*Official* Shiny Things club

[Bedokian]

When buying ES3 and A35 using dollar cost averaging method in the "110 minus your age" proportion, do we have to go through the process of sell high and buy low or do we just continue to hold regardless of the price, collect the dividend and sell only when we really need the money?

In portfolio rebalancing method, the concern is more of maintaining the proportion of the equity-bond portfolio in accordance to the 110 minus one's age, rather than timing the market (and the price).

Rebalancing is usually done yearly or half yearly, but if you are going through a DCA method, maybe it would be simpler if done at the same frequency, i.e. DCA via yearly or half yearly. Else if you are DCA monthly, you have to calculate how much ES3 and A35 to buy based on your last known equity-bond proportion.

As for when you need the money, it will be when you are fully retired and this portfolio would be used as your income, by drawing down (4% per year, as per normal rules). ST could provide more answers for this.

 

[Astro2]

Rebalancing is usually done yearly or half yearly, but if you are going through a DCA method, maybe it would be simpler if done at the same frequency, i.e. DCA via yearly or half yearly. Else if you are DCA monthly, you have to calculate how much ES3 and A35 to buy based on your last known equity-bond proportion.

If I use DCA monthly, and buying ES3 and A35 alternatively. On the 12th month which I need to do re-balancing, I will see what's my ES3 and A35 ratio at that point of time and just use the money for that month to buy the laggard to bring the ratio back. Will this be a simplier approach?

Astro2

 

[bluetwinkle]

When you rebalance to the proportion, you sell/buy.

Actually I was thinking along the line if one should sell all when the price is near say one-year high and about 10-20% than each unit paid after DCA, and then buy again with the money when the price is lower.

 

[bluetwinkle]

In portfolio rebalancing method, the concern is more of maintaining the proportion of the equity-bond portfolio in accordance to the 110 minus one's age, rather than timing the market (and the price).

Rebalancing is usually done yearly or half yearly, but if you are going through a DCA method, maybe it would be simpler if done at the same frequency, i.e. DCA via yearly or half yearly. Else if you are DCA monthly, you have to calculate how much ES3 and A35 to buy based on your last known equity-bond proportion.

As for when you need the money, it will be when you are fully retired and this portfolio would be used as your income, by drawing down (4% per year, as per normal rules). ST could provide more answers for this.

Thanks. So this plan is more like saving for retirement rather than building income?

I guess my initial idea of how to do this was more like gambling on the system. It felt like one would be able to get more units.

 

[chuanz]

Thanks. So this plan is more like saving for retirement rather than building income?

I guess my initial idea of how to do this was more like gambling on the system. It felt like one would be able to get more units.

No no no. Everybody knows buy low sell high, but when's low and when's high? E.g now it's definitely not high, so is it low? Time to buy? Buy how much? 10%? 30%? 80%? So if after you buy then Monday drop again. Then what? Sell? Buy more? Or you didn't buy and Monday rebound strongly. Then what? Buy? Hold back wait and see?

The whole idea/beauty of DCA index ETF is, you don't care!

 

[reinphd]

Thanks. So this plan is more like saving for retirement rather than building income?

I guess my initial idea of how to do this was more like gambling on the system. It felt like one would be able to get more units.

Yes am for retirement with this plan. You can see it as a source of income with the dividend. But the longer vision would be to reinvest them back, so that you can retire earlier depending on your goals

Sent from Samsung SM-G900F using GAGT

 

[highsulphur]

something interesting happened to me on IB today.

I placed a GTC order for IWDA to buy at 41.50 days ago. I checked on my mobile to see that the order has been filled. However, when I logged in to TWS, I noticed the average price filled was the day low of 40.68! Not that I am complaining but there is no way such things can happen on SGX.

 

[wahkao3]

something interesting happened to me on IB today.

I placed a GTC order for IWDA to buy at 41.50 days ago. I checked on my mobile to see that the order has been filled. However, when I logged in to TWS, I noticed the average price filled was the day low of 40.68! Not that I am complaining but there is no way such things can happen on SGX.

why sgx wont happen????

 

[ping56]

Hi. I'm wondering how come the stock market are all dropping? If it's a correction, why is it happening? Sorry for my noob qns.

 

[wahkao3]

Hi. I'm wondering how come the stock market are all dropping? If it's a correction, why is it happening? Sorry for my noob qns.

concern on china

 

[Bedokian]

If I use DCA monthly, and buying ES3 and A35 alternatively. On the 12th month which I need to do re-balancing, I will see what's my ES3 and A35 ratio at that point of time and just use the money for that month to buy the laggard to bring the ratio back. Will this be a simplier approach?

Astro2

Also possible. But that being said (addressing to bluetwinkle as well) I realised you will incur more transaction costs and a bit more admin time doing it monthly.

Based on books that I have read (in particular The Permanent Portfolio), it is always recommended to start a portfolio in one lump sum, rather through DCA, because when you buy the various asset classes at the same time, it will be some kind of snapshot of the portfolio, and come 6 months or 1 year later, a clearer picture can be seen as to who are the under performers (and need to buy more) or vice versa. Performance can be tracked easily as well.

During rebalance, it does not mean you still stick with the amount you started (e.g. I started off with $10,000 - $7,000 (70%) in ES3 and $3,000 (30%) in A35, and play around with this $10,000 only every 6 months or 1 year). At the rebalancing stage, you could add in and grow the capital (using same e.g., after 6 months, it has become $8,000 (80%) ES3 and $2,000 (20%) A35. I then inject in $2,000 more, and make it back to 70-30, so in total I have $12,000, and I buy another $400 for ES3, and $1,600 in A35, making it to $8,400 (70%) in ES3 and $3,600 (30%) in A35).

So, I was thinking, for both of you, maybe you could start with a lump sum first, then with the accumulated cash allocated for investment, rebalance the portfolio 6 months or 1 year later, thus saving the hassle of a monthly purchase.

Thanks. So this plan is more like saving for retirement rather than building income?

I guess my initial idea of how to do this was more like gambling on the system. It felt like one would be able to get more units.

All investment plans start with an aim, usually saving for retirement or financing your kids' education, etc.

Portfolio rebalancing is never about timing the market, but fixing a timing on when to buy in, regardless of the price and market conditions.

Disclaimer - I do not practice this method of investment, but I do follow certain principles of it.

 

[Shiny Things]

Hi. I'm wondering how come the stock market are all dropping? If it's a correction, why is it happening? Sorry for my noob qns.

There's almost never a proximate explanation for any particular selloff. For this one it's any number of things: worries about a slowdown in China, twitchiness on the Korean peninsula, fears of what's going to happen when the Fed hikes, overleveraged positions in US equities getting blown out, generalised EM panic after Kazakhstan and all that...

To be honest - it's not worth looking for an explanation for "why is the market selling off"; there's almost never one good explanation. Certainly there are some panics where the explanation is clear: the 1987 meltdown was driven by program traders selling to hedge mutual-fund portfolios; the Flash Crash was triggered by some idiot at Waddell and Reed selling a gargantuan clip of SPX futures, with no rate limit, into a market where market-makers were already withdrawing liquidity; February 2008 was because Socgen was unwinding a gargantuan unauthorised long position in index futures run up by Jerome Kerviel; the China melt earlier this year was retail margin muppets buying the ding-dong high and getting stopped out.

But most day-to-day moves are just a case of "more sellers than buyers" or "more buyers than sellers". A little bit of nihilism doesn't go astray - it's okay to accept that you don't know why the market moved.

 

[Shiny Things]

something interesting happened to me on IB today.

I placed a GTC order for IWDA to buy at 41.50 days ago. I checked on my mobile to see that the order has been filled. However, when I logged in to TWS, I noticed the average price filled was the day low of 40.68! Not that I am complaining but there is no way such things can happen on SGX.

Score! Send some donuts to the guys at IBKR.

 

[Shiny Things]

Thanks. So this plan is more like saving for retirement rather than building income?

Exactly right. You're trying to be methodical about investment here - buying regularly every month, not trying to pick bottoms and tops. (Nobody can do that, and anyone who says they can is lying.)

I guess my initial idea of how to do this was more like gambling on the system. It felt like one would be able to get more units.

 

[lala81]

something interesting happened to me on IB today.

I placed a GTC order for IWDA to buy at 41.50 days ago. I checked on my mobile to see that the order has been filled. However, when I logged in to TWS, I noticed the average price filled was the day low of 40.68! Not that I am complaining but there is no way such things can happen on SGX.

Yes happened to me before, order filled below the price i input.
That's with Stanchart

 

[lala81]

Exactly right. You're trying to be methodical about investment here - buying regularly every month, not trying to pick bottoms and tops. (Nobody can do that, and anyone who says they can is lying.)

my experience with my trader friends, one oil and one shares, is that they will always revise their forecasts that they told u the last time (if it doesn't happen)

Being a good trader i guess is getting it right 65-70% of the time.

 

[newjersey]

my experience with my trader friends, one oil and one shares, is that they will always revise their forecasts that they told u the last time (if it doesn't happen)

Being a good trader i guess is getting it right 65-70% of the time.

if they are 100% sure on insider news, they won't need to draw a salary.

 

[Shiny Things]

I didn't know shiny things is an expert in insurance too!

I'm not - I just have very strongly held opinions on insurance (basically you don't need anything except hospital cover, and a term-life plan if you have dependents). You might want to start a separate thread if you've got insurance questions.

 

[JJJ010101]

Hi guys, seeing that General Election is nearing. Why are your views on Singapore's future economy?

Are we hitting some road bumps in terms of growth, particularly Singapore companies?

Have we really maxed out on (easy)ways to grow like what PM said?

What are your strategies for investing with this in perspective?

Sorry if this has been brought up recently in the thread, didn't really have much time to actively follow.

 

[w1rbelw1nd]

Hi guys, seeing that General Election is nearing. Why are your views on Singapore's future economy?

Are we hitting some road bumps in terms of growth, particularly Singapore companies?

Have we really maxed out on (easy)ways to grow like what PM said?

What are your strategies for investing with this in perspective?

Sorry if this has been brought up recently in the thread, didn't really have much time to actively follow.

Isnt it really on a case by case basis? Some Singapore-based company have huge overseas exposure, but some's revenue is only in Singapore...

Personally, I feel that if the government stop wasting so much money on defense we can use the money for better purposes. Lowered defence Budget need not equate to a weak military.