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Old 02-02-2020, 01:40 PM   #1756
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i consider to stop becoz i thought with approx 75 to 80mths of DCA (total of 100k investment) in etf is good enough... after that i will let the capital + gains + dividend grow on its own until it time for retirement where i will encash them and place into FD or SBB with no risk

The money which i will put in endowment is another 100k which i wanna set aside as a risk free savings with guaranteed return of 2.59%pa. The maturity of this endowment is timed nicely with the depletion of the 100k which Ive allocated for the etf investment. i may or may not wanna use the capital + returns of this endowment to continue to DCA on the etf... this depends on the rate of return i see from the 6 years return of the etf investment, and also the risk appetite i have 6yrs later from now...

The 110k i put inside the UOB one and DBS multiplier would earn 2++%pa with high liquidity in the event of urgent need. this is the money that i will use to pay for my ownstay property (approx 1k per mth). By the end of 2028 when my cpf fully depletes, and if I still have not see a desired capital gain, I will continue to hold for another 2 or 3 yrs (that will need approx 70k.









Why stop? The maturation of an endowment plan isn’t a good reason to stop. Stopping would mean your $1,300/month savings flow crashes to zero. The endowment plan proceeds are simply savings that get reallocated. They shouldn’t be “double counted” as additional savings.

The cash allocation seems a little high to me. That’s equivalent to $9,166 per month for 12 months, not counting your Ordinary Account for mortgage payments.

Last edited by yesimvested; 02-02-2020 at 07:52 PM..
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Old 02-02-2020, 07:49 PM   #1757
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i will stop becoz i thought with approx 75 to 80mths of DCA (total of 100k investment) in etf is good enough... after that i will let the investment + dividend grow on its own until retirement where i will encash them.
Clearly you’re capable of at least S$1,300/month of savings flow without affecting your lifestyle in a way you cannot tolerate. Why would you stop in ~7 years? Because you would suddenly need S$1,300/month of whiskey to drink that you aren’t drinking now? It doesn’t make any sense!

Just keep saving and prudently investing until retirement! This is called “consumption smoothing.” If you do it reasonably well, you enjoy a great lifestyle now, and for the rest of your life, and even have some lifetime gifts for your progeny and loved ones.
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Old 02-02-2020, 07:55 PM   #1758
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you mean i should continue to do DCA investment in the etf with the 100k from the endowment once it matures in 6 years time?

As in its kind of like a no brainer?

i guess it was too conservative...

Do you think the spread of $500 mthly on ES3 and $800 mthly on IWDA is sensible? I dont feel like there is a need to do the 110 - age and twice yearly rebalancing thing...


Clearly you’re capable of at least S$1,300/month of savings flow without affecting your lifestyle in a way you cannot tolerate. Why would you stop in ~7 years? Because you would suddenly need S$1,300/month of whiskey to drink that you aren’t drinking now? It doesn’t make any sense!

Just keep saving and prudently investing until retirement! This is called “consumption smoothing.” If you do it reasonably well, you enjoy a great lifestyle now, and for the rest of your life, and even have some lifetime gifts for your progeny and loved ones.

Last edited by yesimvested; 02-02-2020 at 08:02 PM..
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Old 02-02-2020, 08:11 PM   #1759
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you mean i should continue to do DCA investment in the etf with the 100k from the endowment once it matures in 6 years time?
Yes! That ought to be the default assumption anyway. The endowment plan is past savings, and its maturity doesn’t suddenly make it new savings. It’ll just be existing savings to reinvest while your regular savings flow continues.

Your portfolio allocations are up to you, but planning to slash monthly savings from $1,300 to zero about 7 years from now when you’re at least 8 more years away from retirement doesn’t make any sense.

I’ve been saving something every month for over a quarter century — I started very young — so I don’t think you should stop after 7 years.
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Old 02-02-2020, 09:15 PM   #1760
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yeah i understand....

i guess the difference is stashing money from the endowment 6years later to another endowment which will have a guaranteed gain of 2++%pa return vs using them to do DCA on etf for the next few years.

So it really depends if the future performance of IWDA and ES3 really justify the "risk" of not going for a guaranteed 2++% endowment return.

Not forgetting the initial 100k + gains + dividends that is in the etfs are still in the trading account (rolling hopefully good compounded interest until the day i need to encash them)

Both etf investing and endowment are savings... just a matter of which has more gains and risk.

right?



Yes! That ought to be the default assumption anyway. The endowment plan is past savings, and its maturity doesn’t suddenly make it new savings. It’ll just be existing savings to reinvest while your regular savings flow continues.

Your portfolio allocations are up to you, but planning to slash monthly savings from $1,300 to zero about 7 years from now when you’re at least 8 more years away from retirement doesn’t make any sense.

I’ve been saving something every month for over a quarter century — I started very young — so I don’t think you should stop after 7 years.

Last edited by yesimvested; 02-02-2020 at 09:52 PM..
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Old 02-02-2020, 10:24 PM   #1761
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i guess the difference is stashing money from the endowment 6years later to another endowment which will have a guaranteed gain of 2++%pa return vs using them to do DCA on etf for the next few years.
Those aren't the only two choices. What you probably want to do is this:

1. Save at your $1,300/month pace until retirement. If you can increase that pace as you progress in your career and feel comfortable with a new, higher monthly savings flow, that'd be great.

2. In addition, when the endowment plan matures about 6 years from now, take the proceeds and also invest them in your low cost, age and risk appropriate investment portfolio. So let's suppose that's $100K worth of endowment plan at maturity, for example. If you like, you can divide that up into 10 monthly installments of $10K each. So for a 10 month period you'd add $10K to each of your regular monthly investments (regular is $1,300, or more if you're at a higher pace by then).

So it really depends if the future performance of IWDA and ES3 really justify the "risk" of not going for a guaranteed 2++% endowment return.
No, there's no requirement that you maintain an all stock portfolio. You could add in some MBH, for example, if you feel you want some Singapore dollar denominated bond exposure.

Let's suppose 6 years from now you have $100K worth of stocks (IWDA and ES3) and $100K worth of a matured endowment plan. At that point you're still at least 9 years away from retirement and more like 14 probably. Let's suppose you decide that a 70%-30% stocks-bonds split is what you want to have for this particular $200K at that particular age. (Remember, you're also dragging a lot of cash, and presumably you have CPF assets. So all that is quite conservative.) OK, you already have 50% in stocks ($100K) by then, so to get to 70% you'd take another $40K from the endowment plan and add it to your stock investing, and you'd take the other $60K and buy MBH. So for that 10 month period (as suggested above), you'd do this:

a. Regular $1,300/month (or your higher regular monthly savings flow) still goes into stocks;
b. Add another $4,000/month, split the same way across IWDA and ES3;
c. Buy $5,000/month of MBH.

After the 10 month reinvestment period has passed, you'd adjust your monthly savings flow to spread it across MBH, ES3, and IWDA to maintain your desired portfolio allocations. And you'd periodically rebalance (once or twice per year).

Make sense?

Last edited by BBCWatcher; 02-02-2020 at 10:26 PM..
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Old 02-02-2020, 10:48 PM   #1762
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thats damn bloody detail... thanks and appreciate!

There is this part I can never understand how to do:

"you'd adjust your monthly savings flow to spread it across MBH, ES3, and IWDA to maintain your desired portfolio allocations. And you'd periodically rebalance (once or twice per year)"


Actually I have not commit the 100k into the endowment yet. About to do it already as im not sure for how long will Etiqa offer the 2.59%pa endowment plan.


if thats the case, i would think your recommendation will be to up the monthly DCA by another say 60% while the IWDA and ES3 are still considerably "low cost" as of now... And the balance funds to start with MBH now?

Basically to drop the whole endowment plan idea until probably when i already enter the retirement age...

Then perhaps i will do the below mthly with the 200k for the next 8 years+ and perhaps reduce the monthly investment thereafter depending on my income at that time.

IDWA - $900
ES3 - $600
MBH - $500



Those aren't the only two choices. What you probably want to do is this:

1. Save at your $1,300/month pace until retirement. If you can increase that pace as you progress in your career and feel comfortable with a new, higher monthly savings flow, that'd be great.

2. In addition, when the endowment plan matures about 6 years from now, take the proceeds and also invest them in your low cost, age and risk appropriate investment portfolio. So let's suppose that's $100K worth of endowment plan at maturity, for example. If you like, you can divide that up into 10 monthly installments of $10K each. So for a 10 month period you'd add $10K to each of your regular monthly investments (regular is $1,300, or more if you're at a higher pace by then).


No, there's no requirement that you maintain an all stock portfolio. You could add in some MBH, for example, if you feel you want some Singapore dollar denominated bond exposure.

Let's suppose 6 years from now you have $100K worth of stocks (IWDA and ES3) and $100K worth of a matured endowment plan. At that point you're still at least 9 years away from retirement and more like 14 probably. Let's suppose you decide that a 70%-30% stocks-bonds split is what you want to have for this particular $200K at that particular age. (Remember, you're also dragging a lot of cash, and presumably you have CPF assets. So all that is quite conservative.) OK, you already have 50% in stocks ($100K) by then, so to get to 70% you'd take another $40K from the endowment plan and add it to your stock investing, and you'd take the other $60K and buy MBH. So for that 10 month period (as suggested above), you'd do this:

a. Regular $1,300/month (or your higher regular monthly savings flow) still goes into stocks;
b. Add another $4,000/month, split the same way across IWDA and ES3;
c. Buy $5,000/month of MBH.

After the 10 month reinvestment period has passed, you'd adjust your monthly savings flow to spread it across MBH, ES3, and IWDA to maintain your desired portfolio allocations. And you'd periodically rebalance (once or twice per year).

Make sense?

Last edited by yesimvested; 02-02-2020 at 11:31 PM..
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Old 03-02-2020, 12:01 AM   #1763
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Actually I have not commit the 100k into the endowment yet. About to do it already as im not sure for how long will Etiqa offer the 2.59%pa endowment plan.
Well that's an altogether different situation! So you have another S$100K in cash and no endowment. Why are you interested in an endowment plan for your retirement financial needs?

if thats the case, i would think your recommendation will be to up the monthly DCA by another say 60% while the IWDA and ES3 are still considerably "low cost" as of now... And the balance funds to start with MBH now?
So let's suppose you want that 70%-30% split at your current age, just for sake of argument. So you'd do something like this:

1. For 10 months, invest a total of $11,300 per month. $7,910 (70%) goes into stocks, and $3,390 (30%) goes into bonds. If you want to round that to $7,900 and $3,400, that's fine.

The $7,900 would be split between ES3 (or G3B) and IWDA (or VWRA), so let's suppose that's $3,000 into ES3 (or G3B) and $4,900 into IWRA or VWRA since you said you want to split it that way (in round numbers).

2. Starting in month 11, you ease back to your regular monthly savings pace of $1,300 per month, of which $400/month goes into MBH, $600/month into IWDA or VWRA, and $300/month into ES3 (or G3B). (I'm rounding to nearest hundreds here.) Except you probably wouldn't actually buy each fund every month since there's often a minimum commission to do that, but rather you'd "batch up" your purchases. (Although MBH and G3B are available through POSB Invest Saver on a monthly basis, and that's a pretty reasonable way to buy them in this dollar amount. I think FSMOne is also pretty good. Shop around.)

3. Once or twice a year you'd rebalance. (I think once a year is fine.)

Basically to drop the whole endowment plan idea until probably when i already enter the retirement age...
Why even then?

4. As you get to about 7 years before retirement, you could start making a gradual adjustment to shift the allocations away from stocks and more toward bonds so that, by retirement age, you're at something like a 30%-70% split (stocks v. bonds). But you'd use and keep the same funds. Then, in retirement, you'd have a pool of assets to draw from gradually.
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Old 03-02-2020, 12:37 AM   #1764
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OK, so now you're changing the initial situation again? You now say you have S$200K of idle cash to invest, above the S$110K in cash you've previously described?

You're under 40, and even if you retire VERY early you most likely wouldn't touch your retirement savings until at least age 60. (Why age 60? Because at age 55 you may have some CPF assets you might want to use if you're retiring that early.)

If you have a lump sum to invest for long-term savings, you shouldn't take years to invest that lump sum. You should do it in a matter of months, then continue saving. So if it's $200K to invest, OK, divide that up into 12 months if you like, which is $16,667 per month. Add your regular monthly savings flow to that -- let's suppose that's $1,000/month -- and then invest $17,667 per month for the next 12 months. Then continue at $1,000/month until retirement, adjusting your monthly savings flow upward as your career progresses and you're able to pay more to yourself every month.

Choose a portfolio allocation that's appropriate for your age and risk tolerance. A 70%-30% stocks-bonds split would be rather conservative at your age, actually, but you get to make that decision. Start adjusting the portfolio allocation when you get to about 7 years before retirement.

Let's suppose you wake up 3 months from now and IWDA (or VWRA) has fallen by 20% within the past month or two. Is that bad? No, it's fabulous! That means you're buying cheaper stocks, and who doesn't like a discounted price if you're buying? But you don't want to wait too long -- like years -- to move into your desired long-term portfolio allocations, because that's reducing the time that your money has to grow until you retire. So if you want to divide up a lump sum into 6 or 10 or 12 monthly installments, that's alright, but (for example) chewing up 6 years of your ~20+ years on a low yielding endowment plan doesn't make a lot of sense to me.
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Old 06-02-2020, 11:49 AM   #1765
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got another noob question... couldnt find the answer to it from internet..

May i know approximately how many percent of dividends will we get quarterly from the below etfs? (i understand that the dividends will be reinvested)

1)IWDA (after 15% withholding)
2)ES3
3)MBH

the reason im asking this is to understand if there is a possibility to "live off" dividends when its time to retire.

for example: if the average dividend per quarter for the 3 etf combined is 1%. And i have approximately 500k combined in them. Quarterly i be able to get a dividend of $5000. Coupled with CPF life, i think it be pretty decent to just live off dividends without touching the nest egg at all.

im a noob.. be gentle
1% per quarter means 4% per year. Of course it wont be so high unless you are >90% in reits

In short, when drawing down, do the reverse of accumulating. Sell the leading asset(s) monthly/quarterly according to AA
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Old 06-02-2020, 12:25 PM   #1766
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ah ok... so how many percent are people historically getting per individual etf listed below? would u know?

also.. whats AA? (noob question)

thanks
All the dividend yields can be found by searching. E.g. for ES3 and MBH just sum up the past 12mth dividend and divide by current price

AA = asset allocation
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Old 06-02-2020, 12:45 PM   #1767
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May i know approximately how many percent of dividends will we get quarterly from the below etfs? (i understand that the dividends will be reinvested)
1)IWDA (after 15% withholding)
This fund holds most stocks listed across all of the "developed" countries' stock markets. All the dividends that these stocks pay are reinvested in the fund, less applicable dividend taxes in the countries where these stocks are listed. It's all automatic, the dividends vary, and the dividend tax rates vary. Currently IWDA's underlying gross dividend yield is about 2% per year.

2)ES3
ES3 does not reinvest dividends; it distributes them. Please review fund publications if you'd like past dividend distribution details, and please note that this fund's dividend distributions are planned for twice per year but subject to the fund manager's discretion. That is, the fund manager decides whether, when, and how much to distribute dividends, and the fund manager is under no particular obligation to distribute what the underlying shares themselves distribute. For example, the fund manager could elect to accept scrip dividend offers in lieu of cash dividends. (And we should be grateful the fund manager gets to make such decisions, hopefully intelligently.)

3)MBH
Same thing, except MBH is managed by Nikko AM and has planned, discretionary, annual dividend distributions.

the reason im asking this is to understand if there is a possibility to "live off" dividends when its time to retire.
That's not a particularly interesting question to answer, actually. All three of these funds are highly liquid, and all you should really care about is total long-term returns, inclusive of manually and automatically reinvested dividends. When you're ready to draw down assets in retirement, you can do that through any combination of discretionary distributed dividends (without reinvestment) and share sales.

Don't worry about it, in other words.

Last edited by BBCWatcher; 06-02-2020 at 12:48 PM..
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Old 06-02-2020, 03:43 PM   #1768
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https://www.dividends.sg/view/es3

https://www.dividends.sg/view/MBH
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Old 07-02-2020, 12:23 AM   #1769
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Here's another quick update....

It's another January, so here's what I'm up to (in no particular order):

1. My spouse and I have already put the wheels in motion to make the maximum U.S. IRA contributions for 2020. (It takes a few steps and some days to do that, mechanically, but I start the process as early as allowed.)
Well underway.

2. We'll make our CPF top ups for tax relief at the end of this month.
All done, although one of us might have some "gap filling" MediSave top ups later in the year.

5. I'm penciling in two family vacations for 2020, and I'm keeping an eye on airfares.
And now keeping an eye on the 2019-nCoV-related disruptions.

6. I'm checking my immunizations to see if any boosters are due in 2020. (Tetanus, maybe?)
All good, including Tetanus.

Don't forget about other important investments. For example, it's good to learn how to swim if you or a loved one haven't learned yet. Also, Valentine's Day is coming up on February 14.
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Old 14-02-2020, 06:53 PM   #1770
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Hi BBCWatcher,

There has been talk about a potential downturn of the economy because of the corona virus. Do you have any general advice for us in this market? Is putting monies into gold a good short term option? I have seen people suggesting buying GLD through IB as a hedge at this point. Please can you let us know your thoughts. Sorry if you have written it elsewhere. I went back a few pages but could not find anything on this.
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