Official Shiny Things thread—Part III

[HIPPODEUS]

Anyone has an idea of how to weigh surrendering endowments (and redeploying to a 3-fund portfolio) vs keeping it?

Do we consider only the guaranteed portion when comparing to an investment strategy? E.g.

1) I can surrender a policy for 42k now (after having paid 72k), pay another 24k per year for the next 2 years, and get back 112k guaranteed after 7 years. IRR = 3.08%

2) Invest = surrender policy now, put in another 24k per year for next 2 years; assuming allocation per 110-age, 5% return for equities and 2% for bonds, I would end up with 118k (IRR = 3.85%).

Question is whether scenario 1 should be looking at the illustrated benefits (i.e. 4.75% performance) column since it's likely that the insurer's par fund will be performing at ~4% as well if my investment is performing at that level?

 

[BBCWatcher]

My initial plan for the latter portion of my emergency fund was to invest it in A35 since it fulfills my criteria, but its market price has spiked over the past few weeks and is now trading well above the narrow band of 1.10 to 1.20 which it was in from 2012 to 2019. Assuming I put in 20k now at 1.245 and the price drops to 1.10 when I need the money, I'd be looking at a 11.2% loss which is the equivalent of ~6 years of dividends. Do you think it's a good idea to invest now or should I hold that money in my bank until it goes back to its more normal band (assuming it ever does given the wacky environment we're in)? Or are there better alternatives (I'm considering Stashaway Simple too, for instance)?

Singlife is currently offering 2.5% interest p.a. if you park S$10,000 there. That offer can change at any time (and you can withdraw at any time), but it's an excellent offer right now. It's SDIC protected so quite safe.

After that, ELASTIQ (from Etiqa Insurance) is offering 1.8% interest p.a. guaranteed for the next 3 years, and with only a 90 day minimum holding period. After 90 days you can withdraw with accrued interest at any time. I don't remember off hand what the limit is, but between these two I've probably just consumed all your emergency reserve needs.

A35 is keyed to the yield of Singapore Government Securities, less the costs involved to buy it, sell it, and manage it. Even the 30 year Singapore Government Security is yielding less than 1.4%, so A35 would yield less than that if market interest rates don't change (i.e. government bond prices remain fixed). But government bond prices/yields can fluctuate, and thus so can A35's price. If you're going to take that form of risk, I think it'd better to invest in MBH. I know you've said you're comfortable with fluctuating share price risk, except...obviously you aren't. And that's fine, so other vehicles are available for your emergency reserve.

 

[hiroki01]

Singlife is currently offering 2.5% interest p.a. if you park S$10,000 there. That offer can change at any time (and you can withdraw at any time), but it's an excellent offer right now. It's SDIC protected so quite safe.

After that, ELASTIQ (from Etiqa Insurance) is offering 1.8% interest p.a. guaranteed for the next 3 years, and with only a 90 day minimum holding period. After 90 days you can withdraw with accrued interest at any time. I don't remember off hand what the limit is, but between these two I've probably just consumed all your emergency reserve needs.

A35 is keyed to the yield of Singapore Government Securities, less the costs involved to buy it, sell it, and manage it. Even the 30 year Singapore Government Security is yielding less than 1.4%, so A35 would yield less than that if market interest rates don't change (i.e. government bond prices remain fixed). But government bond prices/yields can fluctuate, and thus so can A35's price. If you're going to take that form of risk, I think it'd better to invest in MBH. I know you've said you're comfortable with fluctuating share price risk, except...obviously you aren't. And that's fine, so other vehicles are available for your emergency reserve.

Thanks BBCW!

Yes, I guess I'm only comfortable with fluctuating share price risk for this part of my emergency funds up to a certain extent, which doesn't exactly include buying into a bond ETF at its historical height. I was considering MBH too, and in fact I'm planning to park the money I'm saving for my downpayment/reno in MBH until my housing plan materializes, but I was thinking something a touch "safer" would be prudent for my emergency funds. Perhaps I'm overthinking all of this though, haha.

Thanks for the Singlife/Elastiq recommendations. I'll look into those!

 

[swan02]

1. A35 should NOT be held only by itself. It must be tagged along with 10-20 percent equities, 15 percent IMO. This way even if it’s high priced, it’s loss will be negated by the rise in equities and vice versa. In other words, without equities, your risk actually rises in a 100 percent intermediate sovereign bond allocation

2. I would actually recommend mbh for a full bond portfolio as it has a smithereens of equity like risk bundled with low duration ie lower interest rate risk, and a mixed bag of sovereign and investment like fixed income.

Hello, I'm looking for some advice

Long story short: I'm self-employed and I've decided to split my emergency funds into two parts: one in a normal bank account (highly liquid/almost no interest) and another in a higher-risk but still relatively safe and liquid instrument. I understand the pros/cons of doing this and I'm willing to accept the risks.

My initial plan for the latter portion of my emergency fund was to invest it in A35 since it fulfills my criteria, but its market price has spiked over the past few weeks and is now trading well above the narrow band of 1.10 to 1.20 which it was in from 2012 to 2019. Assuming I put in 20k now at 1.245 and the price drops to 1.10 when I need the money, I'd be looking at a 11.2% loss which is the equivalent of ~6 years of dividends. Do you think it's a good idea to invest now or should I hold that money in my bank until it goes back to its more normal band (assuming it ever does given the wacky environment we're in)? Or are there better alternatives (I'm considering Stashaway Simple too, for instance)?

 

[swan02]

BBC, the two products mentioned seem very attractive maybe too good to be true ? I’m very interested but full of reservations.

I’m wondering what can you foresee the reasons for such generous returns ?
Are the insurance companies doing it for new customers ie lose on one aspect, gain the other or perhaps they are indeed able to generate a return greater with little risk ?

Singlife is currently offering 2.5% interest p.a. if you park S$10,000 there. That offer can change at any time (and you can withdraw at any time), but it's an excellent offer right now. It's SDIC protected so quite safe.

After that, ELASTIQ (from Etiqa Insurance) is offering 1.8% interest p.a. guaranteed for the next 3 years, and with only a 90 day minimum holding period. After 90 days you can withdraw with accrued interest at any time. I don't remember off hand what the limit is, but between these two I've probably just consumed all your emergency reserve needs.

 

[BBCWatcher]

BBC, the two products mentioned seem very attractive maybe too good to be true ? I’m very interested but full of reservations.

Well, Singlife is clearly in client acquisition mode, and thus the offer is limited to $10,000 per depositor. They can also change the 2.5% p.a. interest rate any time they wish. There's no trick, really. It's a good offer while it lasts. Their account comes with a Visa debit card, and Singlife probably gets a little bit of revenue that way.

ELASTIQ is a little different because the (lower) 1.8% p.a. interest rate is insurer guaranteed for 3 years, but you have to "survive" a 90 day fund lock.

Insurance companies like everyone else are interested in upselling their other products, and there's some value in building up their marketing lists. Of course you're under no obligation to buy anything else.

 

[limster]

interestingly, after I signed up for Singlife's 3 year 3% plan, I never got any marketing calls from them: https://forums.hardwarezone.com.sg/money-mind-210/singlife-3%-endowment-plan-5942042.html

they are one of the very few that allow signups to be done 100% online.

but as I pointed out in that thread, their valuation as a fintech in 2018 was US$176m, so it is a super small cap compared to the big insurers, but as long as I'm within the SDIC limit I'm ok.

 

[newjersey]

I fail to see the need for such a pointless and callous comment. You just mentioned earlier today that you are a "stock-picker"; you don't see any of us commenting that "stock-picking [is] for losers", do you?

Based on your previous questions about "financial news", you obviously know very little about day trading (and please don't even try to pretend otherwise). Why make such an uninformed and distasteful remark on something you're not even familiar with?

let me know if u are in the vhnwi club?

otherwise, yes, u are probably the loser that we joke about.

and oh the hocus pocus of TA, u believe in that crap, don't u?

 

[hellvolhardzelinsky]

Saw one AIA advisor sharing on his Instagram that Michael Burry talking about the index bubble.

Michael Burry, in an interview with Bloomberg news, has expressed his views that the popularity in index funds is now DISTORTING PRICES for stocks and bonds. “The flows will reverse at some point, and it will be ugly when they do.” He is DRAWING PARALLELS with the collateralized debt obligations CRASH�� in 2008, which led to the last financial crisis.

What do you guys think of this? This guy looks quite famous according to his followers count.

 

[celtosaxon]

Saw one AIA advisor sharing on his Instagram that Michael Burry talking about the index bubble.

What do you guys think of this? This guy looks quite famous according to his followers count.

Fundamentally, things are more financially sound today than back in 2008, despite the shock we have had to the system.

At most, we might see a pull-back (not a crash) in the coming months depending on the magnitude of second wave infections, but I would view that as a buying opportunity. Keep in mind that prospects in 2021 are quite optimistic with a all of the stimulus/vaccine potential and the stock market prices in 6 months future expectations.

That is my view.

 

[chrisloh65]

I trust Michael Burry's insights and capability, having made Billions $ from his investment. Obviously there will be naysayers against him, and these people (who are really "nobody" in the world) acting as though they are "incredible investment experts", more "expert" than Michael Burry, but couldn't even make a Million $ from their own investment.

Ask yourself: Do you believe in "self-proclaimed experts" here (including those in HWZ) or real world-wide recognized expert Michael Burry with proven track-record?

Saw one AIA advisor sharing on his Instagram that Michael Burry talking about the index bubble.



What do you guys think of this? This guy looks quite famous according to his followers count.

 

[CarlJung]

I didn't see any vaccine for HIV, SARS or MERS after years and years. I don't see how now they will produce a viable vaccine in 6-12 months.

And for the stock market I see this

I am not a pessimist but I don't see all these gold and flowers they all see in the near future

Fundamentally, things are more financially sound today than back in 2008, despite the shock we have had to the system.

At most, we might see a pull-back (not a crash) in the coming months depending on the magnitude of second wave infections, but I would view that as a buying opportunity. Keep in mind that prospects in 2021 are quite optimistic with a all of the stimulus/vaccine potential and the stock market prices in 6 months future expectations.

That is my view.

 

[hellvolhardzelinsky]

I trust Michael Burry's insights and capability, having made Billions $ from his investment. Obviously there will be naysayers against him, and these people (who are really "nobody" in the world) acting as though they are "incredible investment experts", more "expert" than Michael Burry, but couldn't even make a Million $ from their own investment.

Ask yourself: Do you believe in "self-proclaimed experts" here (including those in HWZ) or real world-wide recognized expert Michael Burry with proven track-record?

Well, I believe there are always 2 sides to a claim for investments.

Can you explain to me why you trust his insights other than the reason that he made a good investment in the past?

 

[chrisloh65]

The gold and flowers goes well with the normal theme some people are propagating to talk up the market + "DCA blindly into index ETFs regardless of market conditions" over long-term and you will come out well (BUT not before the early adopters retire rich first since they will hit retirement age earlier!).

I didn't see any vaccine for HIV, SARS or MERS after years and years. I don't see how now they will produce a viable vaccine in 6-12 months.

And for the stock market I see this

I am not a pessimist but I don't see all these gold and flowers they all see in the near future

 

[chrisloh65]

Why you claiming that "viventa" is a loser?
Strange that you will be calling others "loser"

If you are doing "DCA blindly into index ETFs regardless of market conditions", your returns will be pathetic. So who will end up to be a real "loser"? You should know very well

So who really believe in "crap" that you claimed?

let me know if u are in the vhnwi club?

otherwise, yes, u are probably the loser that we joke about.

and oh the hocus pocus of TA, u believe in that crap, don't u?

I fail to see the need for such a pointless and callous comment. You just mentioned earlier today that you are a "stock-picker"; you don't see any of us commenting that "stock-picking [is] for losers", do you?

Based on your previous questions about "financial news", you obviously know very little about day trading (and please don't even try to pretend otherwise). Why make such an uninformed and distasteful remark on something you're not even familiar with?

 

[chrisloh65]

Since Michael Burry has a illuminating track-record and make Billions $ for himself from investment, just from this point, his opinion will be much more worthy of consideration than any other tom, dick, and harry here or even anywhere in the world.

While past success may not predict future, betting along with somebody who has proven success will be so much better than betting along with somebody who is a "nobody", has no proven track-record, and can only "self-trumpet" right?

Well, I believe there are always 2 sides to a claim for investments.

Can you explain to me why you trust his insights other than the reason that he made a good investment in the past?

 

[chopra]

I didn't see any vaccine for HIV, SARS or MERS after years and years. I don't see how now they will produce a viable vaccine in 6-12 months.

And for the stock market I see this

I am not a pessimist but I don't see all these gold and flowers they all see in the near future

unemployment graphs are harder to interpret. 6 mths later all these figures will vanish as unemployed ppl will not b counted anymore .

 

[hellvolhardzelinsky]

Since Michael Burry has a illuminating track-record and make Billions $ for himself from investment, just from this point, his opinion will be much more worthy of consideration than any other tom, dick, and harry here or even anywhere in the world.

While past success may not predict future, betting along with somebody who has proven success will be so much better than betting along with somebody who is a "nobody", has no proven track-record, and can only "self-trumpet" right?

Lol, wanna have a healthy discussion also cannot.
You keep calling names at those who DCA into index fund. Correct me if I'm wrong, DCA-ing into index fund is following Jack Bogle right?

Your life must be really interesting to come here and call people out and calling people names everyday just because people think differently from you.

If you are just following blindly and not providing any reason/explanation of why you are "following", then I see no difference between you and those "self-trumpet".

You should go back to your own fanclub or spend more time in your stock picking. I'm not sure why you wasting your time here, I bet you can do better with the time to stock pick and retire earlier than all of us.

 

[CWL84]

Saw one AIA advisor sharing on his Instagram that Michael Burry talking about the index bubble.



What do you guys think of this? This guy looks quite famous according to his followers count.

More people turning to ETFs will affect the profits of insurance agents and active fund managers so of course they are not fans of ETFs. There are already proper and well thought out arguments against Micheal Burry's theory, I suggest that you look at them.

 

[hellvolhardzelinsky]

More people turning to ETFs will affect the profits of insurance agents and active fund managers so of course they are not fans of ETFs. There are already proper and well thought out arguments against Micheal Burry's theory, I suggest that you look at them.

One thing I believe is that if most of the people invest in ETF themselves. The advisors will have no commission to get.

I met with an advisor which recommended me his "INVESTMENT" plan but until now, the performance is not that good compared to indexing.