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Old 02-07-2020, 06:51 PM   #2461
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The bottom line is that excessive cash hoarding is getting increasingly expensive. So don't hoard too much cash.
But what should we do with the spare cash? Stock market looking dangerously high now...... I am also having a headache to decide. I have put 30% of spare cash into the stock market, and am contemplating what to do with the remaining 70%.

Maybe MBH or A35? Or into beaten down financials ETF?
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Old 02-07-2020, 08:57 PM   #2462
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But what should we do with the spare cash?
It depends on what your plans are for that cash, specifically whether you have any near term spending needs.

Stock market looking dangerously high now......
Which stock market(s)? For example, as I write this, the Straits Times Index is more than 22% off its 52 week high water mark.

I am also having a headache to decide. I have put 30% of spare cash into the stock market, and am contemplating what to do with the remaining 70%.
Maybe MBH or A35? Or into beaten down financials ETF?
Well, ideally you wouldn't be sitting on a big pile of cash in the first place. But whenever I have the happy problem of too much cash piling up, I increase monthly dollar cost averaging into my long-term, well diversified portfolio per desired, age and risk appropriate allocations. This approach works remarkably well, actually.
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Old 03-07-2020, 09:52 AM   #2463
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It depends on what your plans are for that cash, specifically whether you have any near term spending needs.

Which stock market(s)? For example, as I write this, the Straits Times Index is more than 22% off its 52 week high water mark.

Well, ideally you wouldn't be sitting on a big pile of cash in the first place. But whenever I have the happy problem of too much cash piling up, I increase monthly dollar cost averaging into my long-term, well diversified portfolio per desired, age and risk appropriate allocations. This approach works remarkably well, actually.
I feel the US market is kinda dangerous now, Shopify Nikola and Tesla being among the best examples.

Agree with STI being low, hence I have put 30% of the spare cash in STI, HSI and selective stocks like Visa. Not so sure about aggressively investing in IWDA or VUSD, given the current conditions.....
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Old 03-07-2020, 10:14 AM   #2464
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I feel the US market is kinda dangerous now, Shopify Nikola and Tesla being among the best examples.

Agree with STI being low, hence I have put 30% of the spare cash in STI, HSI and selective stocks like Visa. Not so sure about aggressively investing in IWDA or VUSD, given the current conditions.....
Nobody is suggesting any aggressive moves. Just take the excess cash that should be long-term invested, divide it by 10, 12, maybe 15 — something like that — and average it in. If your fear is correct, VWRA or IWDA (notable examples) will fall or even crash, and you’ll be buying cheaper shares over most of those 10 to 15 months.

Last year I reported I had excess cash piling up (a happy problem), and so I raised my monthly buy rate. That raise meant I bought some more index fund shares during the COVID-19 special sales event. I’m pretty happy about how that worked out, but it wasn’t anything impressive. I just monitored cash levels then took action per long-term, preexisting policy to keep those levels from getting too high.

Those particular two stocks are microscopic portions of VWRA and IWDA.

Last edited by BBCWatcher; 03-07-2020 at 10:18 AM..
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Old 06-07-2020, 06:22 PM   #2465
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Advice Needed

Hi BBCWatcher,
I have been reading your posts and have been a great help in providing direction to me on how to relook into my investment portfolio and insurance needs. I just completed a review of my current insurance portfolio and would like to seek your advice on the next steps.
• 40yo, female, non-smoking
• 2 kids under 6 yo
• Earning $12k/mth
• Mortgage loan of $1.3M
Currently, I have the following policies:
1. NTUC Income Vivolife assured of $200K which started in 2008. Includes Severe Critical Illness.
2. TM Asia Life Secure assured of $180K which started in 2007. Covers 30 CI conditions.
3. PruShield Premier & Extra – Covers myself and also purchased for my mum, age 64
I am looking to get a Term Life to cover the mortgage loan of $1.3M, DII (6 mths deferment, 3% escalating benefit and till age 65) and also to downgrade the rider for both myself and mum. Any advice from you on my proposal?
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Old 06-07-2020, 08:57 PM   #2466
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I am looking to get a Term Life to cover the mortgage loan of $1.3M, DII (6 mths deferment, 3% escalating benefit and till age 65) and also to downgrade the rider for both myself and mum. Any advice from you on my proposal?
All that seems broadly reasonable to me. A couple comments:

(a) You'll likely want term life insurance to be compatible with policies #1 and #2. That could mean consolidating policies depending on what you've got and how good a value it is (or isn't).

(b) If you're concerned about premium burdens then you could take a look at switching to PRUshield Plus with its corresponding rider.

(c) Do the children have a basic Integrated Shield plan in place? If they're citizens a solid plan is Great Eastern's Supreme Health B Plus with Classic rider.
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Old 07-07-2020, 07:56 PM   #2467
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Thanks BBC!

For the point on consolidation of policies, can you elaborate more on that and how I should go about with it? I actually am toying with the idea of whether I still wanna keep policy #1 & #2. Also, I just found out that my husband also brought for me the Mindef Group Term Life and PA. These seem to be to be abit excessive. Also, for the Term Life policy, what do you recommend that I should be covered for? Was deciding btw $1.5M or $3M.

As for my kids, they are currently covered under PruShield & PruExtra. We think the premiums are abit too high and am looking for other options available in the market.
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Old 08-07-2020, 08:16 AM   #2468
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For the point on consolidation of policies, can you elaborate more on that and how I should go about with it? I actually am toying with the idea of whether I still wanna keep policy #1 & #2.
Basically you’d look for one or a couple new term policies to replace what you’ve got and add more sum assured, then cancel one or both of the policies you have. In that order, of course, so there’s no coverage gap. If it makes sense to do.

Why more than one new term policy (as a possibility)? Well, one reason is that it’d allow you to ratchet down coverage more easily, particularly as your mortgage is paid down on schedule. And there are a couple ways to do that. For example, you could get three S$400,000 policies (the maximum direct purchase allows) with staggered term ages of 55, 60, and 65. Other variations are possible, of course.

Of course the insurers don’t like what I’m describing since the total premiums are lower, so some of them offer premium discounts if you buy a $1 million (or more) single policy. So you could certainly consider that and see if it’s a good deal for you. Obviously you’re going to be more reluctant to cancel a larger, “lumpy” policy, which is why the insurers encourage it with some premium discount at that level.

Also, I just found out that my husband also brought for me the Mindef Group Term Life and PA. These seem to be to be abit excessive.
I’m not a big fan of PA in general (especially not ahead of DII), but you could certainly take a look at whether the MINDEF/MHA group plan coverage could be raised for term life and whether their DII rider is available to you. The MINDEF/MHA insurance is generally good value for money, so if it’s open to you, great. That particular DII policy’s terms and conditions are not my favorite, but it’s worth considering.

Also, for the Term Life policy, what do you recommend that I should be covered for? Was deciding btw $1.5M or $3M.
Covering the mortgage balance makes sense to me as a starting estimate because it means your surviving husband inherits the home free and clear OR he can sell it and use the life insurance proceeds in some other way to support the household, as he prefers. Bear in mind the outstanding mortgage naturally decreases over time as it’s paid off at standard pace, and your children get that much closer to their own working careers and family lives, so your life insurance needs will ordinarily tend to diminish over time.

As for my kids, they are currently covered under PruShield & PruExtra. We think the premiums are abit too high and am looking for other options available in the market.
Ah, OK. Well, I don’t like the idea of a preexisting condition reset, so one option is PRUshield Plus with its associated rider.
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Old 08-07-2020, 12:14 PM   #2469
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Hi BBCWatcher,

I would really like to get your opinions on which US stocks/ETFs should we put our money in?
Male / 29.
have around 7k to invest.
able to stomach high risk for high return.
has access to IBKR.

as a newbie, can you provide some insights / guide on which we should keep our eyes on? thank you !
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Old 08-07-2020, 07:42 PM   #2470
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I would really like to get your opinions on which US stocks/ETFs should we put our money in?
Male / 29.
have around 7k to invest.
able to stomach high risk for high return.
has access to IBKR.
as a newbie, can you provide some insights / guide on which we should keep our eyes on? thank you !
I really don't have an opinion on particular U.S. listed stocks. I tend to stick with a couple well diversified stock index funds. And I'm sure you don't need my help to find thrilling casino games.
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Old 08-07-2020, 08:06 PM   #2471
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U.S. Mortgage Rates Hit All-Time Low

Mortgage News Daily and Freddie Mac both report that U.S. mortgage interest rates have hit an all-time low, where "all-time" means for the long time those two organizations have been keeping records. MND says that the average 30 year fixed interest rate mortgage dipped to 2.92%. Yes, that's right: the standard U.S. mortgage has a fixed interest rate for the entire 30 year term and no prepayment penalty. Other types of mortgages are available, of course, but the 30 year fixed is quite popular.

The 2.92% rate is a reported average. Borrowers with good or excellent credit scores who shop around -- easy to do online nowadays -- might be able to do a bit better. Assuming a 2.9% nominal rate that's probably a real interest rate of about 1.7%. Not bad!

If you're a borrower in Singapore, these low U.S. interest rates are terrific news. U.S. dollar interest rates heavily influence Singapore dollar interest rates. Rates aren't perfectly correlated, but there is significant correlation. You should see some pretty compelling offers now, although I still caution that you should be wary of rates that are linked to references your lender controls. In Singapore a SIBOR-linked rate is safer, in my view.

The decision whether to take a HDB loan or a bank loan is that much more difficult when bank interest rates are lower, as they are now. I would point out that HDB loans still offer a number of advantages, including greater rate stability if we should see interest rates rise. And you can refinance a HDB loan with a bank loan, but not the other way around. So it's still an "interesting decision."

On the other hand, if you're a saver in Singapore -- putting Singapore dollars in ordinary bank accounts, fixed deposits, and various other cash-oriented vehicles -- then you've probably already noticed that interest rates are quite low. Take that as a strong hint not to hoard excessive amounts of cash, something you shouldn't be doing anyway. "Excessive" depends on your circumstances and needs.

If forced to guess -- and it's only that -- I think we'll have low interest rates for a while, through the rest of 2020 at least.
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Old 09-07-2020, 10:56 AM   #2472
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Thanks BBCW for introducing Elastiq. looks really flexible and promising. Do you have referral code? apparently we can Receive S$50 each.

btw, other than such cash product, could you recommend any etf or unit trust that invest in fixed income at low mgmt fee?

thanks
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Old 09-07-2020, 01:55 PM   #2473
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Thanks BBCW for introducing Elastiq. looks really flexible and promising. Do you have referral code? apparently we can Receive S$50 each.
No, I don't participate in any such programs. If I think something looks potentially interesting, I'll say so only because I think it's interesting.

btw, other than such cash product, could you recommend any etf or unit trust that invest in fixed income at low mgmt fee?
Singtel's Dash EasyEarn is broadly similar but offering 2.0% interest for the first year. There's a S$0.70 withdrawal charge, please note.

For long-term savings I think MBH (the Singapore dollar bond ETF) is still the most viable option. Of course there are various CPF-related possibilities that may be available.
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Old 09-07-2020, 02:21 PM   #2474
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Mortgage News Daily and Freddie Mac both report that U.S. mortgage interest rates have hit an all-time low, where "all-time" means for the long time those two organizations have been keeping records. MND says that the average 30 year fixed interest rate mortgage dipped to 2.92%. Yes, that's right: the standard U.S. mortgage has a fixed interest rate for the entire 30 year term and no prepayment penalty. Other types of mortgages are available, of course, but the 30 year fixed is quite popular.

The 2.92% rate is a reported average. Borrowers with good or excellent credit scores who shop around -- easy to do online nowadays -- might be able to do a bit better. Assuming a 2.9% nominal rate that's probably a real interest rate of about 1.7%. Not bad!

If you're a borrower in Singapore, these low U.S. interest rates are terrific news. U.S. dollar interest rates heavily influence Singapore dollar interest rates. Rates aren't perfectly correlated, but there is significant correlation. You should see some pretty compelling offers now, although I still caution that you should be wary of rates that are linked to references your lender controls. In Singapore a SIBOR-linked rate is safer, in my view.

The decision whether to take a HDB loan or a bank loan is that much more difficult when bank interest rates are lower, as they are now. I would point out that HDB loans still offer a number of advantages, including greater rate stability if we should see interest rates rise. And you can refinance a HDB loan with a bank loan, but not the other way around. So it's still an "interesting decision."

On the other hand, if you're a saver in Singapore -- putting Singapore dollars in ordinary bank accounts, fixed deposits, and various other cash-oriented vehicles -- then you've probably already noticed that interest rates are quite low. Take that as a strong hint not to hoard excessive amounts of cash, something you shouldn't be doing anyway. "Excessive" depends on your circumstances and needs.

If forced to guess -- and it's only that -- I think we'll have low interest rates for a while, through the rest of 2020 at least.
Hi BBCW,

Thanks for your insights! Indeed it makes the choice between HDB and bank loan tougher! In my opinion, govt should revise the hdb loan rate lowe given the objective is to make hdb affordable for everyone. The uncertainty here is no one knows how long will this low interest rate last and will it continue to be lower than 2.6%? It will be good for people who have few lease years remainin to switch to bank loan and pay off the loan fast. May I ask is it wise to take up hdb loan first to enjoy the low downpayment and switch to bank loan next year to enjoy lower monthly loan payment? Thanks!
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Old 09-07-2020, 03:06 PM   #2475
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Indeed it makes the choice between HDB and bank loan tougher! In my opinion, govt should revise the hdb loan rate lowe given the objective is to make hdb affordable for everyone. The uncertainty here is no one knows how long will this low interest rate last and will it continue to be lower than 2.6%?
I'd have to think it through a little more, but perhaps what the government could do is something like this:

1. Lower the OA interest rate to 2.0% for amounts above $20,000.

2. Lower the HDB loan rate to 2.1%.

"Be careful what you wish for."

It will be good for people who have few lease years remainin to switch to bank loan and pay off the loan fast.
No, it's NOT good for responsible savers/prudent investors to repay low cost loans any faster than they need to. Bank loans are even lower cost now than they used to be, and they used to be low cost, too.

May I ask is it wise to take up hdb loan first to enjoy the low downpayment and switch to bank loan next year to enjoy lower monthly loan payment?
It depends on what you value. Obviously if you want a lower down payment then the HDB loan helps. If you value payment and rate stability, the HDB loan wins again. If you are willing to accept some rate risk with the possibility (not guarantee) of reducing your interest cost, a bank can help out. It's easier to accept the rate risk when you have the ability to pay off most or all of the remaining mortgage in the event the mortgage interest rate gets unacceptably high relative to your investment alternatives -- in other words, as you accumulate greater wealth.

A fairly popular pattern is this one:

1. You get a BTO with 5 year MOP, and you get a HDB loan with a low down payment.

2. With 2 or 3 years remaining on your BTO, and with some of the HDB loan repaid, you refinance with a lower interest bank loan with a 3 year fixed interest rate period.

3. When the 5 year MOP is finished, you sell your BTO. That is, you were always quite sure (or at least reasonably sure) you were going to flip your BTO as soon as allowed, so a 3 year fixed interest rate bank loan works quite well for you in this way, especially after initial HDB loan payments and additional savings fix the down payment gap you had.

Last edited by BBCWatcher; 09-07-2020 at 03:11 PM..
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