Official Shiny Things thread—Part III

[limster]

A big part of fulfillment comes from volunteering ! I went out there , served in a community, get to know many more people. My social interactions with people from all walks of life increased a lot more and my perspectives widen as a result.

Well done. Some might say this is just switching from paid to part-time unpaid work, but whatever the definition, thanks for contributing to society.

I also hope to do the same, but realise that I need to have an extra income stream to deploy alongside any charity work I do, as it is not necessarily the case that the charity I volunteer at has the exact same priorities as I do.. and money talks, even in the charity sector.

 

[swan02]

Ic, you are in the honeymoon period.

Frankly, the first few years was very fulfilling while residing overseas. Since returning to Singapore in late 2018, again the first 1.5 years was quite fun, as I explored what I've missed. Our expenditure are actually no more than what we spend during our working lives.

Just as you, I've learnt much in taxes, enjoyed finance blogs etc, read a lot, exercised, food, caught up with friends etc.

What I probably should have explored is volunteering, or join a bicycle gang.

I'm actually fortunate that my wife just spends on frivolous things online and that cost doesn't bother me as its a form of entertainment to her. She certainly loves her retirement and I don't she will ever go back to work.

I am a monster with regards to studies from day one of the kids studies. Back overseas, I also came to know an early retiree, but he was splendid in both kids acing their studies jumping a few grades. I don't believe in tutors as evidence to what this person proved to me. Being a recipient of many tutors myself yielded poorly.

I believe no tutors would have your child's best interest as much their parents.

Taking his stride, my kid has done very well even within the Singapore system. We decided on not taking the Chinese exemption but the rigor of preparing him was gruesome.

On hindsight, things only started to bother me post march this year. Perhaps my somber mood would improved after I dive and meet my AA from nov to Jan 2021 ?

**Can you share the components of your AA ? .. I also realise different AA within the equity component do have a significant impact on my risk tolerance.

@swan02 I am also an early retiree 43, with 2 children. In early 2018, I was only 10% in equities , and been vesting into the markets especially on ‘big drop’ days. I steadily moved into a now 48% .
.

 

[Listopad]

Well done. Some might say this is just switching from paid to part-time unpaid work, but whatever the definition, thanks for contributing to society.

I also hope to do the same, but realise that I need to have an extra income stream to deploy alongside any charity work I do, as it is not necessarily the case that the charity I volunteer at has the exact same priorities as I do.. and money talks, even in the charity sector.

I wouldn’t want my kids to think money falls from trees , but from decades of hard work, very high savings rate , investments and a big dollop of luck. Volunteer is a sweet spot that comes in a form of unpaid work (with joy) and opened doors to parts of our society that we overlook, and gives a sense of contribution. It’s great you also hope to do the same !

When planning for retirement , I have also set aside a budget $ for charity giving , forms part of my SWR (a fixed annual $+ variable amount tied to returns of the market).

Retirement is the start of a second phase in life, has to be intentional and do-able with planning ! Treat it as a new job, just no deadlines , you are the boss this time !

 

[DreamingSheep]

Hello again,

Previously i posted about some questions about my lump sum savings but i didn't see any replies after that so i thought i'll check in again to see if theres any other opinions on my plans.

So the plan is to invest my 25k to fund my HDB in 5-7 years.
@swan02 suggested to 20/80 AA. 20% VWRD, 80% MBH. p.s. what's AA by the way? Also, is there any reason to go into VWRD instead of IWDA and why MBH as well. I don't understand considerations which goes into picking an ETF so forgive me for asking a lot of questions. Another thing is how much potential returns will i be able to get after 5-7 years? How do i calculate it?

I'm also planning to do a 300 per mth to build up my portfolio according to ST's guide for ES3, MBH and IWDA. I already started 100/mth RSP into G3B a few mths ago. From what i understand is, ES3 and G3B seem to be similar things; can i keep continuing buying G3B? or should i drop it and swap to ES3?

The MaybankKimEng MIP recommendation in the ST's guidebook seem to be a similar setup to the RSP, which auto deducts the acc every mth. I can only do 300 a mth so theoretically i can only buy different ETFs every mth. But if the MBKE is doing it monthly, how do i buy another etf??

Looking forward to ST's update for the book for the CPF srs portion as well, my money is in the CPF not doing anything now. Of course, any opinions here given will help. Sankyu!!

 

[Kayeesha]

IWDA, SWRD and LCWD track the same index - MSCI World, but VHVE tracks a different index - FTSE Developed World. There are subtle differences between the 2 indices, eg. included countries (S.Korea, Poland) and the number of companies (85% vs 90% of the universe). You should not compare the price/performance of VHVE directly with that of the other 3 ETFs, as they will definitely be a bit different.



I think the price difference is mostly attributed to the low volume of SWRD and LCWD.

The chart below compares IWDA, SWRD, LCWD for the last 2 weeks, in hourly interval.

If you see a flat line, it means there was no trade volume for those hours. LCWD has very low volume, sometimes not a single trade in a day. SWRD is better, but you can still see stretches of a few hours without any volume. IWDA has the highest volume, and price moves up and down frequently.

The LSE closes at 4:30pm UK time. When you look at the closing price of these ETFs, the last done price might occur at different times of the day. For example, IWDA at 4:30pm, SWRD at 3:30pm, and LCWD at 1:00pm. The index can move a lot within a single day. So, the price/performance difference you are seeing is likely due to the previous trade (of the start day) and last trade (of the end day) occurring at different times. 0.08% is too small to be reflected in the price, compared to the movements of the index. It is not meaningful to compare the performance of the 3 ETFs for the last 1 year. More meaningful to compare performance of 10 years and above, as the expected TER saving is more significant.

You may want to take some hints from SPY/VOO/IVV:
https://towardsdatascience.com/spy-vs-voo-is-there-any-difference-437defc2c3f3
https://stockanalysis.com/what-is-the-best-sp500-etf/

Do note that all 3 SPY/VOO/IVV are much larger than IWDA. They probably don't have an issue with spread. Ideally, the spread of SWRD and LCWD should be quantified in order to know whether you really save money.

Many thanks hwckhs for your reply (btw, only the second link works).

I guess it’s too simplistic to think that the TER is the “only major” factor that affects the fund’s NAV. I read that IWDA uses securities lending and employs extensive cross trading between their funds. So, the returns from these activities may be offsetting their higher TER.

Anyway, the money you lose due to spread only occurs when you buy and sell, but the saving on TER occurs every year. My guess is, if you hold for a very long time (eg. 10, 20yr), you will save. However, if you hold for only a few years, then maybe the saving from TER is negated by the spread. Just my guess.

Thanks for your closing thoughts.

 

[Kayeesha]

Hello,

May I know what is the latest recommended international bond etf?

I have seen a few options pop up; CORP LN, LQDA. What about VAGU by vanguard? Any thoughts?

Thank you all!

I have a question on the bond portion of a stocks and bonds portfolio which I think is related to frugal living’s post.

As our stock portfolio comprises local and global stocks denominated in local and foreign currency (US$), would it make sense to have a bond portfolio comprising safe bonds denominated in US$ as well? My thinking is when we come to rebalancing, we don’t have to worry too much about FX risk as we will have US$ bonds to sell to buy US$ denominated ETFs and vice versa?

Thanks.

 

[omnipage]

what are the free charting tools you all are using ?

 

[bobobob]

I have a question on the bond portion of a stocks and bonds portfolio which I think is related to frugal living’s post.

As our stock portfolio comprises local and global stocks denominated in local and foreign currency (US$), would it make sense to have a bond portfolio comprising safe bonds denominated in US$ as well? My thinking is when we come to rebalancing, we don’t have to worry too much about FX risk as we will have US$ bonds to sell to buy US$ denominated ETFs and vice versa?

Thanks.

If you live in Singapore then your expenses are in SGD. Then main worry is that SGD appreciates against USD. That's why ST recommends SGD bond, and both STI and global stocks.

 

[Kayeesha]

If you live in Singapore then your expenses are in SGD. Then main worry is that SGD appreciates against USD. That's why ST recommends SGD bond, and both STI and global stocks.

Thanks bobobob.

I understand that when you are in the retirement phase, drawing down from your portfolio to fund your daily expenses, withdrawing in S$ will be preferred.

However, if you are in the accumulation phase and suppose stocks plummeted, to rebalance you will be selling your bonds to purchase your US$-denominated stocks. So, I thought to hedge currency risk, you would use US$ bonds instead of S$ bonds?

Thanks, once again.

 

[Kayeesha]

Hello everyone again,

Can someone kindly tell me the reasons for selecting ES3 instead of G3B? The expense ratio is the same for both ETFs and G3B gives the higher dividend yield at 4.91% vis-à-vis ES3’s 4.47% and paying once a year reduces the reinvestment cost. So, it would seem G3B is the better choice?

What am I missing? Thanks.

 

[bobobob]

However, if you are in the accumulation phase and suppose stocks plummeted, to rebalance you will be selling your bonds to purchase your US$-denominated stocks. So, I thought to hedge currency risk, you would use US$ bonds instead of S$ bonds?

Thanks, once again.

Can you explain what you think you risk happening if you hold SGD bonds instead of USD bonds in the event you want to sell bonds to buy more global stock?

Btw I'm not sure if it relates to your question, but note that value of USD dominated stock does not necessarily move together with USD strength. Search for some BBCwatcher posts on this.

 

[Kayeesha]

Can you explain what you think you risk happening if you hold SGD bonds instead of USD bonds in the event you want to sell bonds to buy more global stock?

Currency risk?

Btw I'm not sure if it relates to your question, but note that value of USD dominated stock does not necessarily move together with USD strength. Search for some BBCwatcher posts on this.

Not sure how to do this easily ....

Thanks once again.

 

[Han Shot First]

I find for the same index "MSCI China NR", we have
MCHI in US
2801 in HK
LG9 in SGX
Almost the same size and same Expense Ratio.

So which one is good?

2801 HK has a much lower expense ratio than the other two (about 0.2% vs 0.6%), and it seems liquid enough unless you’re planning to trade seven-figure lumps. Pick that one.

What is the TER (Total Expense Ratio) of 2801 HK?

BlackRock states openly that the Management Fee of 2801 HK is 0.20%. However, BlackRock does not state openly what is the TER of 2801 HK.

 

[cassowary18]

Hello everyone again,

Can someone kindly tell me the reasons for selecting ES3 instead of G3B? The expense ratio is the same for both ETFs and G3B gives the higher dividend yield at 4.91% vis-à-vis ES3’s 4.47% and paying once a year reduces the reinvestment cost. So, it would seem G3B is the better choice?

What am I missing? Thanks.

ES3 has been around for longer, has a larger AUM (which reaps economies of scale), slightlynmore liquid, and lower tracking error. But both are good. If you feel like G3B is better for you go for it. Much like how people debate between IWDA, SWRD and LCWD which track the same index.

 

[chrisloh65]

You really hit the nail on the head!

In most other Blackrock index ETFs, they state "Total Expense Ratio".
For 2801 HK, suddenly they don't state "Total Expense Ratio" but only mention "Management Fee", which is usually much lower than "Total Expense Ratio". So what is the "Total Expense Ratio" for 2801 HK then?

Also, I don't like 2801 HK for the fact that just its 2 top holdings constitutes about 35% of the total weights or market value of the fund! Where is the diversification in buying index ETF? Unfortunately this is the problem with many index ETFs isn't it?! They are always over-weight on biggest market cap stocks that will have more limited price growth.

So I rather pick stocks. Example I bought BYD at about HK$26 in 2015 and now it has gone up by about 500% to HK$154.10!

What is the TER (Total Expense Ratio) of 2801 HK?

BlackRock states openly that the Management Fee of 2801 HK is 0.20%. However, BlackRock does not state openly what is the TER of 2801 HK.

 

[limster]

https://www.asiaone.com/money/how-buy-us-stocks-singapore-2020-3-best-investment-brokerages

* 1 Nov 2020 Asiaone article claiming 3 recommended brokerages for US stocks
(1) Saxo (2) TD Ameritrade (3) Poems

* Same article claims that Lower WHT for Irish domiciled ETFs not relevant since US stocks are more about growth

* Never mentioned US estate duty

* Never mention Saxo's 0.75% US$ forex premium vs (IB: 0.01%, FSMOne: 0.25%, SCB: 0.4%) https://investmentmoats.com/money/saxo-markets-high-currency-conversion-fee/

I mean seriously, where do they get these writers from?

 

[shadowsworn]

IB US or SG

Not sure if its been asked. Should i set up a IB US or IB SG account?
or can I only set up IB SG account now that they have an SG office?

 

[moolala]

Not sure if its been asked. Should i set up a IB US or IB SG account?
or can I only set up IB SG account now that they have an SG office?

right now are u still able to set up IB US?

 

[swan02]

At an etf level, There isn’t any currency risk.

Unless you actually perceive Fx risk at a company level before net profit. Eg weaker currency benefits export oriented companies or have many operations overseas such as coke. Hence an etf viewed this way exposes u to fx risk but u r not the Treasurer.

FX risk or benefits to the investor is shown in research to b equity related due to diversification. however at bond level, the benefits was just too little.

Hence vanguard typically hedge an international bond etf, as well as some at equity level. Shiny argues it’s just marketing giving consumers what they want and it’s irrelevant to have hedging of equities and perhaps also international bonds for Singapore domiciled.

As for me, USD bonds only provides one benefit which is to fill in the gaps of our sgd bond market such as illiquidity, poor buffer in event of deflation...but only after u really understood the notion of diversification, volatility and especially rebalancing. U will belong to the school believing equity helps u to eat, high quality bonds helps u to sleep.

Via rebalancing, the negative correlated assets to each other will truly shine. Hence USD GOVT bonds in a deflationary situation is the best negative correlated asset class to a Singapore investor I can find. U can magnify it’s beta by having a longer maturity along with greater interest rate risks. Instead of USD bonds, u can keep USD currency, protects u from expected inflation aka expected interest rate rise as well as deflation though not as potent as USD govt bonds due to USD strengthening in deflationary crisis for a Singapore investor.

however there are many ways to skin the cat. Hence u can achieve similar results just by having mbh, but lowering your equity risk level instead.

Or having unhedged usd bonds and top it up with a small allocation to gold or TIPS, or instead of gold, increase exposure to international equities.

.

 

[Listopad]

**Can you share the components of your AA ? .. I also realize different AA within the equity component do have a significant impact on my risk tolerance.

My AA components:
Equity: 48%
VWRD/IWDA: 71%
EIMI: 20%
ES3: 9%

Bond & cash
CPF/SA/MA - i am big fan, max out all that i can
MBH, local bank perps, Capland, ST Telemedia, NTUC bonds, DBS multiplier, Etiqa, GE205

cashflows from above, are re-invested almost immediately, and let compounding do its job.