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Old 13-01-2020, 08:14 PM   #1681
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When i was abt to execute my trade, i noted that SCB charges abt 0.8% of fees. By right , it should be 0.20% only. After searching scb web, i noted that there are additional fees for LSE.
Is there no way to avoid these fees?
Yes, this is a known, reported, ongoing problem. Standard Chartered doesn’t estimate the fees correctly ahead of the buy order for U.S. dollar quoted funds. They charge correctly, though.
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Old 13-01-2020, 09:01 PM   #1682
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Under what scenarios are endowment plans worthwhile at all?

I recently saw an ad at a bank that seemed to suggest that endowment plans force someone to save for 5 years and need a commitment with no hope of an early withdrawal. The writeup was based on projections of 3-4 or even higher annual returns. But that may be marketing, may hide exorbitant management costs and suppose at the end of 10 years, they generate 2% or 2.5% p.a.

Even with that, I was imagining that for someone with no appetite for equity, and therefore no possibility of losing the capital, but also no immediate requirements, no issues with that 10-year lock in period, little uncertainty about the monthly commitment, pretty good insurance and reserve funds in place, that it wouldn't be an absolutely terrible thing.

I was not approached by the bank to buy but I was wondering who would be a good candidate to buy into one of those plans.

Last edited by vegavega25; 13-01-2020 at 09:06 PM..
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Old 14-01-2020, 12:35 AM   #1683
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There are two types of endowment plans. One is a participating fund endowment plan which shows you the projections for 3.25% and 4.75% PAR fund performance. This is the type to avoid.

The other type is more like a fixed deposit. Usually the period is 3-5 years and the returns are fixed. These aren't too bad, if you are ok with IRR ih the low 2%s
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Old 14-01-2020, 07:28 AM   #1684
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There are two types of endowment plans. One is a participating fund endowment plan which shows you the projections for 3.25% and 4.75% PAR fund performance. This is the type to avoid.

The other type is more like a fixed deposit. Usually the period is 3-5 years and the returns are fixed. These aren't too bad, if you are ok with IRR ih the low 2%s
Hi tangent, of the one which acts like FD,any that you know of ? i am looking for one to keep my short term fund but they seems to be fully subscribed the moment they are out.
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Old 14-01-2020, 11:06 AM   #1685
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No, they come and go quite fast.
They aren't really all that much more attractive than MBH though.
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Old 14-01-2020, 11:12 AM   #1686
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If you do a search in bogleheads, the general consensus is to go for treasuries instead of corporate bonds as corporate bonds has some equity risk. They say just go for treasuries and take on equity risk in equities. Of course you can also just have total bond fund but we do not have such a passive fund here.

So why here in hwz, mbh is recommended over a35 ?

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Old 14-01-2020, 02:04 PM   #1687
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Good to know they charged correctly. Thanks!

Yes, this is a known, reported, ongoing problem. Standard Chartered doesn’t estimate the fees correctly ahead of the buy order for U.S. dollar quoted funds. They charge correctly, though.
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Old 14-01-2020, 03:23 PM   #1688
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If you do a search in bogleheads, the general consensus is to go for treasuries instead of corporate bonds as corporate bonds has some equity risk. They say just go for treasuries and take on equity risk in equities. Of course you can also just have total bond fund but we do not have such a passive fund here.
I wouldn't characterize the Bogleheads forum as having a "general consensus" on this point. It's a point of friendly debate, actually.

So why here in hwz, mbh is recommended over a35 ?
In my view, someone who (a) is planning to retire in Singapore, (b) is reliably allowed to do so (i.e. is a Singaporean citizen, PR, or is a LTVP holder legally married to an opposite sex citizen or PR), and (c) is not a U.S. person is probably best served using MBH as the primary bond leg of his/her long-term investment portfolio. I think it's reasonable to forecast that MBH will have a higher long-term yield than A35, and I think the higher yield is worth the slight default risk a particular individual bond issuer might have and also worth the greater short-term volatility.

I should point out that the Singaporean context is different than the U.S. centric Bogleheads perspective, with the "typical" long-term investor that I've just described (except for the LTVP spouses) also ending up with not only a well stocked or even super stocked CPF Retirement Account (and resulting CPF LIFE annuity) but also some decent or bigger CPF Special and Ordinary Account assets. CPF assets are very government bond-like. In other words, you do (or should) have a government bond(-like) leg in your long-term portfolio, and it's an excellent one: CPF. That's unlike the United States which does not have any age 55+ balance aspect to U.S. Social Security. (Although I happen to think U.S. Social Security is a fine program that'll only need a Net Investment Income Tax (NIIT)-like revenue boost and a bit of tweaking to bolster benefits for low income beneficiaries.) I write extensively about maximizing available CPF-related opportunities, as you probably know.

If you can predict another big financial crisis with high confidence, then of course you should load up on high quality government bonds just ahead of the crisis. That's one event when they do quite well.

I don't think MBH is a perfect fund by any means. I wish it'd just accumulate dividends, and if it says "investment grade" in the name then it should hold only investment grade bonds, not bonds that a bond rating agency hasn't actually rated. (Or call it something else.)

I can also see an argument for these same individuals to invest in a multi-currency bond index fund, in a small allocation percentage, as they approach retirement and while in retirement. That'd help mitigate hypothetical "black swan" events involving the devaluation of the Singapore dollar relative to other major currencies. I don't think it's required, but I could see why some people might get slightly fancy and add a little dash of a global bond index fund.

Last edited by BBCWatcher; 14-01-2020 at 03:28 PM..
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Old 15-01-2020, 03:39 PM   #1689
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There are two types of endowment plans. One is a participating fund endowment plan which shows you the projections for 3.25% and 4.75% PAR fund performance. This is the type to avoid.

The other type is more like a fixed deposit. Usually the period is 3-5 years and the returns are fixed. These aren't too bad, if you are ok with IRR ih the low 2%s
The fixed returns short-term plan is certainly a fixed deposit for all practical purposes.

But it is the participating fund endowment plan that I am still intrigued by. I certainly think that it is sold on the basis of the lure of the 3.25-4.75% p.a. performance. And the guaranteed (fixed?) amount was certainly lower than the sum of total premia paid over a 5 year period.

That said, (1) I am curious why you say these must be avoided, (2) from an academic perspective I am wondering who a good client for these plans is, and (3) what is a decent non-equity-based non-treasury alternative for a fixed-time horizon.

If a potential client someone is investing with a fixed time period in mind, with pretty high confidence that he/she'd want the money back exactly in January 2030, AND has either other types of equity exposure or zero appetite for equity, is it something to consider adding to the portfolio of financial products? Or, what non-SSB non-treasury product would you offer as an alternative to an endowment plan?

Tangent and BBC, would appreciate your thoughts.

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Old 16-01-2020, 01:49 PM   #1690
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Hi BBCW, do u have any recommendation for new born term insurances?
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Old 16-01-2020, 04:11 PM   #1691
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Hi BBCW, do u have any recommendation for new born term insurances?
That depends. What newborn-related risks are you trying to defend against?
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Old 18-01-2020, 08:05 AM   #1692
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As a periodic reminder, I see lots of threads from people who are evidently panicked about cancer (as a notable example) who think it's a good idea to buy insurance that might pay (for example) $100K if you get mid or late stage cancer. And/or they're even considering Early Critical Illness (ECI) insurance.

But those same people seem oblivious to the utterly catastrophic risk of becoming disabled, unable to work, and losing (as an example) $2 million or more of lifetime employment income.(*) While living in Singapore, a high cost country which is, shall we say, not known for its generous social benefits.

I don't get it! Priorities, people! Maybe Critical Illness (CI) insurance is something you might still buy (I don't think so, but maybe), but surely CI must be a lower insurance priority than Disability Income Insurance, right? Why is this not blindingly obvious to more people?

(*) How do you get to $2 million? It's equivalent to an average of about $5,555/month of income, inclusive of employer and employee contributions to CPF, for 30 years. Or $3,500/month of take home pay, before income tax, if you prefer to think of it that way.
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Last edited by BBCWatcher; 18-01-2020 at 08:14 AM..
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Old 18-01-2020, 03:32 PM   #1693
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does anyone know where I can get a reasonable quote for DII? I asked two agents but they were all super keen to sell me life policies instead. Very frustrating and waste my time.

As a periodic reminder, I see lots of threads from people who are evidently panicked about cancer (as a notable example) who think it's a good idea to buy insurance that might pay (for example) $100K if you get mid or late stage cancer. And/or they're even considering Early Critical Illness (ECI) insurance.

But those same people seem oblivious to the utterly catastrophic risk of becoming disabled, unable to work, and losing (as an example) $2 million or more of lifetime employment income.(*) While living in Singapore, a high cost country which is, shall we say, not known for its generous social benefits.

I don't get it! Priorities, people! Maybe Critical Illness (CI) insurance is something you might still buy (I don't think so, but maybe), but surely CI must be a lower insurance priority than Disability Income Insurance, right? Why is this not blindingly obvious to more people?

(*) How do you get to $2 million? It's equivalent to an average of about $5,555/month of income, inclusive of employer and employee contributions to CPF, for 30 years. Or $3,500/month of take home pay, before income tax, if you prefer to think of it that way.
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Old 18-01-2020, 03:49 PM   #1694
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does anyone know where I can get a reasonable quote for DII?
MoneyOwl provides instant online quotations for Aviva’s IdealIncome DII policy, and they rebate 50% of the sales commission. However, bear in mind the premium quotation essentially assumes an office job solely in Singapore, so don’t take the initial quotation too seriously if that’s not you. Aviva’s MINDEF/SAF group DII rider is available via the same dedicated sales channels as the other policies for that group. For Great Eastern and AIA you have to work with agents, but you can visit one of their corporate customer service offices and have a chat that way. They might be more professional in their interactions. Roadshows also seem to offer somewhat better interactions from what I’ve observed, and you might get a free trinket.

You can also head over to the insurance thread, post the basics, and insurance salespeople who monitor this forum will probably be able to give preliminary quotations. Example: “age 34 next birthday, female, office desk job, longest available elimination period requested, want $3,500/month of DII coverage to age 65 (can confirm that’s at or below 75% of present salary), and please provide escalating and non-escalating benefit quotations if available.” (Aviva offers that.)

Last edited by BBCWatcher; 18-01-2020 at 03:54 PM..
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Old 18-01-2020, 05:17 PM   #1695
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Hi BBCWatcher, I got a feeling that the commission for Early Critical Illness and Multipay is very attractive. And it preys on the availability bias on a lot of us. Usually, we should just get maybe $50,000 in early critical coverage.

The premiums are doubled that of late-stage critical illness, which is equivalent to a normal death and tpd coverage.

Perhaps selling $50,000 isn't very shiok, but selling $300,000 in multipay... that is a different matter all together.
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