if you were to die tomorrow (or too soon) because that person depends on your income.

Something is wrong in your description of the policy you're highlighting. I'll take an educated guess: what's the guaranteed death benefit?

 

[swan02]

Though I’m a low risk taker. Oddly, I get the most peace from just 100 percent into stocks while dca and easier to stick with it. Simply avoid watching the markets and just as simply and quickly buy that stock every month with almost a blank mind.

No rebalancing required, no need to think. Thinking about and watching the markets was bad for mental health and your portfolio.

I did way better back then mentally than I am now with 80 percent in fixed income.

Investing is not all about performance. It's certainly not striving for returns at any cost. The aim instead is to obtain the best risk adjusted return, according to your risk appetite and current life stage.

IMO, once you start on your investment journey, bonds have a place in your portfolio. It doesn't matter how bonds are doing now - it is meant to serve as a long term counter weight to equities and reduce overall portfolio volatility. 110-age is a portfolio allocation suggestion. Adjust it according to your own risk tolerance. If you can stomach the volatility, you can allocate 100% to equities. I know someone in his late forties who has been doing that monthly since he was 20+.

 

[polar27]

I don't have a DII.

Yes, have a 2yr old kiddo, parents and spouse to look after, starting an investment portfolio now, as past savings went for house down payment.


The hospitalisation policy is the basic hospital policy to cover 95% of hosp bill, and is funded largely from medisave.

The guaranteed death benefit (or any stage CI affliction) is 200k till 86yrs. Beyond that, the guaranteed coverage for life drops to 100k but will also include the non guaranteed bonus from policy (which may make the total payout more than 200k then if the illustrated non guaranteed par funds perform well). The critical illness coverage will cease after 86y, and hey will be grateful if that happens!

Cheers

What about Disability Income Insurance (DII)?

"Was recommended" is doing a lot of heavy lifting there. Who recommended the hospitalization plan you have?


Do you have any dependents? You don't need life insurance unless you have at least one genuine dependent and cannot self-insure. A dependent is someone who would be in serious financial distress and at risk of falling below an "acceptable" lifestyle if you were to die tomorrow (or too soon) because that person depends on your income.

Something is wrong in your description of the policy you're highlighting. I'll take an educated guess: what's the guaranteed death benefit?

 

[limster]

In my simplistic mindset, if I put away 50k by 2030, and even if this amount gets compounded by a nominal 2-3% interest per year, a whole life policy (with CI illness coverage of any stage) seems comparable to a bond and helps with a diversified portfolio?

I didn't start off by buying shares either. my first 'investment' was an NTUC Living Policy that has been steadily returning 3%+ CAGR. It is better than a bond because every year, the surrender value increases more than the annual premium. Furthermore, instead of surrendering it, there are people who will buy it from me for more than the surrender value.

Even though I have a small CI rider ($50k), that is my regret - I do not think that you should get a CI rider for Whole Life because you are locked in to that plan and CI coverage is costly (and profitable for insurer and agent who will try to upsell you all sorts of rubbish). If I didn't have the CI rider, my insurance plan CAGR will be several basis points higher.

You should look at whole life + Term with CI. The reason is that its easier to switch your Term with CI plan if a different insurer announces a more competitive plan (eg: lower cost, wider CI coverage).

After getting the whole life policy, I had peace of mind and instead of wasting my office hours surfing HWZ to learn how to get rich and watching the stock market and CNBC, I could focus on my job and increase my salary. Now that my salary can't go much further, I can relax and surf the internet