Official Shiny Things thread—Part III

[ValerieLah]

double top trend ? *gets ready cash*

which ticker?

 

[Shiny Things]

For US markets, seems that tiered is always better for small retailers like us?

Honestly, I'd just set it to "tiered" for everything and get on with your life. The LSE exchange fee that makes fixed cheaper than tiered between 10k and 90k is like half a basis point; it's a rounding error in the grand scheme of things. And yes, unless you're making some very weird routing choices or trading giant volumes of penny stocks, tiered will always be cheaper for US equities.

 

[iceblendedchoc]

For USD denominated ETFs in LSE,

Tiered: less than USD 9,028 OR more than USD 85,890
Fixed: USD 9,028 to USD 85,890

See below quote from the moderator before


**************** Quote from previous post of one of the moderators here *************************

If you are mainly buying USD denominated ETFs (such as IWDA and EIMI) in LSE, the below applies.

Tiered
- 0.05% commission, min USD 1.70, max USD 39 (under "EUR, CHF, USD, PLN, ILS and HUF-Denominated Products Tiered")
- 0.0045% LSE exchange fee, min GBP 0.10
- GBP 0.06 (~USD 0.08) LSE clearing fee

Fixed
- 0.05% commission, min USD 5

This means that Tiered is better for trades below USD 9,028 (commission of USD 5), and trades above USD 85,890 (commission of USD 42.945).

***************************************************************************************

This should be on page 1 sticky!

 

[swan02]

The mother of all... s&p 500 ! .

So what now ?
I only get lucky knowing when it goes down, but never back up.

Who wants to make guesses how much more it will go down from now ?

Another...
5 percent ?
10 percent ?

which ticker?

 

[Kayeesha]

Hello everyone,

I am trying to select one the following ETFs: IWDA, SWRD, VHVE and LCWD.

One of the criteria is a low TER. My understanding is that the management fee erodes the NAV. So, IWDA having the higher TER should be performing worse than the rest with their lower TERs. But based on their share prices for this year, they all seem to have the same performance. So, is the low TER not a selection criteria after all?

Thanks.

 

[anonyme]

Hello All. My positions at IBKR are far less than 100K. If I'd like to rid of the monthly $10 activity fee at IBKR, would it make sense to transfer my spare cash to IBKR and hold it as cash until I'm ready to invest? Does this count first of all to have noi activity fee?

Thanks in advance!

 

[celtosaxon]

The mother of all... s&p 500 ! .

So what now ?
I only get lucky knowing when it goes down, but never back up.

Who wants to make guesses how much more it will go down from now ?

Another...
5 percent ?
10 percent ?

On Sep 24 it hit a low of 3209, then it bounced back and went as high as 3549 on Oct 12... which was really an abortive recovery, given the earlier high of 3588 made on Sep 2, and that usually signals more downside. If it drops below 3209 the next support is probably around 3000, and from there if it makes another abortive recovery that peaks below 3549, then it may even drop below 3000, next support maybe 2800.

What could stop this downward see saw pattern? Passage of a new multi-trillion stimulus bill, a marked drop in Covid cases, and an approved vaccine that can be distributed in meaningful numbers.

What could make it continue? Anytime an incumbent president is not re-elected it creates uncertainty which the market does not like, plus Biden plans to raise corporate taxes which will hurt corporate earnings, which hurts share price - some of this is already priced in, but maybe not all.

The bigger question is, why does any of this matter and why are you worried about it? Are you about to retire and you haven’t brought your stock allocation down to a reasonable level yet? If you are a long term investor, any drop in stock price means you are getting a better price as you continue investing. In 20 years from now the S&P should easily be above 10,000 (if the last 100 years of history is any guide).

 

[ValerieLah]

Hello All. My positions at IBKR are far less than 100K. If I'd like to rid of the monthly $10 activity fee at IBKR, would it make sense to transfer my spare cash to IBKR and hold it as cash until I'm ready to invest? Does this count first of all to have noi activity fee?

Thanks in advance!

Yes your cash value counts as a part of your portfolio in IBKR and the total amount. I don't know if it would make sense because you can probably make more than $10 a month using your cash (if the amount is high).

 

[Shiny Things]

Hello everyone,

I am trying to select one the following ETFs: IWDA, SWRD, VHVE and LCWD.

One of the criteria is a low TER. My understanding is that the management fee erodes the NAV. So, IWDA having the higher TER should be performing worse than the rest with their lower TERs. But based on their share prices for this year, they all seem to have the same performance. So, is the low TER not a selection criteria after all?

You might be jumping to conclusions here. A low TER is important, but the reason I prefer IWDA over those other options is that it's much bigger (has a larger assets under management) and a lot more liquid (so the spread is tighter, and it's easier to trade in and out).

And IWDA's TER is pretty low already (0.2%); chopping an extra 0.05% or 0.08% off that isn't a huge incremental difference, and it can be outweighed by a narrower spread.

Hello All. My positions at IBKR are far less than 100K. If I'd like to rid of the monthly $10 activity fee at IBKR, would it make sense to transfer my spare cash to IBKR and hold it as cash until I'm ready to invest? Does this count first of all to have noi activity fee?

Thanks in advance!

Yep, cash counts.

 

[MangoTuna65]

Hello All. My positions at IBKR are far less than 100K. If I'd like to rid of the monthly $10 activity fee at IBKR, would it make sense to transfer my spare cash to IBKR and hold it as cash until I'm ready to invest? Does this count first of all to have noi activity fee?

Thanks in advance!

10$ monthly for 100k is just 0.12% annual fee. Any bank deposit account should be able to beat that?

 

[swan02]

Having retired since 2015. My asset allocation towards equities took a long time to rise. It is actually very low to begin with. The amount set for equities actually reached 40 percent not too long ago and was a huge hurdle.

However, I've recently decided not to buy a property with a sum set a side for quite a while and thus added on to my portfolio which brought my allocation to equities to a very low low, giving lots of heartache again to buy more equities. My monthly DCA is just too small.

Since I'm the type who look at absolute number rather than percentage, I can say the journey buying equities is at every step a painful one.

However, if s&P 500 drops to 3000 (which I hope), it will be hell a lot easier to just make a very large purchase and meet my AA immediately and I can ignore my portfolio till one year later for rebalancing. This method will help me focus on better things in life.

I've been telling myself about the "20 years later thingy..s&P 500.." for years, psychologically doesn't really work when I deal with large sums, especially when retired. Maybe I should get back to work. Working helps me to take more risk easily.

Although I'm a passive investor, I do find applying technicals help to justify (push) me to make purchases. It's to me a psychological tool rather than a truly a market timing tool.........and thus the double top trend......I think 3000 is a good one.

On Sep 24 it hit a low of 3209, then it bounced back and went as high as 3549 on Oct 12... which was really an abortive recovery, given the earlier high of 3588 made on Sep 2, and that usually signals more downside. If it drops below 3209 the next support is probably around 3000, and from there if it makes another abortive recovery that peaks below 3549, then it may even drop below 3000, next support maybe 2800.

What could stop this downward see saw pattern? Passage of a new multi-trillion stimulus bill, a marked drop in Covid cases, and an approved vaccine that can be distributed in meaningful numbers.

What could make it continue? Anytime an incumbent president is not re-elected it creates uncertainty which the market does not like, plus Biden plans to raise corporate taxes which will hurt corporate earnings, which hurts share price - some of this is already priced in, but maybe not all.

The bigger question is, why does any of this matter and why are you worried about it? Are you about to retire and you haven’t brought your stock allocation down to a reasonable level yet? If you are a long term investor, any drop in stock price means you are getting a better price as you continue investing. In 20 years from now the S&P should easily be above 10,000 (if the last 100 years of history is any guide).

 

[Kayeesha]

You might be jumping to conclusions here. A low TER is important, but the reason I prefer IWDA over those other options is that it's much bigger (has a larger assets under management) and a lot more liquid (so the spread is tighter, and it's easier to trade in and out).

And IWDA's TER is pretty low already (0.2%); chopping an extra 0.05% or 0.08% off that isn't a huge incremental difference, and it can be outweighed by a narrower spread.

Thank you ShinyThings for your reply.

Based on their fact sheets, their AUMs are IWDA US$25,878 (net assets of fund) US$25,068m (net assets of share class), SWRD US$272m, VHVE US$36m (share class assets) US$740m (total assets), LCWD US$693m.

Using US$100m as the benchmark for a large ETF, all of them satisfy this.

I thought spreads would only impact my P&L and not affect the share price we see on the exchange? I am trying to understand the impact of the TER on the NAV.

Unless, the impact will only be seen over a longer period of time? So, in the long run, say over 10 years, the other ETFs with the lower TER will perform better?

Thanks once again.

 

[celtosaxon]

Having retired since 2015. My asset allocation towards equities took a long time to rise. It is actually very low to begin with. The amount set for equities actually reached 40 percent not too long ago and was a huge hurdle.

However, I've recently decided not to buy a property with a sum set a side for quite a while and thus added on to my portfolio which brought my allocation to equities to a very low low, giving lots of heartache again to buy more equities. My monthly DCA is just too small.

Since I'm the type who look at absolute number rather than percentage, I can say the journey buying equities is at every step a painful one.

However, if s&P 500 drops to 3000 (which I hope), it will be hell a lot easier to just make a very large purchase and meet my AA immediately and I can ignore my portfolio till one year later for rebalancing. This method will help me focus on better things in life.

I've been telling myself about the "20 years later thingy..s&P 500.." for years, psychologically doesn't really work when I deal with large sums, especially when retired. Maybe I should get back to work. Working helps me to take more risk easily.

Although I'm a passive investor, I do find applying technicals help to justify (push) me to make purchases. It's to me a psychological tool rather than a truly a market timing tool.........and thus the double top trend......I think 3000 is a good one.

Consider ignoring the actual amounts, keep your focus on the % allocation. 40/60 is a very safe allocation at 5 years into retirement. The longer you are in retirement, the lower your sequence of return risk becomes, which means you could even allow it to naturally grow up to 60/40 during the next 5-10 years without rebalancing.

You should not be worried about short-term market movements - just rebalance as needed, but not so frequently - even once a year is enough. Keep enough liquid reserves to cover a year or two of expenses.

 

[revhappy]

Having retired since 2015. My asset allocation towards equities took a long time to rise. It is actually very low to begin with. The amount set for equities actually reached 40 percent not too long ago and was a huge hurdle.


I've been telling myself about the "20 years later thingy..s&P 500.." for years, psychologically doesn't really work when I deal with large sums, especially when retired. Maybe I should get back to work. Working helps me to take more risk easily.

It has been quite sometime since you retired. Curious how do you pass your time? What are the advantages and disadvantages you experienced about retiring early, in the past 5 years?

 

[swan02]

It has been quite sometime since you retired. Curious how do you pass your time? What are the advantages and disadvantages you experienced about retiring early, in the past 5 years?

1. initially, I was very proud of myself, having achieved wealth that for the profession I was in (not exactly highly paid), able to achieve a sum that very few are able to attain.
2. For a short while, believed I'm some investing guru, but realised later, its all luck. So initially I felt confident, it shows in my outward appearance, personality ....
3. As the years go by, and unfortunately, as my knowledge went up, it actually affected by investing experience. "safe" investing (bonds, cash) actually didn't help at all but made it worse. As the saying goes, sometimes ignorance is bliss.
4. as with time, my self confidence dived, as I missed the rally, although I was right to call the crash.
5. So now, I'm an idiot without a job. So total self worth remains at all time low. You keep hearing things of people saying "wasted talent".

You don't feel rich anymore, cuz I'm expecting future returns to be a lot lower...its like burning money over time rather than seeing it grow. The feeling is terrible.
6. There really isn't any advantage to early retirement. As after "resting" for so long, and doing all you wanted to do, nothing seems to be interesting. You lead a life ...like an old person....aimless, no hope....nothing...no matter how much money you have...yet at the back of your mind worry how the future holds. I sleep hell a lot, not sure if I'm depressed, strangely, I don't even seem to gain as much muscle/motivation in exercise...I don't even feel healthier retired. Aches and pain seem to manifest much faster rather than less.

In fact, an old person is likely to be happier as he/she has peers to hang out with. I see my friends just trying to make ends meet. Don't underestimate the benefits of social interactions at work, it helps mentally.

7. I will suggest people never to quit your job, always continue working perhaps at a slower pace. Sadly, professional jobs are rarely comfy (based on personal experience, utopia doesn't exist).
8. So now, I'm undecided as to what I should do next in finding work especially during these trying times....starting lessons in Tech soon, and perhaps its a fantastic nudge on me into computing most noticeably into programming that I can spend my life "creating something" or at least tutor my kids in Python or any Tech.

9. Now even as I start at the bottom in a possible "new" profession, I worry I can't adjust being paid peanuts, especially when I feel I actually don't need a job to survive. I wonder how that will pan out...will I just tell my boss off whenever I feel like it ?

Consider ignoring the actual amounts, keep your focus on the % allocation. 40/60 is a very safe allocation at 5 years into retirement. The longer you are in retirement, the lower your sequence of return risk becomes, which means you could even allow it to naturally grow up to 60/40 during the next 5-10 years without rebalancing.

You should not be worried about short-term market movements - just rebalance as needed, but not so frequently - even once a year is enough. Keep enough liquid reserves to cover a year or two of expenses.

1. Well I was even much at much lesser than 40 percent for quite a while. I agree with you I needed a much higher allocation to equities eg start at 60 percent, but my SWR is like 2 percent or less as long as I remain in my HDB. I can't be bothered to actually monitor it or calculate my actual SWR accurately, as the more I see, the more unhappy I get....I actually have a much higher sequence of risk returns as I'm a young retiree, not a person of 70 but much much younger, hence portfolio needs to last >60 years or forever.

2. The aim is to reach 40 percent and grow 5 percent every year, to a final 80 percent or more, leaving sufficient cash/bonds in emergency to last me 5 years. Now I'm back down like maybe 10 percent or less when I added the extra cash that was meant for a new abode.

With the portfolio much bigger, I think reaching 25 percent equities is already very sickeningly difficult as I look at the amount rather than the percentage.

I don't think I can ever go beyond 40 percent unless a crash happens. Especially considering that bonds are no longer able to help you sleep. Objectively, equities is the right way going forward.

 

[highsulphur]

Swan02 is single or with dependents?

 

[bobobob]

You don't feel rich anymore, cuz I'm expecting future returns to be a lot lower...its like burning money over time rather than seeing it grow. The feeling is terrible.
6. There really isn't any advantage to early retirement. As after "resting" for so long, and doing all you wanted to do, nothing seems to be interesting. You lead a life ...like an old person....aimless, no hope....nothing...no matter how much money you have...yet at the back of your mind worry how the future holds. I sleep hell a lot, not sure if I'm depressed, strangely, I don't even seem to gain as much muscle/motivation in exercise...I don't even feel healthier retired. Aches and pain seem to manifest much faster rather than less.

In fact, an old person is likely to be happier as he/she has peers to hang out with. I see my friends just trying to make ends meet. Don't underestimate the benefits of social interactions at work, it helps mentally.

Sounds like you've realized money doesn't buy happiness. Sometimes people post the financial freedom pyramid. Since you've already peaked that pyramid, have a look at this pyramid.

https://www.simplypsychology.org/maslow-hierachy-of-needs-min.jpg

It sounds like what you're feeling is missing is meaningful human connection and meaningful work.

 

[swan02]

Yes with two very young kids.

and.... seeing them all the time actually made me a very angry grumpy person considering now that I’m their teacher and disciplinarian. It’s frustrating teaching kids.

now I’m expecting no less from them in academics and because of that turned my wife against me !

now I know why couple fight more during covid. Except this time it’s a 5 years “covid”. Fortunately married a meek wife. Don’t think women can tolerate my once arrogant self assured persona.

Swan02 is single or with dependents?

 

[highsulphur]

You must have retired very early then. Early 40s?

 

[hwckhs]

I am trying to understand the impact of the TER on the NAV.

Unless, the impact will only be seen over a longer period of time? So, in the long run, say over 10 years, the other ETFs with the lower TER will perform better?

You need to do some calculations, in order to visualize the potential saving.

Let's compare 2 ETFs, X and Y, with a TER of 0.20% and 0.12% respectively.

Saving per year: 0.08%
Saving after X years: 100% - (100%-0.08%)^number-of-year

Saving due to TER at end of:
Year 1: 0.08%
Year 5: 0.40%
Year 10: 0.80%
Year 15: 1.19%
Year 20: 1.59%
Year 30: 2.37%

Make your own judgement whether the above saving is worthwhile.

Bear in mind these figures are the best case scenarios. As ST and other ppl pointed out, smaller ETFs may have a wider spread, which may reduce the saving. I do not know where to find the average historical spread of those ETFs (may need professional tools?), but if you can find them, you can revise the "Saving after X years" formula above to see if it still makes sense. Some even say tracking error matters.

An annual saving of 0.8% would be substantial (when compounded), but that of 0.08% would be small. It depends on your priorities and preferences.