Official Shiny Things thread Episode V, The Empire Strikes Back

[arrakis]

Shiny Things, ​

Would it be advisable to do a loan switch to CHF now? I have a wealth lending facility with SCB in SGD, given that CHF is now at 10 year high (1.6280) against SGD. My SGD loan rate is about 3.28% vs CHF 0.90%. Will CHF reach 1.65 or 1.70 levels? Think 1.70-1.80 was when they unpegged on 15 Jan 2015.​

I am not well verse in FX so hoping to have your inputs.

 

[revhappy]

OK, but are you barred from holding (as examples) CRPA or IGIL?

Aren't the proceeds coming into India over time? Is that direction of fund movement restricted?

In India, brokers are not allowed to offer overseas listed ETFs or funds. We will have to open a brokerage account overseas, for example IBKR SG or Charles Schwab US and then remit the Rupees to USD or another currency.

The proceeds are allowed to come back to India. But we need to declare our holding to the income tax authorities and then pay taxes 30% on the capital gains.

Personally, I like my assets to be domiciled in the same country where I have the right to live. Thats why inspite of having the ability to keep all my funds in SG, I remitted them to India and allocated them to India domiciled assets.

In India fixed income(FD/bond funds) consistently yield around 7-8%. I know there is currency depreciation, but its okay, my expenses will be in rupee and so far, Indian inflation has been under control. Unlike Latin America or Eastern Europe countries of similar credit rating.

Until recently developed world currencies yielded close to 0. Even MBH was a pain for me, it was way too volatile and overall didnt yield enough for me. Hence, I decided to move everything to India. I dont regret it so far, especially looking at how developed world yields have climbed and wiped out years of returns

 

[revhappy]

Shiny Things, ​

Would it be advisable to do a loan switch to CHF now? I have a wealth lending facility with SCB in SGD, given that CHF is now at 10 year high (1.6280) against SGD. My SGD loan rate is about 3.28% vs CHF 0.90%. Will CHF reach 1.65 or 1.70 levels? Think 1.70-1.80 was when they unpegged on 15 Jan 2015.​

I am not well verse in FX so hoping to have your inputs.

Read the book "The four pillars of Investing" by William Bernstein, you will know to stay away from such complicated exotic products and the private wealth managers

 

[redname]

Hi, wld like to seek some advice on what investment I can get into.

I have starting DCA just last month so it isn't too late to change where I can put my money in.

my portfolio looks roughly like this 30% reits, 30% US market, 20% emerging market/tech, 10% Gold, 10% Cash Funds

1. I read the recommendation to be 60% IWDA/VWRA, 10% ES3 and 30% MBH, is it advisable to change to this instead or stay as what i'm doing?

50% VWRA (VWRA seems more divest, is my understanding correct?
10% ES3
30% MBH
10% Gold

I have this liking for Gold cause i have on hand some gold bought more than 10 years ago and the price doubled, so it seems quite ok for me

2. Along the line of DCA, I have a lump sum that I want to invest into and i figured DCA wld be good too but how long shld i spread it across? 2 years? I dont have immediate use for this sum

3. What other investments can i do? CPF? i read just dump whatever I'm qualified to into some world fund

 

[razoreigns]

If you're looking for free advice, I wouldn't bet 50+% of a retirement portfolio on nominal Indian rupees even when retiring in India. I don't do that with Singapore dollars or U.S. dollars, and they're better currencies.

Can you elaborate on this view? If you are retiring in Singapore, why would you not hold all your fixed income allocation in SGD and take on currency risk?

 

[BBCWatcher]

Can you elaborate on this view? If you are retiring in Singapore, why would you not hold all your fixed income allocation in SGD and take on currency risk?

Any single country's currency could have real purchasing power problems. Singapore's currency has within the living memory of some Singaporeans. I think it's a low risk, but it's a risk.

 

[razoreigns]

Any single country's currency could have real purchasing power problems. Singapore's currency has within the living memory of some Singaporeans. I think it's a low risk, but it's a risk.

You would diversify the currency of the underlying bonds? Doesn’t the equity allocation in say iwda/isac serve as the hedge against inflation?

 

[DevilPlate]

You would diversify the currency of the underlying bonds? Doesn’t the equity allocation in say iwda/isac serve as the hedge against inflation?

For ordinary folks of let say household networth 1-2M……no need to overthink.

At most hold some physical gold bars/coins as insurance.

 

[razoreigns]

I won’t see gold as insurance against inflation since it’s non productive asset. Value of gold is purely speculative and not much utility. I think a portfolio consisting of bonds and equity would do for the man on the street.

 

[BBCWatcher]

You would diversify the currency of the underlying bonds?

I would and do to some extent.

Doesn’t the equity allocation in say iwda/isac serve as the hedge against inflation?

Yes, over the long term that should work well. However, I still think there's merit in having a portion of one's bond portfolio in a global bond index fund. But not until you start approaching retirement, and in retirement. That's when you'll be more "bond heavy."

I won’t see gold as insurance against inflation since it’s non productive asset. Value of gold is purely speculative and not much utility. I think a portfolio consisting of bonds and equity would do for the man on the street.

I agree. If you want to wear a bit of gold jewelry and can afford it, fair enough. If you want to hedge against inflation just buy a real return bond fund such as IGIL and/or individual real return bonds from high quality sovereigns with high quality currencies. If you want to prepare for the end of the world then don't live in Singapore. Move someplace where you can hunt and gather, build a bunker, stock up on freeze dried food, grow your own food, etc. ("Prepper logic" doesn't really have a place for gold. Some metals are fine, but they need to be directly useful for survival.)

 

[razoreigns]

I would and do to some extent.

Yes, over the long term that should work well. However, I still think there's merit in having a portion of one's bond portfolio in a global bond index fund. But not until you start approaching retirement, and in retirement. That's when you'll be more "bond heavy."

I agree. If you want to wear a bit of gold jewelry and can afford it, fair enough. If you want to hedge against inflation just buy a real return bond fund such as IGIL and/or individual real return bonds from high quality sovereigns with high quality currencies. If you want to prepare for the end of the world then don't live in Singapore. Move someplace where you can hunt and gather, build a bunker, stock up on freeze dried food, grow your own food, etc. ("Prepper logic" doesn't really have a place for gold. Some metals are fine, but they need to be directly useful for survival.)

Interesting. This got me thinking whether I should diversify my fixed income allocation into other ETFs since I am planning for a major career pivot in a year or so. Currently my fixed income allocation is my CPF and MBH, totally SGD based. My equity allocation is still high at about 70% and I don’t plan to drastically reduce it quickly as my planned SWR is conservatively low. Bonds will be maximum 50% of my portfolio when I reach 65. Any suggested allocations into specific bond ETFs?

 

[BBCWatcher]

Interesting. This got me thinking whether I should diversify my fixed income allocation into other ETFs since I am planning for a major career pivot in a year or so. Currently my fixed income allocation is my CPF and MBH, totally SGD based. My equity allocation is still high at about 70% and I don’t plan to drastically reduce it quickly as my planned SWR is conservatively low. Bonds will be maximum 50% of my portfolio when I reach 65. Any suggested allocations into specific bond ETFs?

CRPA is a popular low cost global investment grade corporate bond index fund.

 

[redname]

Hi, wld like to seek some advice on what investment I can get into.

I have starting DCA just last month so it isn't too late to change where I can put my money in.

my portfolio looks roughly like this 30% reits, 30% US market, 20% emerging market/tech, 10% Gold, 10% Cash Funds

1. I read the recommendation to be 60% IWDA/VWRA, 10% ES3 and 30% MBH, is it advisable to change to this instead or stay as what i'm doing?

50% VWRA (VWRA seems more divest, is my understanding correct?
10% ES3
30% MBH
10% Gold

I have this liking for Gold cause i have on hand some gold bought more than 10 years ago and the price doubled, so it seems quite ok for me

2. Along the line of DCA, I have a lump sum that I want to invest into and i figured DCA wld be good too but how long shld i spread it across? 2 years? I dont have immediate use for this sum

3. What other investments can i do? CPF? i read just dump whatever I'm qualified to into some world fund

anyone can help?

 

[highsulphur]

Hi, wld like to seek some advice on what investment I can get into.

I have starting DCA just last month so it isn't too late to change where I can put my money in.

my portfolio looks roughly like this 30% reits, 30% US market, 20% emerging market/tech, 10% Gold, 10% Cash Funds

1. I read the recommendation to be 60% IWDA/VWRA, 10% ES3 and 30% MBH, is it advisable to change to this instead or stay as what i'm doing?

50% VWRA (VWRA seems more divest, is my understanding correct?
10% ES3
30% MBH
10% Gold

I have this liking for Gold cause i have on hand some gold bought more than 10 years ago and the price doubled, so it seems quite ok for me

2. Along the line of DCA, I have a lump sum that I want to invest into and i figured DCA wld be good too but how long shld i spread it across? 2 years? I dont have immediate use for this sum

3. What other investments can i do? CPF? i read just dump whatever I'm qualified to into some world fund

1. the allocation seems ok to me given you wanted to include gold. Can always start with that and adjust along the way
2. I would suggest split over max 6 months if you are employed which means more income coming your way as time passes too
3. you can consider CPF as your bond component or you can even use it to invest MBH or ES3. That will free up your cash for your VWRA

 

[redname]

1. the allocation seems ok to me given you wanted to include gold. Can always start with that and adjust along the way
2. I would suggest split over max 6 months if you are employed which means more income coming your way as time passes too
3. you can consider CPF as your bond component or you can even use it to invest MBH or ES3. That will free up your cash for your VWRA

thanks esp for #3, didnt knw abt using CPF for MBH and ES3

 

[Shiny Things]

not optimistic one day china becoming on par with US?
or India becoming the next china?

It's not that China isn't going to grow, it's that the benefits of that growth won't flow to private shareholders. China's stated policy is that they're going to suppress consumer spending and growth in favor of SOCs and export growth.

Shiny Things, ​

Would it be advisable to do a loan switch to CHF now? ​

No. Gonna stop you right there. Absolutely not. No. Nuh-uh. No. Never. NEVER EVER DO THIS. If there's one thing I can teach people (after "diversify, buy index funds, rebalance, hold for a few decades"), it's "foreign currency loans are a terrible idea".

And that's because foreign currency loans inevitably blow up. Swiss-franc loans, in particular, have been blowing people up since at least the 1980s. In 2008, I had friends who took out SGD mortgages on their Australian properties, and in the week when Lehman blew up and AUD tanked 20% in a week and everyone got fired, these people got calls from the bank telling them "if you don't post a quarter million dollars of extra collateral this week we're taking your house". It wasn't great!

The tradeoff for the lower interest rate on CHF or JPY loans is that you have crash risk - whenever there's some sort of crisis, CHF and JPY (especially CHF) tend to rocket higher, because everyone liquidates their bets on higher-yielding currencies and rushes into those "safe-haven" currencies—which means your loan's notional, and your interest payments, suddenly get a lot larger right when you can't afford it.

Hi, wld like to seek some advice on what investment I can get into.

I have starting DCA just last month so it isn't too late to change where I can put my money in.

I'm gonna add here - it's never too late to change what you invest in! It's a good idea to pick an allocation that you feel comfortable with, though, and to stick to it: don't chase hot sectors or trendy investments.

1. I read the recommendation to be 60% IWDA/VWRA, 10% ES3 and 30% MBH, is it advisable to change to this instead or stay as what i'm doing?

Yep, definitely change. You'll get more diversification and more stability.

50% VWRA (VWRA seems more divest, is my understanding correct?

Correct!

I have this liking for Gold cause i have on hand some gold bought more than 10 years ago and the price doubled, so it seems quite ok for me

Nothing wrong with that, but don't over-index on past gains. Past performance doesn't predict future performance, after all - and 2x in 10 years isn't bad, but it doesn't compare with IWDA (tripled in the last ten years). And gold famously has periods of decent returns followed by long periods of absolutely nothing - it flatlined for a quarter of a century between 1980 and 2005, and went nowhere for the entirety of the 2010s - ten years of zero returns while stocks absolutely shot the lights out.

 

[singaporean11]

It's not that China isn't going to grow, it's that the benefits of that growth won't flow to private shareholders. China's stated policy is that they're going to suppress consumer spending and growth in favor of SOCs and export growth.


No. Gonna stop you right there. Absolutely not. No. Nuh-uh. No. Never. NEVER EVER DO THIS. If there's one thing I can teach people (after "diversify, buy index funds, rebalance, hold for a few decades"), it's "foreign currency loans are a terrible idea".

And that's because foreign currency loans inevitably blow up. Swiss-franc loans, in particular, have been blowing people up since at least the 1980s. In 2008, I had friends who took out SGD mortgages on their Australian properties, and in the week when Lehman blew up and AUD tanked 20% in a week and everyone got fired, these people got calls from the bank telling them "if you don't post a quarter million dollars of extra collateral this week we're taking your house". It wasn't great!

The tradeoff for the lower interest rate on CHF or JPY loans is that you have crash risk - whenever there's some sort of crisis, CHF and JPY (especially CHF) tend to rocket higher, because everyone liquidates their bets on higher-yielding currencies and rushes into those "safe-haven" currencies—which means your loan's notional, and your interest payments, suddenly get a lot larger right when you can't afford it.


I'm gonna add here - it's never too late to change what you invest in! It's a good idea to pick an allocation that you feel comfortable with, though, and to stick to it: don't chase hot sectors or trendy investments.


Yep, definitely change. You'll get more diversification and more stability.


Correct!


Nothing wrong with that, but don't over-index on past gains. Past performance doesn't predict future performance, after all - and 2x in 10 years isn't bad, but it doesn't compare with IWDA (tripled in the last ten years). And gold famously has periods of decent returns followed by long periods of absolutely nothing - it flatlined for a quarter of a century between 1980 and 2005, and went nowhere for the entirety of the 2010s - ten years of zero returns while stocks absolutely shot the lights out.

I believe your claim about:
"China's stated policy is that they're going to suppress consumer spending and growth in favor of SOCs and export growth"
is not true and wrong information because I could not find any records where "China's stated policy" is as such.

Could you point us to the China's published records about the "China's stated policy" that you claimed?

On the contrary, what I found is that China Gov's stated policy is to encourage consumer spending to drive China's economic growth and there is a lot of room for growth in this area since most Chinese have a lot of savings or rather too much savings(!) vs US since Americans are now mostly heavily in debt and sooner or later they must reduce consumer spending significantly if they want to reduce their US' total debt which is unsubstainable. Significant reduction in Americans' consumer spending will hit many US listed companies and hence reduce the valuation of most US listed stocks and hence also their stock prices!

Also, China Government's policies to encourage their listed companies to pay more dividends means that investors in China-listed stocks can collect high dividends for their retirement portfolio. You just need to look at many H-shares of the China state-owned banks and they are paying 6% or more dividend yield !

So H-shares is very much more attractive for a Singaporean retirement portfolio than US listed stocks since the latter pay very negligible dividends and not to mention still subjected to the 30% US dividend withholding tax.

 

[BBCWatcher]

On the contrary, what I found is that China Gov's stated policy is to encourage consumer spending to drive China's economic growth and there is a lot of room for growth in this area since most Chinese have a lot of savings or rather too much savings(!) vs US since Americans are now mostly heavily in debt and sooner or later they must reduce consumer spending significantly if they want to reduce their US' total debt which is unsubstainable. Significant reduction in Americans' consumer spending will hit many US listed companies and hence reduce the valuation of most US listed stocks and hence also their stock prices!

I suppose actual statistical facts are boring, but here are the facts. The household debt to GDP ratio in the U.S. is lower in the most recent IMF report than it has been in nearly 25 years. U.S. household debt as a percentage of GDP peaked in 2007. In China the household to GDP ratio is at or near a record high and has been sharply increasing since the IMF started tracking it in 2006. If current trends continue (U.S. household debt falling as a percentage of GDP, China rising) then China will rise above the U.S. by this measure circa 2026 or 2027.

Another “fun“ statistical fact: China’s Gini coefficient (a measure of inequality) rose significantly from 2008 to 2023. (Source: UBS.) In the same period the U.S. Gini coefficient fell slightly. The U.S. is still more unequal, but these two countries are converging by that measure, too.

 

[singaporean11]

I suppose actual facts are boring, but here are the facts. The household debt to GDP ratio in the U.S. is lower in the most recent IMF report than it has been in nearly 25 years. U.S. household debt as a percentage of GDP peaked in 2007. In China the household to GDP ratio is at or near a record high and has been sharply increasing since the IMF started tracking it in 2006. If current trends continue (U.S. household debt falling as a percentage of GDP, China rising) then China will rise above the U.S. by this measure circa 2026 or 2027.

Ah, looks like many people like you have succumbed to typical western media propaganda and brain-washing!

If you just focused on debt to GDP ratio without considering net assets to GDP ratio, then obviously Singapore is also 1 of the most heavily indebted country in the world (just like China)! -- Strangely I don't think you have ever mentioned this point here...

Heck, you can even read in western media that Singapore's Gov Debt to GDP ratio is 1 of the highest in the world!
"In December 2024, Singapore's government debt to GDP ratio was reported as 173.1%."
while
US government debt to GDP ratio is only 124.0% BUT it is US facing Gov debt crisis and not Singapore Gov (with 173.1%)!

https://www.ceicdata.com/en/indicator/singapore/government-debt--of-nominal-gdp

But China also has 1 similar characteristics to Singapore, that is, the net household assets to GDP ratio is also 1 of the highest in the world, VS say USA will be very much lower! -- if the Western media would even tabulate this "net household assets to GDP ratio" statistics to prove their smearing and lie of China (and Singapore)!

With so much net household assets, Chinese (like Singaporeans) have so much money/assets that can be converted to money to spend and consume more while Americans and US Gov with so little net household assets and so much household debts MUST cut their spending to rein in their unsubstainable debt level and this will definitely cause a significant drop in US listed stocks' valuation and hence their share price!

 

[BBCWatcher]

Readers are welcome to review the available statistics for themselves.