Official Shiny Things thread—Part III

[swan02]

Well sort of. Still have time to beef up as payout starts at 70.

1. First managed to convince her to reach FRS, not yet ERS by selling her the notion of CPF bank account.
2. Then fortunately I have to b the one doing the shares buying to get the seat warm up but can only DCA.
3. If all fails.... just lump sum a property like many oldies seem to like.

I’m still unsure about CPF life for myself but likely the logic that I can go full on 100 percent equity once an annuity is established is really sound.

Did the retiree follow the advice? It’s not always easy to convince people who are risk averse.

But it is sound advice, especially if you can survive on CPF then you will have no fear and the upside on your riskier investments is just gravy.

My retirement plan is 40% guaranteed income streams, 10% bonds, 50% equities.

 

[celtosaxon]

Actually the Escalating Plan, payout start at age 70, is the best overall choice for risk averse retirees. (The Basic Plan is the best overall choice for risk averse heirs. )

Put another way, the Basic Plan is best overall for who want the highest probability of collectively getting the most out of their CPF money. The other plans are best for those who want to get the most CPF money individually during their lifetime.

But that is looking at CPF in a bubble. The point that BBC often makes is that there are much better vehicles for leaving a legacy.

So, let’s say by choosing the Basic plan it causes you to spend down outside assets... in this case, you may be collectively better off securing your own needs with a higher CPF LIFE payment, so that you don’t need to touch the rest, which can earn far higher returns than CPF ever will.

I think the point is that everyone should keep an open mind and make sure they fully understand the bigger picture & trade-offs.

 

[SeNiLe]

Hi all, apologies if this has been answered before but the search function doesn't throw up anything useful in this thread...

For incoming TT (telegraphic transfer) via USD or SGD, which bank in SG would have the lowest fee?

I seem to recall that some forumers have used UOB before and have only been charged about $10. I have foreign bank accounts too but it seems like they all charge a percentage of amount (ie higher fees)...

 

[BBCWatcher]

Yes u r right. This individual is not only risk averse but also places huge importance on heir who fortunately is me starting payout 70.

Even so, with an enhanced cpf life. I really don’t see the need of escalating, it’s overkill as together with a full on equity Mix with div shares are good for these oldies wanting to feel some cash n still beat inflation,
Great overall return n good for me as heir.

The Escalating Plan is a better defense against "black swan" events such as theft, fraud, dementia, creditor demands, and adverse court judgments. Yes, sure, the investment portfolio should provide inflation defense and more, but "crazy" things are possible.

Put another way, the Basic Plan is best overall for who want the highest probability of collectively getting the most out of their CPF money. The other plans are best for those who want to get the most CPF money individually during their lifetime.

I think CPF's actuaries seem to be offering fair bets all around, so I don't think I'd phrase it that way.

But that is looking at CPF in a bubble. The point that BBC often makes is that there are much better vehicles for leaving a legacy.

CPF LIFE is pretty terrible at leaving a bequest, actually.

So, let’s say by choosing the Basic plan it causes you to spend down outside assets... in this case, you may be collectively better off securing your own needs with a higher CPF LIFE payment, so that you don’t need to touch the rest, which can earn far higher returns than CPF ever will.

Bingo, you got it. Although I'd say "the rest is highly likely to earn far higher returns than CPF if allowed to grow as long as possible."

It's even a little more than that. If you know (with high confidence) you've got an ERS-level CPF LIFE Escalating Plan in your future, because you already have it banked, then, in the here and now, today, you can adopt a more aggressive portfolio posture than you otherwise would. It's pretty amazing, really.

Please note you might not end up choosing the Escalating Plan, or any plan. One advantage of deferring to age 70 is that if you die before your 70th birthday every penny, with interest, goes to your nominees. There is no risk pooling in CPF LIFE before you pool. (Which is a little weird, actually.) If you then reach your 70th birthday but in a hospital intensive care ward bed, maybe you don't choose the Escalating Plan. I'm not opposed to the other payout plans in all cases.

For incoming TT (telegraphic transfer) via USD or SGD, which bank in SG would have the lowest fee?

I seem to recall that some forumers have used UOB before and have only been charged about $10. I have foreign bank accounts too but it seems like they all charge a percentage of amount (ie higher fees)...

There are several banks in Singapore that don't charge incoming telegraphic transfer fees under any circumstances. However, all the "big three" banks (DBS/POSB, OCBC, UOB) do in at least certain circumstances. CIMB is a popular choice among banks that don't since CIMB doesn't have any minimum balance requirements (to avoid a monthly fee) after account opening, but there are some others such as Citibank and BOC. Just check the banks' published fee schedules.

 

[SeNiLe]

Thanks BBCWatcher for your input - was also hoping to find out in your experience which would charge lower FX fees and lower intermediary bank fees (as I presume those which charge low TT transaction fees make it up by giving a worse FX rate or route any non SGD inward transfers via multiple cheaper banks which each charge their own individual fee).

Moreso for eg. USD inward TT to a SGD account than SGD inward TT to SGD...

 

[polyglob]

What is a more aggressive posture? IWDA oneself harder?

If you know (with high confidence) you've got an ERS-level CPF LIFE Escalating Plan in your future, because you already have it banked, then, in the here and now, today, you can adopt a more aggressive portfolio posture than you otherwise would. It's pretty amazing, really.

 

[swan02]

Together with a fully paid hdb. Even for an ERS level basic plan is still insufficient for black swans events ?

I tot it’s Sufficient for oldies. I don’t think they spend more than 1 k a month a person unless Batam is a frequent.

person receiving half what she receives at age 90 in today’s value is still about 1k a month today’s value ?

One thing I have not checked about escalating plan, all money goes into the pool still earning interest. Should the individual pass before premiums plus interest runs out, is there a bequest still available of the remaining sum ?

The Escalating Plan is a better defense against "black swan" events such as theft, fraud, dementia, creditor demands, and adverse court judgments. Yes, sure, the investment portfolio should provide inflation defense and more, but "crazy" things are possible.

 

[BBCWatcher]

Thanks BBCWatcher for your input - was also hoping to find out in your experience which would charge lower FX fees and lower intermediary bank fees (as I presume those which charge low TT transaction fees make it up by giving a worse FX rate or route any non SGD inward transfers via multiple cheaper banks which each charge their own individual fee).

Moreso for eg. USD inward TT to a SGD account than SGD inward TT to SGD...

Ah. Well, the basic "rule of thumb" is to try to avoid having a bank doing the currency conversion, especially if it's some intermediary bank that just happens to be in the wire transfer pathway. Another useful "rule of thumb" is that it's usually not a good idea to place a foreign currency outside its zone -- for example, to transfer U.S. dollars to a U.S. dollar account in Singapore. These are just "rules of thumb," though.

If you're trying to transfer a relatively large or larger amount of money, sometimes you can transfer a small amount as a test to see what happens. There are also firms that specialize in currency conversions and transfers, such as TransferWise, CurrencyFair, and WorldFirst. Interactive Brokers is phenomenally good at currency conversions as another example, although they work only for "first party" transfers since they are not also a transfer specialist.

And sometimes you really don't want to convert and transfer between bank accounts at all. For example, if I want to buy a banana at a supermarket in Singapore one way that I could do it is to insert (or tap) a U.S. credit card. The net result would be that I pay a little less than the Singapore dollar price, drawn in the form of U.S. dollars in the U.S. The particular credit card provides a rebate and charges nothing above the Mastercard or Visa network conversion rate. The result is that I end up with a net rebate above the hypothetical midpoint exchange rate. And since the card has no annual fee and is automatically paid every month, it effectively operates like a debit card but with a nice "float." Great deal! (No, I don't actually do this much in Singapore since I have Singapore dollars and a Singapore dollar rebate credit card, too, but I could. In some other country I do this sort of thing all the time.)

 

[swan02]

FULL on Tech etf both USA and China is prolly my limit. U can also look into those China etf 28xx.....it looks like a ventricular tachycardia. It gives u one too

What is a more aggressive posture? IWDA oneself harder?

 

[BBCWatcher]

What is a more aggressive posture? IWDA oneself harder?

That's an example, although it's not mine specifically since I'm a U.S. person.

Together with a fully paid hdb. Even for an ERS level basic plan is still insufficient for black swans events ?

I tot it’s Sufficient for oldies. I don’t think they spend more than 1 k a month a person unless Batam is a frequent.

person receiving half what she receives at age 90 in today’s value is still about 1k a month today’s value ?

Sufficiency is situational, above a particular baseline anyway. (Zero buying power isn't sufficient.)

A risk averse family would typically approach this problem by asking, "Is the Escalating Plan payout enough to live on now?" If the answer is yes, then that payout stream will be highly likely to answer that same question in the affirmative for the rest of the retiree's life. If the answer is no, then the income stream isn't big enough (doesn't offer enough defense) -- fix that, if possible.

Note that the actual plan selection is a separate question. I'm highly inclined to choose the Escalating Plan, but in some circumstances even risk averse families might choose a different plan, or no plan at all (death before age 70). But as a sufficiency test, you should benchmark against the Escalating Plan. (And some other benchmarks, but at least that one.)

One thing I have not checked about escalating plan, all money goes into the pool still earning interest. Should the individual pass before premiums plus interest runs out, is there a bequest still available of the remaining sum ?

There's always at least principal return in all CPF LIFE payout plans.

 

[pathfinder6]

Just doing some planning ahead for rebalancing in Nov, and was just wondering for those with CPF OA+SA playing the bonds component, how do you rebalance since it's very much locked up until 55 for now?

 

[GreenTea97]

Advice for a student

Hey everyone, i'm currently conflicted on whether i should invest my savings as a student, about to start university and will be in it full time for 3 years but as of now i have all of my savings in singlife and SC jumpstart due to the high interest rate but I was wondering if that money (not a lot btw, only about $15k, I have more but that is the amount I feel comfortable investing) would be better off in an index fund or ETFs as I won't be touching it in the next 3 years, hoping it would profit me a little which would go into paying off my student loans, would love any advice on this dilemma, thank you.

 

[Kaypohji]

Yea I was looking at bid ask spread.
Another thing I noticed too is that
VWRD has bid ask spread of 0.07 while VWRA is 0.16

The volume also matches with the bid ask spread...

To me it seems like for some reason, distributing is more liquid than accumulating ?

Cspx is showing bid ask spread of 0.09 while vusd is 0.04...

Check out CSSPX too.

How do u judge liquidity ?

I do it based on small spread yet has enough volume to execute that small spread.

A share price of 800 dollars but smaller volume can still be a lot more liquid as long spread is small vs a low dollar share price with bigger spread and large volume.

 

[swan02]

0.09 as out of $339 csspx ? vs 0.04 out of 64.15 vusd?

Express as a percentage and you will get your answer.

Yea I was looking at bid ask spread.
Another thing I noticed too is that
VWRD has bid ask spread of 0.07 while VWRA is 0.16

The volume also matches with the bid ask spread...

To me it seems like for some reason, distributing is more liquid than accumulating ?

Cspx is showing bid ask spread of 0.09 while vusd is 0.04...

 

[celtosaxon]

Hey everyone, i'm currently conflicted on whether i should invest my savings as a student, about to start university and will be in it full time for 3 years but as of now i have all of my savings in singlife and SC jumpstart due to the high interest rate but I was wondering if that money (not a lot btw, only about $15k, I have more but that is the amount I feel comfortable investing) would be better off in an index fund or ETFs as I won't be touching it in the next 3 years, hoping it would profit me a little which would go into paying off my student loans, would love any advice on this dilemma, thank you.

Not a dilemma at all. If this is money you will need to spend 3 years from now... keep it in a high interest rate savings account. As tempting as it might be, you should not invest any money that you’ll need access to in the next several years. The market is simply too unpredictable.

 

[swan02]

Reminds me when I was a student and had about 25k and for donkey years I left it in a savings account earning jack nothing.

R u young ? Rich family ? what r u using the money in 3 years time ? Flat ?

If nothing like I did cuz upon graduation u r likely to wanna get a job and work work work ... this is the best time to test out all the theory you’ve learnt in this forum about passive investing. Practice gives u confidence as you will be handling bigger money with time.

Don’t make the same mistake as I did. I had at least 50k idling for 20 years.

Hey everyone, i'm currently conflicted on whether i should invest my savings as a student, about to start university and will be in it full time for 3 years but as of now i have all of my savings in singlife and SC jumpstart due to the high interest rate but I was wondering if that money (not a lot btw, only about $15k, I have more but that is the amount I feel comfortable investing) would be better off in an index fund or ETFs as I won't be touching it in the next 3 years, hoping it would profit me a little which would go into paying off my student loans, would love any advice on this dilemma, thank you.

 

[celtosaxon]

Just doing some planning ahead for rebalancing in Nov, and was just wondering for those with CPF OA+SA playing the bonds component, how do you rebalance since it's very much locked up until 55 for now?

First thought is to save more & invest outside CPF to boost the non-bond side. Second is to use CPFIS. However, if you plan to use OA for a property in the coming years, you should treat that money as “reserved for a major purchase” - not a part of your portfolio. I would also be careful using CPFIS with SA money since it can earn up to 5%. I would rather be a little bond heavy rather than give up a guaranteed 5%, but that’s me.

 

[GreenTea97]

Not a dilemma at all. If this is money you will need to spend 3 years from now... keep it in a high interest rate savings account. As tempting as it might be, you should not invest any money that you’ll need access to in the next several years. The market is simply too unpredictable.

Thank you so much for the advice well I highly doubt i'll be touching the money in the next 3 years as my student loan covers most of my school fees and the plan is for my parents to go ahead and settle the loan amount before i graduate (so there won't be any interest) and for me to start paying them back once I get a job, would u still advice me to leave the money in the savings account in this case?

 

[GreenTea97]

Reminds me when I was a student and had about 25k and for donkey years I left it in a savings account earning jack nothing.

R u young ? Rich family ? what r u using the money in 3 years time ? Flat ?

If nothing like I did cuz upon graduation u r likely to wanna get a job and work work work ... this is the best time to test out all the theory you’ve learnt in this forum about passive investing. Practice gives u confidence as you will be handling bigger money with time.

Don’t make the same mistake as I did. I had at least 50k idling for 20 years.

Thanks for sharing ur personal experience! well i'm not THAT young, 23 this year , definitely not from a well to do or rich family, probably will not be touching the money in the next 3 years and have no other commitments such as housing loans etc

Although i'm quite interested in investing this amount, I'm just looking for some advice as I have no idea if this would be a wise choice in the grand scheme of things as keeping it in the savings account will guarantee me about a few hundred dollars per year whereas investing could go either ways (last thing I would want is to lose a significant amount)

 

[celtosaxon]

Thank you so much for the advice well I highly doubt i'll be touching the money in the next 3 years as my student loan covers most of my school fees and the plan is for my parents to go ahead and settle the loan amount before i graduate (so there won't be any interest) and for me to start paying them back once I get a job, would u still advice me to leave the money in the savings account in this case?

Ah... so this money is not earmarked for any specific purpose after 3 years? In that case, agree with Swan02, start your investing journey with a broadly diversified, low cost exchange traded index fund. If you can start doing this at your age and continue adding to it with discipline after you start working, you will be well on your way to $1m by age 40.