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Old 15-07-2020, 11:15 PM   #2491
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Hi BBCW,

Need to seek your advice. I just started rsp 500$ monthly into ES3 (60%) and MBH (40%) via FSMONE. Not long after, I also started buying into VWRA at $1500 bi-monthly. Many have said don't waste time on STI. May I ask should i stop buying into ES3 and put money into cspx or ogig instead? Are they correlated to VWRA? I read the return for S&P is about 7% if you hold it for long term. What's your take on it? Thank you!
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Old 15-07-2020, 11:42 PM   #2492
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Need to seek your advice. I just started rsp 500$ monthly into ES3 (60%) and MBH (40%) via FSMONE.
So that's $300/month into ES3 and $200/month into MBH.

Not long after, I also started buying into VWRA at $1500 bi-monthly.
So that's $750/month into VWRA. As percentages it works to be:

ES3: 24%
MBH: 16%
VWRA: 60%

Many have said don't waste time on STI. May I ask should i stop buying into ES3 and put money into cspx or ogig instead?
Assuming you plan to retire in Singapore and have a right to do so, and assuming you're at least 10 years away from retirement (since you're tilted toward stocks), your allocations seem fairly reasonable. It's a little STI heavy for my tastes, but that's probably just due to rounding to nearest hundred dollar increments.

Are they correlated to VWRA?
First of all, assuming you're not a U.S. person you probably don't want to touch OGIG for tax-related reasons. VWRA already includes all the stocks in CSPX and OGIG, quite substantially, so yes, they're correlated. I'd just stick with VWRA.

CSPX and OGIG have been really high flying lately, near or at record all-time highs. If you're trying to time markets (you shouldn't), then this isn't the obvious time to get more interested in CSPX and OGIG.

I read the return for S&P is about 7% if you hold it for long term. What's your take on it?
It has been 7% or better retrospectively. That doesn't mean it will be even 7% going forward. I generally use 6% (nominal, U.S. dollar terms) as a long-term projection for the U.S. S&P 500, but I "stress test" using much lower figures.
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Old 16-07-2020, 12:19 AM   #2493
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So that's $300/month into ES3 and $200/month into MBH.

<It's roughly there based on the buying price of the index.>


So that's $750/month into VWRA. As percentages it works to be:

ES3: 24%
MBH: 16%
VWRA: 60%


Assuming you plan to retire in Singapore and have a right to do so, and assuming you're at least 10 years away from retirement (since you're tilted toward stocks), your allocations seem fairly reasonable. It's a little STI heavy for my tastes, but that's probably just due to rounding to nearest hundred dollar increments.

<I an 35 yo this year and plan to retire in Singapore. My investment horizon will be at least 20 years. Do you recommend me to transfer some from STI to VWRA? What should the right mix be? Is the current proportion ok? I am buying VWRA via SC.>


First of all, assuming you're not a U.S. person you probably don't want to touch OGIG for tax-related reasons. VWRA already includes all the stocks in CSPX and OGIG, quite substantially, so yes, they're correlated. I'd just stick with VWRA.

CSPX and OGIG have been really high flying lately, near or at record all-time highs. If you're trying to time markets (you shouldn't), then this isn't the obvious time to get more interested in CSPX and OGIG.

<I am a Singaporean. Agree with you that it is too expensive to go into CSPX and OGIG now. Probably have missed the boat. I am actually looking at DCA monthly but still the price is too high now. Since you mentioned VWRA is correlated to these 2 index, I will just stick with VWRA. Regarding tax reason, is it correct to say the tax on dividend is actually very small as ETF generally pay very little?>

It has been 7% or better retrospectively. That doesn't mean it will be even 7% going forward. I generally use 6% (nominal, U.S. dollar terms) as a long-term projection for the U.S. S&P 500, but I "stress test" using much lower figures.
<Am I right to say it is genarally safe to put money into S&P500 for long term till retirement since the long term projection is 6%? would you even recommend using CPA OA to buy into S&P500 with endowus? Thanks!>

Last edited by Sweetangtang; 16-07-2020 at 12:22 AM..
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Old 16-07-2020, 01:05 AM   #2494
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<Am I right to say it is genarally safe to put money into S&P500 for long term till retirement since the long term projection is 6%? would you even recommend using CPA OA to buy into S&P500 with endowus? Thanks!>
Past performance is no guarantee of future results. Also, there's an issue of under diversification if you're betting on just 500 large companies (with the 5 big tech giants making up a disproportionately large chunk of the S&P500) listed only on US stock exchanges...
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Old 16-07-2020, 07:31 AM   #2495
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Your buying pattern looks fairly good to me. ES3 will throw off some dividends (so will MBH), and you could use those dividends for rebalancing. At your age in your circumstances a target allocation of something like 20% ES3, 15% MBH, and 65% VWRA would make sense to me, and you’re very close to that on the buying side and can get even closer, if you wish, via dividend reinvestments. (I’m assuming some CPF savings are occurring, too.)

The U.S. S&P 500 stocks already make up roughly half of VWRA, so you’re already well covered there. VWRA is domiciled in Ireland so you’re getting Irish dividend tax rates (good) and automatic dividend reinvestments within the fund.
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Old 16-07-2020, 08:59 AM   #2496
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Any advice if term CI/early CI plans are worth getting, either solely or to complement DII?

Also, can suggest when to sell your stocks, for a person who does not monitor the markets daily? When it grows above/goes below a certain percentage? Or when cash is required?

Thanks


OK, so this part means you don't need life insurance of any sort. You don't have any dependents. That's easy.


No, that's silly. If you're fine with public hospital care, then just insure to that level. If you're a Singaporean citizen then I suggest Great Eastern's Supreme Health B Plus, optionally with their Classic-B rider. That's an Integrated Shield plan designed to cover public hospital B1 ward on an "as charged" basis.


If you want DII coverage to 75% then yes, you could buy it all from Great Eastern ("PayAssure"). I believe it's also possible to buy the MINDEF/MHA group DII policy to 50% then "top up" to 75% (+25%) with Great Eastern or with AIA. But please check the policy conditions to make sure that's allowed, particularly Aviva's policy letter. You don't want Aviva to knock down its payout by half (from 50% to 25%) if/when you're also claiming from Great Eastern.

I'm not fond of Aviva's lack of tolerance for periods of unemployment. However, they generally have a relatively low premium. You get what you pay for, I suppose.


I don't think PA is particularly important.


You have no dependents, and evidently you don't have any plans to have any. Are you planning to spend Singapore dollars in your afterlife? That might be hard.

If you're "forced" to take life insurance in order to get some other policy you actually need and like -- and if the total premium is still attractive -- OK, so be it, but then you'd make that bundled life insurance as small and as inexpensive as allowed.
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Old 16-07-2020, 01:02 PM   #2497
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Any advice if term CI/early CI plans are worth getting, either solely or to complement DII?
You wouldn't get either without DII, assuming you're able to purchase DII. Or at the very least I lack the imagination to come up with a scenario when DII is less important than CI or ECI. (If someone has such imagination, please chime in.)

I don't think CI or ECI are particularly important. I wouldn't classify them as genuine insurance necessities.

Also, can suggest when to sell your stocks, for a person who does not monitor the markets daily? When it grows above/goes below a certain percentage? Or when cash is required?
Two major occasions, really:

1. When you're periodically (once or twice a year, for example) rebalancing your portfolio to align with your desired allocations in your particular circumstances, such as your planned retirement date.

2. Yes, when you need to cash for immediate spending, and your stock holding is the best source of funds.

There's another possible reason that doesn't really apply to most residents of Singapore, and that's a sale for tax optimization reasons. For example, if you're getting ready to emigrate to a country with a capital gains tax, it might make sense to sell appreciated stocks before emigrating provided that's actually a legitimate, compliant approach to resetting the cost basis.
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Old 16-07-2020, 05:18 PM   #2498
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I have been paying for my mum’s NTUC Enhanced incomeshield advantage rider, and as she goes up the age group, it gets more expensive. I’m paying about $793 for her age group now. She is 62 this year.
She has claimed once when she stayed at TTSH private ward for about 7 days (cannot recall as it was more than 7 years ago) due to a bacterial infection, and the hospitalisation expenses (about 7k) were covered by NTUC.
As with most old folks her age, she doesn’t have adequate insurance coverage (like DI or term etc). I feel that it would be a “waste” to let go of the rider as she could only rely on the private medical insurance for big medical bills.

I’m also paying for the rider for my own Ntuc enhanced incomeshield advantage.

Would like to get your opinion on whether we should continue with the rider. Thank you!
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Old 16-07-2020, 05:46 PM   #2499
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I have been paying for my mum’s NTUC Enhanced incomeshield advantage rider, and as she goes up the age group, it gets more expensive. I’m paying about $793 for her age group now. She is 62 this year.
That appears to be the Deluxe Care Rider, which is actually $753 per year. Please correct me if I'm mistaken.

She has claimed once when she stayed at TTSH private ward for about 7 days (cannot recall as it was more than 7 years ago) due to a bacterial infection, and the hospitalisation expenses (about 7k) were covered by NTUC.
Yes, but she may have had the Plus Rider back then. She had the option to switch to the Deluxe Care Rider which requires a 5% co-payment (cash or usually MediSave payable), capped at $3,000 per policy year. So a $7,000 bill at TTSH would result in a $350 co-pay.

There's a Classic Care Rider available which operates pretty much the same way except it's a 10% co-pay, still with a $3,000 per policy year cap. So a $7,000 bill at TTSH would result in a co-pay of $700. The Classic Care Rider costs $322 per year in her age bracket ($431 less). That's quite a big premium difference, isn't it?

As with most old folks her age, she doesn’t have adequate insurance coverage (like DI or term etc).
Actually, DII is term to age 65, typically. So she's not really missing that. Term life insurance is only necessary if she has a dependent, and that's unlikely if you're paying for her Integrated Shield rider. NTUC's Enhanced IncomeShield Advantage plan is their public hospital A ward Integrated Shield plan.

I'd say that next on the list of policies to consider is CareShield Life, which should be available to her starting in mid 2021. (Does she have ElderShield already?) CSL is basically long-term care insurance.

I feel that it would be a “waste” to let go of the rider as she could only rely on the private medical insurance for big medical bills.
Fortunately there's a much lower cost rider that still caps out of pocket costs for covered services at $3,000 per policy year. Another possible option is to shift to NTUC's Enhanced IncomeShield Basic plan, but that's designed to cover public hospital B1 ward (i.e. 4 bedded rooms), not the single bedded room.

I’m also paying for the rider for my own Ntuc enhanced incomeshield advantage.
Same deal, really: if you're on the Plus Rider (a "legacy" rider that's no longer available) or Deluxe Care Rider, you could consider the Classic Care Rider.

Last edited by BBCWatcher; 16-07-2020 at 05:52 PM..
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Old 16-07-2020, 08:14 PM   #2500
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Your buying pattern looks fairly good to me. ES3 will throw off some dividends (so will MBH), and you could use those dividends for rebalancing. At your age in your circumstances a target allocation of something like 20% ES3, 15% MBH, and 65% VWRA would make sense to me, and you’re very close to that on the buying side and can get even closer, if you wish, via dividend reinvestments. (I’m assuming some CPF savings are occurring, too.)

The U.S. S&P 500 stocks already make up roughly half of VWRA, so you’re already well covered there. VWRA is domiciled in Ireland so you’re getting Irish dividend tax rates (good) and automatic dividend reinvestments within the fund.
Thanks BBCW! Glad to know I am on the right track.
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Old 16-07-2020, 08:18 PM   #2501
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Past performance is no guarantee of future results. Also, there's an issue of under diversification if you're betting on just 500 large companies (with the 5 big tech giants making up a disproportionately large chunk of the S&P500) listed only on US stock exchanges...
Thanks Viventa!
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Old 16-07-2020, 08:57 PM   #2502
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Thanks for sharing. Appreciate it !

Posted from PCWX using iPhone10,5
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Old 18-07-2020, 03:00 PM   #2503
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Total Return “Porn” Through June 30, 2020

For some reason some people like to see my personal rate of return data. OK, here are the latest conveniently accessible figures through the end of June, 2020, across the three investment firms that hold the bulk of my household's investable wealth. My last update was through December, 2019, so this update is after much of the COVID-19 dip, with markets still below their peaks. These figures represent gross annualized total account returns ("money returns") in nominal U.S. dollars. (The net outcome is hard to predict. In particular, some capital gains and dividend taxes have already been paid along the way, but some more capital gains tax will likely be due upon future sale.) Gross dividends have been almost entirely reinvested in full since the accounts were opened. (I say "almost" entirely reinvested because there's one very small, strange exception at Schwab. U.S. persons are not ordinarily subject to withholding tax, and I settle dividend taxes out of cash. Gross dividend reinvesting is a slight advantage, but capital gains tax is a disadvantage. Earlier I said after tax dividend reinvesting, but that’s incorrect except with respect to a little foreign dividend tax paid at the fund level.) Only Vanguard provides an easy way to look up a 10 year number while the others report out to at least 5 years.

Vanguard

10 Year: 7.4%
5 Year: 5.5%
3 Year: 4.7%
1 Year: 1.6%

Fidelity

5 Year: 6.44%
3 Year: 6.07%
1 Year: 3.19%

Caveat: About 14% of my Fidelity holdings are still not reflected in the above figures. This portion only came into existence more recently, and due to an apparent quirk in Fidelity's online system it won't show up in the above figures for some time to come. If included I believe the one year figure especially would be a little lower.

Schwab

Inception: 11.57%
5 Year: 12.01%
3 Year: 9.58%
1 Year: 5.29%

Vanguard holds the biggest share of investable assets, followed by Fidelity, and then Schwab. Savings continue to flow every month into Fidelity and Vanguard.

I have absolutely no complaints. None of this stuff is "rocket science." It's just the natural outcome of regular, dogged, monthly savings for many years into a very small number of low cost, well diversified funds. I have no plans to make any changes except to review my monthly savings flow periodically, hopefully for possible raises. If I’ve engineered these holdings correctly— and I think I have — everything else happens automatically, including rebalancing, dividend reinvestment, and the pre-retirement gradual adjustments from stocks to bonds to a certain extent.
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Old 18-07-2020, 03:40 PM   #2504
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Anticipating Headwinds Ahead

Here’s how I’m thinking about the next several years. First of all, the basic financial math is working really well, or has worked anyway. If for example I estimate an average 6.0% annualized nominal return, we double principal about every 12 years. Then, if we steadily inject more principal, it’s truly magical, really. Boring works, and how.

I expect some upcoming headwinds, though. Maybe we’ll see lower average returns — that wouldn’t surprise me. It seems highly likely tax rates will have to go up (and should) over the next several years, starting as early as 2021. And at some point the “downshifting” into lower average yielding but less volatile holdings will have a meaningful impact. However, the income side of the ledger still looks good (fortunately), and spending is well under control and looks to stay that way. I’m also happy with the fact we have foundational retirement life annuities nailed down well already.
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Old 18-07-2020, 08:32 PM   #2505
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One thing I’ve noticed over the years, as the amount of my savings has increased, all of this new money invested at higher prices has resulted in a significant “average up” of my cost basis, and effectively watered down much of the positive historical returns.

How should one account for such averaging up in accounting for their historical returns?
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