I want to extend my thanks to Shiny Things and numerous other contributors for being so helpful and patient with the rest of us. I have learnt a lot from this thread and what is being shared certainly resonates on a deep level. My investing experience so far is that about once every two years I get excited about 'getting my act together' and go speak to financial consultants, read internet forums and then maybe 4 days later I get so overwhelmed and then just procrastinate putting anything into action. Repeat this sad situation once a year and that's my experience over the last 10 years of my life. At least one thing I've learnt about myself is that if investing gets too complex, I won't do it.
Hey, nothing wrong with that - everything has to start somewhere! And we'll get you sorted out; you're on the right track already.
1. I am also a late starter at 40, with approximately S$450-S$500k in cash to invest and perhaps S$5k-8k/month to DCA into my retirement fund. I know I'm nowhere near private banking material, but based on my quantum should I still implement my retirement plan with SCB for SGX ETFs and Interactive Brokers for my LSE holdings? Or is there a potentially more efficient way of doing things? I actually already have a a number of broker accounts (Philips and UOBKH) which I can use.
Nope, you're doing it exactly the right way. Phillips and UOBKH and all the other brokers are far more expensive than Interactive Brokers for global stocks; and Stanchart is generally the cheapest way to do Singaporean stocks.
I will say, though, that you might be able to negotiate a better rate than Stanchart on your Singaporean stocks because you've got a lot of volume to do. Try calling up Phillip or UOBKH and telling them "I've got $300k to invest with you in a few big clips, and I want a better brokerage rate". If either of them can beat 0.18%, then it might be worth using them instead of Stanchart.
2. Along the same lines, I am probably more comfortable with moving my upfront cash into my retirement fund in stages rather than all at once. Again, given the lump sum quantum, does the 'drip it in in three equal chunks over three months' guideline apply, or are there other considerations?
Sure, that's totally OK. And 3-4 months is a good time to spread it out over, if you want to spread it out; you don't want to take too long, otherwise you'll have cash sitting on the sidelines doing nothing for ages.
3. I am still trying to figure out how to categorise my CPF savings into the bond portion of my savings. If, based on my existing OA+SA balance of about S$130k, I have a total pool of S$630k to invest. Should I be achieving my balance at S$440k of cash in stocks, S$190 of cash in a bond, and just hold my CPF 'as is'? (NB: My OA doesn't really increase that much as contributions pays down my home mortgage).
If I treat CPF savings as bonds as described, does this mean I don't really have 'dry powder' to move into equities when prices drop, since its not really cash (and I assuming I don't have real cash on hand to rebalance) or do I implement this rebalancing by using CPF to buy ES3?
I'll come back to this one later; need to have a bit of a think about this. It's a good question!
4. Given that Medisave is for medical costs (I may be wrong), can I just ignore any balances I have there for retirement purposes?
I don't actually know the answer to this one. I'd say if it can only be used for medical purposes, I'd ignore it for the purposes of retirement savings; does anyone know the rules about tapping Medisave?
5. How do people treat real estate investments (excluding primary residence) in their retirement plan? As many Singaporeans have real estate investments which make up a large chunk of their net worth, I am curious why this isn't given more attention in this thread.
Honestly it's because I think real estate is usually kind of a dumb investment, so I tend to ignore it. I've lived in Australia, Singapore, and California in my life, and all three of those places currently have stupidly-expensive real estate, so I've just decided to ignore it entirely for now. REITs can be useful as part of a balanced portfolio, but they sit in an awkward middle ground between stocks and bonds; I don't own any at the moment, but I might think about them in the future.
6. I have contributed to SRS to reduce tax and presently have about S$38k worth of ES3 in my SRS account. I intend to keep contributing the maximum amount every year. For simplicity, should I just add this to the retirement pool fund or is there any reason why I should keep this separate?
Yep, just treat it as part of your retirement pool, even though it's held in a different account.
7. I have approximately GBP60k held in a UK bank (my savings when I worked in London for a while). Should I buy some GBP denominated fund or should I change it into SGD? Any benefit to holding GBP for diversification, or should I change it now back into my home currency? Is this basically the same situation as holding VRWD/IWDA and having USDSGD exchange risk when it comes time to retire?
It's pretty much exactly the same situation, yeah.
I'd convert it back to SGD right now - put it through your Interactive Brokers account to get the best rate - and use it to fund your ES3 purchases. GBPSGD's at a five-year high, so now's a great time to convert it back.
1. Bite the bullet. Sell all my counters and buy STI ETF and ABF bond fund?
2. Retain counters that gives good dividend, sell counters that is currently at loss and put the money into STI ETF?
3. Do nothing for equities counters, use spare cash into ABF bound funds?
4. Other ways that you think is feasible?
I'm a bit of a purist when it comes to asset allocation, but I'd go for #1.
The thing is that your stocks that are throwing off good dividends aren't necessarily good stocks - there are plenty of dismal penny-stock murderholes on the SGX that are still paying dividends.
There have been some good suggestions upthread about selling off most of your stocks except the good ones; I'd say that if you really want to hang onto some of your positions, it's OK to keep the blue-chips for now, and sell off all the miserable pennies and replace them with the STI ETF and the ABF bond fund. At your age, you want to start dialing down your risk appetite, so you definitely don't want to have money in penny-stock punts.
So let's say - start with selling off the stocks that are just bad. The penny-stocks; the losers; the ones that aren't in the STI already. Move that money into the ABF bond fund to bring you up to your allocation target, and put the excess into the STI ETF. There you go - you've got your nice safe bond allocation, and you've got your allocation to stocks, and you haven't had to sell any of the stocks you really like.
