Official Shiny Things thread—Part III

[beautyseek]

Hi everyone

I have a few questions and would appreciate it if u will enlighten me. Sorry if these are elementary - i am trying to learn.

1. It seems hldgs in VWRD or IWDA through IB will attract US estate duty. How does one address this issue? I mean, if one were to pass on unexpectedly, how do u transfer your ETFs parked with IB to next of kin and how much gets eroded by this estate duty? Just thinking if process is a very cumbersome one which may leave assets "frozen" or in limbo for a while.

2. The other difficulty i find is forex. As the hldgs are in USD, do you track the real S$ return after adjusting forex? It seems price movements can be very much negated by USD SGD movements. Does one try to mitigate by also timing and trading USD on the side and using these USD to buy the ETFs?

3. As the VWRD/IWDA ETFs do not pay dividend, how do you then fit these into a portfolio of a person looking at say retirement in 10yrs? I mean, there will be no income streams from these hldgs so that means, one is looking at capital appreciation and divesting partially to fund retirement in future?

Thanks.

 

[cassowary18]

Hi everyone

I have a few questions and would appreciate it if u will enlighten me. Sorry if these are elementary - i am trying to learn.

1. It seems hldgs in VWRD or IWDA through IB will attract US estate duty. How does one address this issue? I mean, if one were to pass on unexpectedly, how do u transfer your ETFs parked with IB to next of kin and how much gets eroded by this estate duty? Just thinking if process is a very cumbersome one which may leave assets "frozen" or in limbo for a while.

Your IWDA and VWRA holdings are not subject to US estate tax because they're Irish domiciled, even if you buy through a US broker like IB. Only your cash holdings in IB are subject to estate tax.

 

[hwckhs]

3. As the VWRD/IWDA ETFs do not pay dividend...

VWRD = FTSE All World (Distributing)
VWRA = FTSE All World (Accumulating)

Go with VWRD if you prefer distributing. Personally, I use VWRD.

 

[kram62]

Hi everyone

I have a few questions and would appreciate it if u will enlighten me. Sorry if these are elementary - i am trying to learn.

1. It seems hldgs in VWRD or IWDA through IB will attract US estate duty. How does one address this issue? I mean, if one were to pass on unexpectedly, how do u transfer your ETFs parked with IB to next of kin and how much gets eroded by this estate duty? Just thinking if process is a very cumbersome one which may leave assets "frozen" or in limbo for a while.

2. The other difficulty i find is forex. As the hldgs are in USD, do you track the real S$ return after adjusting forex? It seems price movements can be very much negated by USD SGD movements. Does one try to mitigate by also timing and trading USD on the side and using these USD to buy the ETFs?

3. As the VWRD/IWDA ETFs do not pay dividend, how do you then fit these into a portfolio of a person looking at say retirement in 10yrs? I mean, there will be no income streams from these hldgs so that means, one is looking at capital appreciation and divesting partially to fund retirement in future?

Thanks.

1. These are domiciled in Ireland so they are not subject to US estate tax.

2. Stocks are not currency. The fund behind IWDA can be purchased in USD, EUR, GBP, and even Mexican pesos (under different ticker names, but the fund you hold shares of is the same.) It doesn't matter what currency you used to buy. The *nominal price* of each of there's variants will fluctuates according to the currencies respective fluctuations. But the *real value* of all of these shares bought in different currencies will be the same in any currency. The same way a banana bought 1.5 sgd could be bought for about 1 euro. The price is different but the value the same. If the *value* of bananas increases 10% globally while the EUR.SGD exchange rate stays the same, both nominal prices increase 10%. But if the *value* of banana stays constant but the EUR.SGD exchange rate changes to let's say 1.45 sgd per euro (strengthening of sgd against euro) then a 1 euro banana would sell at 1.45 sgd.

Of course this is a oversimplified example and the fluctuations of all currencies against all other currencies make it very complex, but the important takeaway is that the *value* and the *price* are two different things, and the value of stocks is not tied to a nominal price. (unlike bonds whose par value are set in a specific currency)

The tldr is, no need to worry that much.

3. Yes you would regularly divest a bit and transfer the cash to you.

 

[razoreigns]

1. It seems hldgs in VWRD or IWDA through IB will attract US estate duty. How does one address this issue? I mean, if one were to pass on unexpectedly, how do u transfer your ETFs parked with IB to next of kin and how much gets eroded by this estate duty? Just thinking if process is a very cumbersome one which may leave assets "frozen" or in limbo for a while.

It does not as long as you are not US tax resident.

2. The other difficulty i find is forex. As the hldgs are in USD, do you track the real S$ return after adjusting forex? It seems price movements can be very much negated by USD SGD movements. Does one try to mitigate by also timing and trading USD on the side and using these USD to buy the ETFs?

IB does the tracking in your base currency and you can see your returns/performance in SGD. Do not try to time FX. When you are buy, convert. When you sell, convert back.

3. As the VWRD/IWDA ETFs do not pay dividend, how do you then fit these into a portfolio of a person looking at say retirement in 10yrs? I mean, there will be no income streams from these hldgs so that means, one is looking at capital appreciation and divesting partially to fund retirement in future?

No harm selling to fund your retirement. Yes, you pay commission to sell. But remember, you did not need to reinvest your dividends and therefore, you also saved on commission. All in, you probably saved more (in commission and opportunity cost) using an accumulating fund vs a distributing fund. Not to mention, by retirement, you probably should have a bond portfolio allocation, CPF etc, which will also provide you with income.

 

[polar27]

SA and SRS

Aside from stocks and bonds portfolio, any suggestions on using the SRS and SA accounts. Any recommendations on what to invest using the monies in the SRS account? Advisable to link the SRS account to FSM to buy STI ETF monthly using SRS monies? TIA

 

[highsulphur]

Aside from stocks and bonds portfolio, any suggestions on using the SRS and SA accounts. Any recommendations on what to invest using the monies in the SRS account? Advisable to link the SRS account to FSM to buy STI ETI monthly using SRS monies? TIA

I don't think you can use FSM as a broker for SRS funds to buy STI ETF. Think can only use to buy UT

 

[kram62]

There's been a lot of questions about IWDA vs VWRA in the past.

Today, there's a interesting article by Investment Moats that compares the indexes behind both ETFs to figure out if there's a significant difference in performance to expect:

https://investmentmoats.com/passive-investing-2/iwda-versus-vwra-significant-performance-differences/

Spoiler: depending on which rolling period you study, sometimes one or the other is very slightly ahead, but overall the differences are quite small. Any of them is better than doing nothing.

 

[Magickiller9]

It's not only saxo.

Basically all brokers only accept first party transfers.

Revolut or transferwise accounts are usually not counted as first party because they are not really full banks. More of a bank-like transfer and payment service.

i tried transferring to IBKR it works

 

[newjersey]

to chrisloh65,

why don't u just get out of Shiny Things' thread?

case closed?

and then everyone would be happy, including you.

ST has always made it known that he doesn't talk about stock pickings.

if u want to talk about stock pickings, go somewhere else.

it's that simple.

 

[foozgarden]

i tried transferring to IBKR it works

hi there, can you share with us the process and the time/cost of it?

 

[foozgarden]

one other thing, maybe i missed out on it being mentioned here.

those buying iWDA here with IBKR. the min comms is $1.70,.. 0.05%
so you will need $3400 per trade as "breakeven " cost.

which means, using SCB-P is a better option as they dont have min comms?

 

[teArsBoy]

Hey there!

I'm wondering if it is possible to shift my holdings from IB to stand chart? Right now I'm taking a major pay cut so I thought it might be better to move to stand chart for my Iwda since I'm unable to invest more a 1k per month for now.

 

[Nesplex]

Hey there!

I'm wondering if it is possible to shift my holdings from IB to stand chart? Right now I'm taking a major pay cut so I thought it might be better to move to stand chart for my Iwda since I'm unable to invest more a 1k per month for now.

How far are you from the US$100k mark to waive the monthly fee for IB? If you are not very far away, maybe should just stick with IB.

 

[Magickiller9]

hi there, can you share with us the process and the time/cost of it?

i just select ibkr account to withdraw funds from revolut. it took 4 days

 

[teArsBoy]

How far are you from the US$100k mark to waive the monthly fee for IB? If you are not very far away, maybe should just stick with IB.

Pretty far I suppose

 

[CWL84]

Hey there!

I'm wondering if it is possible to shift my holdings from IB to stand chart? Right now I'm taking a major pay cut so I thought it might be better to move to stand chart for my Iwda since I'm unable to invest more a 1k per month for now.

hwckhs mentioned that he was able to transfer some of his Ireland-domiciled ETFs from IBKR to SCB but that was back in middle of last year so whether can still transfer, you will need to check; however, recently other investors have confirmed that transfer of IWDA from SCB to IBKR is no longer possible so you may want to think twice before proceeding.

You can transfer shares into or out from SC by filling an online form. There is no need to visit a branch. In SC online trading (website, not mobile), there is a small button at the top that says "Online Form". You can find "Share Transfer Form" there.

Outward transfer from SC incurs some hefty charges. Check SC's fee schedule. If you are transferring USD shares out, the fee is USD39. It is not stated clearly, but I believe this is per counter. I suggest that you check with sgwm.assettransfer@sc.com .

Apparently, IBKR charges a fee for certain types of transfers. What I transferred out from IBKR (to SC) back then were Ireland-domiciled ETFs (VWRD, LQDE). My IBKR statement indicates that these were "FOP" transfers, and I don't see any fee charged. If you are transferring out "Asian positions", fees are applicable.

Before you do any share transfer, it is best to check for the applicable fees on both sending and receiving brokers.

I did it about a month ago. Yes, inward to SC is free. No fee on IBKR too.

Steps:

1. Figure out which shares you would like to transfer. The ticker, name, ISIN and quantity.
2. Login to SC Online Trading, and the look in the menu to initiate an inward transfer. After filling the form, you will be given a reference number etc. Keep a copy of the details.
3. Login to IKBR Client Portal. Do not use "Transfer Positions", as that only supports transferring to US brokers. Instead, click "Messages" to send a request to IBKR to initiate the transfer. Provide them all the necessary details, including the SC reference no., and SC email address (sgwm.assettransfer@sc.com). I had to call SC to get this email (sgwm = SG wealth management).
4. IBKR will then contact SC to complete the transfer. It takes a few days, probably about a week.

No idea. The shares I transferred are available on both SC and IBKR.

Attempted to transfer IWDA from SCB to IBKR in Apr 2020.

Was subsequently told by both SCB and IBKR that the transfer is not possible, because SCB can only perform the transfer using local UK CREST, whereas IBKR has a mandate to receive all iShares holdings through Euroclear only. To be exact, IBKR can receive GBP holdings using CREST, but iShares holdings cannot be performed through CREST.

Since SCB cannot use anything other than CREST, and IBKR cannot receive iShares through any other means other than Euroclear, the transaction was declined. The transaction was done using the Share Transfer form located on SC Trading Online, and also put in a request to receive positions on IBKR through International Asset Transfer (similar to the instructions in the quote above).

Since there have been successful transfers reported (Sep 2017, Aug 2019 as far as I'm aware), it sounds like something may have changed in settlement instructions for SCB or IBKR.

@those who succeeded - any chance you could assist to ask how the transfer was made, and whether it was using CREST or Euroclear? Also if this method can still be continued moving forward?

@Shiny and other friendly advisors here - caveat is that starting out with SCB and then transferring to IBKR may no longer be feasible.

 

[yourplaceormine]

May be a dumb qn, but since previous poster(s) have said that transferring from SCB to IBKR is no longer possible, would it still be advisable to use SCB until you either invest more than 1k a mth or hit 100k, or would it be better to just go with IBKR now?

 

[Ifritus]

Hi everyone.

I'm currently religiously invested in the 3-Fund Portfolio ES3/MBH/IWDA.

Just wanted to get some opinion if I were to further diversify by investing in another type of ETF, for example IHAK ETF, which tracks cybersecurity industries.

Please let me know your thoughts, thanks!

 

[zoneguard]

i just select ibkr account to withdraw funds from revolut. it took 4 days

Your funds were already in USD in Revolut? What's the benefit of using Revolut over IB for forex when IB's is spot rate?