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celtosaxon 05-11-2019 08:03 PM

You wouldn’t want to do it monthly, assuming S$800 converts to US$588, $10 on $588 will be a 1.7% transaction fee.

Based on SCB pricing, the optimal transaction size is US$4,000, so you should target that... but only provided it doesn’t affect your investment discipline - that always comes first, even if it costs more!

Quote:

Originally Posted by dgenex (Post 123557246)
Hi BBC,

I'm going to be investing $800 per month into IWDA via SCB. Would it be wise to DCA every quarter, or better to DCA every 6 months to save on transaction fees?

Not sure whats the general consensus. Thanks!

Sent from Xiaomi REDMI NOTE 7 using GAGT


Okenba 06-11-2019 06:46 AM

Quote:

Originally Posted by celtosaxon (Post 123572720)
You wouldn’t want to do it monthly, assuming S$800 converts to US$588, $10 on $588 will be a 1.7% transaction fee.

Based on SCB pricing, the optimal transaction size is US$4,000, so you should target that... but only provided it doesn’t affect your investment discipline - that always comes first, even if it costs more!

Doesn't matter if you have less than 100k USD. You still pay 10USD per month anyway.

celtosaxon 06-11-2019 08:42 AM

Does SCB charge USD10 per month? Seems they only charge a per trade commission fee of 0.25% or $10 whichever is higher.

Maybe you are thinking of IBKR?

Quote:

Originally Posted by Okenba (Post 123577573)
Doesn't matter if you have less than 100k USD. You still pay 10USD per month anyway.


Okenba 06-11-2019 12:18 PM

Quote:

Originally Posted by celtosaxon (Post 123578699)
Does SCB charge USD10 per month? Seems they only charge a per trade commission fee of 0.25% or $10 whichever is higher.

Maybe you are thinking of IBKR?

You're right. I was thinking of IBKR...
Apologies. Pls ignore... :s22:

BBCWatcher 06-11-2019 06:06 PM

Quote:

Originally Posted by limchooc (Post 123549974)
My 60 yrs old brother is planning to upgrade to a 2 mil property. After factor in selling his existing fully paid house plus some cash top up from his own saving he is still short of 0.5 mil.

Should he use his CPF OA money to cover the shortfall as he already have the FRS set aside in his retirement account. He is quite reluctant to do so as he think CPF money is his safety net to fall back on should anything happen. Moreover, the CPF money is earning 2.5% to 6% of interest.

But on the other hand he may have hard time getting a loan from bank as he is 60 without a stable income.

CPF OA dollars earn 2.5% interest.

If he's unlikely to get a mortgage, and if he's uncomfortable spending S$0.5M more from his nest egg, then he has another choice: don't buy that S$2 million home.

Quote:

Originally Posted by iozxkv (Post 123550970)
As a 20-year-old with long time horizon, what percentage would you recommend investing in IWDA vs ES3 for capital accumulation and why? What’s the reason for the difference in thinking between you and ST (who recommends 50/50)? Very new to all this so I’m interested in hearing your thoughts!

For a non-U.S. person's long-term savings who expects to retire in Singapore, I'm OK with this sort of arrangement:

20% bonds (MBH, SSBs, CPF if you'd like to count it here)
up to 20% ES3 or G3B
remainder IWDA or VWRA

Quote:

Also, is it OK to skip investing in bond ETFs for the time being since I have a longer time horizon or would you still recommend it?
Quote:

Originally Posted by celtosaxon (Post 123553331)
As a 20 year old, you can definitely skip bonds IMO.

No, I think the bond/bond-like leg is still a good idea. You'll need some emergency reserve (SSBs work). Also, early and mid career working people are probably going to make some CPF MA and SA top ups for tax relief anyway, so if you want to count those items as part of your bond allocation, that's probably OK.

Quote:

Originally Posted by dgenex (Post 123557246)
I'm going to be investing $800 per month into IWDA via SCB. Would it be wise to DCA every quarter, or better to DCA every 6 months to save on transaction fees?

Every quarter looks pretty reasonable. While the brokerage commission is a consideration, so is being out of the market. At S$800/month a quarterly buying pattern seems like a reasonable balance in the circumstances.

celtosaxon 06-11-2019 09:14 PM

Quote:

Originally Posted by BBCWatcher (Post 123587135)
No, I think the bond/bond-like leg is still a good idea. You'll need some emergency reserve (SSBs work). Also, early and mid career working people are probably going to make some CPF MA and SA top ups for tax relief anyway, so if you want to count those items as part of your bond allocation, that's probably OK.

If I was 20, I would be putting every cent I could afford into the stock market... knowing I have a 30-40 year time horizon ahead of me. Just think about all of that compounding!

I’m assuming you recommend a small holding outside stocks at this age, maybe a 6-12 month emergency fund? The only other reason to reduce stock exposure is if the person is risk averse — the volatility could negatively impact their conviction to stay in the market through ups and downs (that would be a disaster).

BBCWatcher 07-11-2019 08:52 AM

Quote:

Originally Posted by celtosaxon (Post 123589853)
If I was 20, I would be putting every cent I could afford into the stock market... knowing I have a 30-40 year time horizon ahead of me. Just think about all of that compounding!

I would not, I did not at age 20. You still have emergency reserve at the very least, and that comes first.

Quote:

I’m assuming you recommend a small holding outside stocks at this age, maybe a 6-12 month emergency fund?
Yes, as a notable example. Also, for citizens and PRs there are CPF assets. These holdings (ER+CPF) aren't typically small percentages at age 20 relative to total personal wealth, although there are a few unusually lucky 20 year olds.

Quote:

The only other reason to reduce stock exposure is if the person is risk averse — the volatility could negatively impact their conviction to stay in the market through ups and downs (that would be a disaster).
No, not the only reason. Here are a couple more:

1. It's rare, but stock markets can experience long, generational periods of decline and/or lethargy. (See: Japan.)

2. A 20 year old unfortunately doesn't always have a long time horizon. It's only a long time horizon with high probability, but occasionally not. (Genuinely necessary insurance plays an important role here, too.)

3. It's remotely possible to find yourself on the backside of an adverse tax or other regulatory change that affects stocks in a particularly awkward way. A big hike in capital gains tax on stocks would be one such example, especially if it's applied bit by bit and unannounced/unpredicted (a long running headwind). Generically you might call this category "whole asset class risks." Unlikely, but not impossible.

celtosaxon 07-11-2019 04:30 PM

Call me a wild man, but I moved to Singapore in my 20’s without a job and only $5,000 in savings (actually, I had $0... all my savings was tied up in paying off my car at the time, which fortunately sold one day after I flew here). I ended up living here jobless for 9 months (had to borrow a few thousand to survive)!

Quote:

Originally Posted by BBCWatcher (Post 123594873)
I would not, I did not at age 20. You still have emergency reserve at the very least, and that comes first.


Yes, as a notable example. Also, for citizens and PRs there are CPF assets. These holdings (ER+CPF) aren't typically small percentages at age 20 relative to total personal wealth, although there are a few unusually lucky 20 year olds.


No, not the only reason. Here are a couple more:

1. It's rare, but stock markets can experience long, generational periods of decline and/or lethargy. (See: Japan.)

2. A 20 year old unfortunately doesn't always have a long time horizon. It's only a long time horizon with high probability, but occasionally not. (Genuinely necessary insurance plays an important role here, too.)

3. It's remotely possible to find yourself on the backside of an adverse tax or other regulatory change that affects stocks in a particularly awkward way. A big hike in capital gains tax on stocks would be one such example, especially if it's applied bit by bit and unannounced/unpredicted (a long running headwind). Generically you might call this category "whole asset class risks." Unlikely, but not impossible.


AzureFlux 07-11-2019 11:02 PM

Quote:

Originally Posted by BBCWatcher (Post 120542827)
Vanguard starts its gradual, progressive portfolio adjustments in its target date index funds at the 7 year mark. If somebody is particularly conservative it's probably OK to start the portfolio adjustments as far ahead as 10 years away from drawdown age, but I personally like Vanguard's 7.

Some people like the 110 minus current age formula (stock/stock-like percentage), but that's too active for my tastes. I prefer fixed percentages (and "loose peg" rebalancing), then a progressive "glide" to retirement over the ~7 year period before retirement. That seems like it's easier (less work) and a little better optimized.

Many thanks BBCW for your ideas on the Singapore approach to the "Vanguard Target Fund" portfolio. I have been reading about how your approach is modelled after Vanguard's, but I am not sure if you meant it literally or loosely.

From Vanguard's website, the glide path for their target-date funds is as follows:

Where T = Retirement Age
90/10 all the way until T-25
At T-25, glide to 50/50 until T
At T, glide to 30/70 until T+7

If the differences are intentional, could I get your thoughts on how you arrived at such a deviation to reach your "glide to 30/70 at T-7 from 80/20" approach?

BBCWatcher 07-11-2019 11:32 PM

Quote:

Originally Posted by AzureFlux (Post 123606762)
Many thanks BBCW for your ideas on the Singapore approach to the "Vanguard Target Fund" portfolio. I have been reading about how your approach is modelled after Vanguard's, but I am not sure if you meant it literally or loosely.

Loosely.

Quote:

From Vanguard's website, the glide path for their target-date funds is as follows:
Where T = Retirement Age
90/10 all the way until T-25
At T-25, glide to 50/50 until T
Their initial glideslope in that 25 year period is very gentle, then it gets steeper. The glide has a curve to it, in other words.

Quote:

At T, glide to 30/70 until T+7
If the differences are intentional, could I get your thoughts on how you arrived at such a deviation to reach your "glide to 30/70 at T-7 from 80/20" approach?
Yes, it's a matter of tastes and context. I prefer a somewhat more conservative posture initially (80% stocks/20% bonds) and a longer hold in that posture. In the Singapore context there's CPF which (for a reasonably successful working adult) tends to produce a nicely chunky pile of bond-like funds, much of which becomes liquid at age 55. (U.S. Social Security is more "backloaded.") So I like going a little heavier longer on the stock portion given that typical CPF background reality in/around age 55, that's all. Oh, and Singaporeans on average live a bit longer than Americans.

I should have been more clear that I'm adapting Vanguard's philosophy, not their literal curves. That's a very fair point.

Other glide paths are possible, of course. Just because I like a particular path doesn't mean you should.

ChinoGirl 08-11-2019 12:28 PM

Watched a few videos and found a good link with calculator for me to work out the rebalancing. I am still way off my targeted allocation.
I have decided to pump in more money instead of selling my IWDA as the profit of USD1,000 plus is not enough to balance my G3B and MBH.

I will pump in SGD10,000 *at one shot* for my entire portfolio, and the following will be adjusted accordingly:

IWDA from 84% to 65%=pump in SGD400 (incur 10 monthly fee via IBKR)
G3B from 10.5% to 15%= pump in SGD2920 (0.82% via POSB)
MBH from 5.3% to 20%=pump in SGD6660 (0.5% via POSB)
All amount has been converted to SGD before computing the % for rebalancing.

Is the above plan ok?

celtosaxon 08-11-2019 10:37 PM

Why now?

I would suggest taking a big step back, reasses your future allocation to make sure you are comfortable, and then work out how much funding you have/will have available over the next 12 months and start dollar cost averaging with unwavering discipline. That way by the end of 2020 you will have fully realized your target and can keep adding to it from there.

You should not focus on $ profit or even at the amounts invested, instead, focus squarely on allocation percentages and simply trust that everything will work out (and historically, it always has). Once you build this up over many years, a 5 figure daily gain or loss is not going to register in your brain anymore. You just have to accept this and have faith that things will work out — as long as you are sufficiently diversified, dollar cost averaging and willing to keep going even through a few rough years (like a 50% market drop), you will be just fine.

Quote:

Originally Posted by ChinoGirl (Post 123612764)
Watched a few videos and found a good link with calculator for me to work out the rebalancing. I am still way off my targeted allocation.
I have decided to pump in more money instead of selling my IWDA as the profit of USD1,000 plus is not enough to balance my G3B and MBH.

I will pump in SGD10,000 *at one shot* for my entire portfolio, and the following will be adjusted accordingly:

IWDA from 84% to 65%=pump in SGD400 (incur 10 monthly fee via IBKR)
G3B from 10.5% to 15%= pump in SGD2920 (0.82% via POSB)
MBH from 5.3% to 20%=pump in SGD6660 (0.5% via POSB)
All amount has been converted to SGD before computing the % for rebalancing.

Is the above plan ok?


celtosaxon 09-11-2019 03:52 PM

What do you think about Kitces bond tent where you reduce from 60% to 30% stocks in the 10 year run up to your retirement, then let it go back to 60% in the 15 years following?

This is one way to address sequence of return risk to protect against unlikely and unfortunate timing where the market crashes in the early years of retirement. However, I would say this only matters to those who count on every cent of their retirement income and need rock solid, steady predictable income.

For those who have retirement income beyond their core needs, they can flex and manage through a crash by putting off that round the world trip for a couple of years. I see this similar to having a variable bonus from an employer, you can’t count on it... but you do enjoy it if it comes.

Quote:

Originally Posted by BBCWatcher (Post 123607155)
I should have been more clear that I'm adapting Vanguard's philosophy, not their literal curves. That's a very fair point.

Other glide paths are possible, of course. Just because I like a particular path doesn't mean you should.


BBCWatcher 09-11-2019 09:35 PM

Quote:

Originally Posted by celtosaxon (Post 123629802)
What do you think about Kitces bond tent where you reduce from 60% to 30% stocks in the 10 year run up to your retirement, then let it go back to 60% in the 15 years following?

Wouldn't there be some extra earlier capital gains tax in that? Most people would tend to be pulling capital gains tax forward that way, and into peak earning (and peak tax bracket) years. Unless this sort of move is handled most via heavier bond investing in that 10 year period and/or within tax advantaged accounts.

celtosaxon 10-11-2019 02:13 PM

Good thought from a US tax perspective it would definitely be preferable to make these moves within tax advantaged vehicles, plus dividend income from bonds is best generated inside those as well.

When my wife and I hit full retirement at 67, we expect to be about 50/50, with the bond-like half coming from SSA+CPF+IRA. We will probably have some low earning years (semi-retirement) leading up to age 67 where LT capital gains could be realized tax free. But I am hopeful the bond-like half will cover our core income needs so we can leave the other half in stocks for tax efficiency & inflation protection. That should also self-insure us to a large extent and give us a variable bonus in up years. That is the plan, but who knows.

Quote:

Originally Posted by BBCWatcher (Post 123634102)
Wouldn't there be some extra earlier capital gains tax in that? Most people would tend to be pulling capital gains tax forward that way, and into peak earning (and peak tax bracket) years. Unless this sort of move is handled most via heavier bond investing in that 10 year period and/or within tax advantaged accounts.



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