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Old 18-07-2020, 09:12 PM   #2506
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How should one account for such averaging up in accounting for their historical returns?
That's a real effect, so I think you just acknowledge it but not worry about it. When the time comes it probably doesn't hurt in terms of potential tax optimization.
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Old 18-07-2020, 11:22 PM   #2507
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Actually the physical location of a company hq or even the stock exchange it is listed in does not matter greatly ?

We have to look at the customer base/source of earnings for those snp500 companies especially those top 5.

If it has been rather international being spread among developed countries, I would think it is not as USA centric as we think it is...

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 19-07-2020, 12:23 AM   #2508
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Actually the physical location of a company hq or even the stock exchange it is listed in does not matter greatly ?

We have to look at the customer base/source of earnings for those snp500 companies especially those top 5.

If it has been rather international being spread among developed countries, I would think it is not as USA centric as we think it is...
You have a point. But a key principle behind index investing is to keep it simple. If you're going to be digging into detail about source of earnings etc. then it really defeats the purpose. With that in mind, IWDA is still superior in terms of convenience and diversification than, say, SPY.
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Old 19-07-2020, 05:43 PM   #2509
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Looking into getting more exposure to tech stocks... What do you guys think of IUIT?
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Old 19-07-2020, 06:00 PM   #2510
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Should one sell US/SG listed stocks in SG before moving to country which has capital gain tax? Or capital gain tax is not applicable for stocks which were purchased during time in SG?
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Old 19-07-2020, 06:41 PM   #2511
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Should one sell US/SG listed stocks in SG before moving to country which has capital gain tax? Or capital gain tax is not applicable for stocks which were purchased during time in SG?
Depends on the country.

From what I know about the US, you‘ll want to realize any capital gains one tax year prior to the year in which you become a tax resident. For any capital losses, you can carry those in, and possibly take a deduction. If your tax residency in the US is only temporary, you may want to sit on any gains until the year after you stop being a tax resident - provided you don’t trigger the deemed expat rules, it may be possible to escape taxation after that (I believe there may be some gray areas though).
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Old 20-07-2020, 12:46 AM   #2512
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Hi bbcwatcher

would like to seek advise how should I better manage the CPF balances of my family
I'm in my mid 30s. My wife is a homemaker and previous OA balances has already wiped out for housing hence the pathetic figures. I am reading your posts from page 1 to find some answers but its taking some time to complete as I am only at page 40+..

I am planning to do a OA to SA transfer as I will not be utilising it for housing at least for the next 6-8 years.

Husband
OA - 49400
SA - 87733
MA - 59452

Wife
OA 374
SA 3000
MA 10


1. Should I focus on maxing my SA to FRS first or help wife reach 60k total balance to earn more interest?

2. For VC as well, if I were to top should I go for my SA, wife's SA or wife's MA.. which would be the priority?
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Old 20-07-2020, 08:05 AM   #2513
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Husband
OA - 49400
SA - 87733
MA - 59452

Wife
OA 374
SA 3000
MA 10

1. Should I focus on maxing my SA to FRS first or help wife reach 60k total balance to earn more interest?
Definitely your wife first since she’s still very eligible for bonus interest.

You are currently allowed to transfer up to $46,633 of your OA balance to your wife’s SA. When you’re below age 55 you must have at least the Basic Retirement Sum ($90,500 in 2020) in OA+SA before you can transfer, so $46,633 is available now if my math is right. Of course her OA and your remaining OA can also be transferred into her/your respective SAs.

You can decide how much OA you want to drag along, if any, for the next 6 to 8 years based on your OA inflow, target amount, etc. But obviously her 5.0% interest earning Special Account (including bonus interest) beats your 2.5% interest earning OA by a whopping amount, so your household is very well compensated for these transfers.

2. For VC as well, if I were to top should I go for my SA, wife's SA or wife's MA.. which would be the priority?
Assuming your wife’s total worldwide income is below $4,000, you can top up her SA by $7,000, and get tax relief for that. Together with a maximum OA to SA transfer (if you decide to do the maximum) that’d take her total balances up to about $57,000, so very close to maximum bonus interest earning. So that’s the best choice among the cash top up choices, because there’s both tax relief (yours) and 5.0% interest (hers).

After that it gets a little more complicated to decide. She still has bonus interest to earn, and that’s compelling. But you may be able to earn $7,000 more of tax relief if you top up your own Special Account and (if you have room below the CPF Annual Limit) $548 of tax relief when you top up your own MA. Typically you’d take these tax reliefs next in priority order, especially if you’re going to be helping her get at least to that magic $60,000 level with subsequent OA to SA transfers and SA top ups. In fact, if you put some money into your SA, that frees up the remainder of your OA to transfer to her SA (since you’ll have $90,500 or more in your SA alone), so that’s another way she could get to $60,000 quickly.

Do you have an idea yet how much OA you’d like to transfer and how much cash is available for top ups?

Of course you’re aware that Special Accounts are reserved for your age 55+ future selves. But if you don’t need all of these OA dollars as OA, it makes perfect sense to get at least some amount repositioned and working harder for you.
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Old 20-07-2020, 09:33 AM   #2514
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[QUOTE=Do you have an idea yet how much OA you’d like to transfer and how much cash is available for top ups?.[/QUOTE]

Good morning and thank you for the prompt reply!

I am looking at 90% of my current OA.. saving some for rainy?! My job is secured just that maybe some psychological assurance should I lose my job I have a buffer to pay off housing loan while I get another job. is there a need?

I should be near the CPF contribution limit

cash wise I'm not quite sure yet.. 7k / year should be doable. I have not done any before.
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Old 20-07-2020, 02:53 PM   #2515
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I am looking at 90% of my current OA.. saving some for rainy?! My job is secured just that maybe some psychological assurance should I lose my job I have a buffer to pay off housing loan while I get another job. is there a need?
I agree with your logic. You can keep and count OA as part of your "emergency reserve" to the extent it could be used to make your mortgage payments, and to the extent you need it above cash reserves. For example, if your mortgage is $1,500/month and you want to keep 6 months of mortgage payment "buffer" in your OA specifically (to augment your cash reserves), that's $9,000 to keep in OA. Then you'd just transfer whatever is above this amount to your wife's SA, and keep doing that as OA streams in until you decide you want to change your desired OA reserve (if you decide that).

As it happens, my household's desired OA reserve is zero since we're happy with cash reserves already, so we transfer everything from OA to SA every month. But whatever your desired OA reserve amount is, whatever is above can be transferred into SA...until you reach the Full Retirement Sum or age 55, whichever comes first. Your wife is farther away from the FRS, and less likely to reach the FRS with compulsory contributions from work, so favoring her SA for a while with transfers and top ups makes a lot of sense.

I should be near the CPF contribution limit
OK. You haven't got much distance between your MA and the Basic Healthcare Sum anyway, so there's not a big tax relief opportunity there. Your wife's SA, with bonus interest and tax relief, seems like the first best option for any cash top ups.

cash wise I'm not quite sure yet.. 7k / year should be doable. I have not done any before.
OK. So I'd pick your wife's SA as the target of that first $7,000, assuming again her total worldwide income this year (2020) is under $4,000. She qualifies for bonus interest, and you qualify for tax relief, so that's a big winner. You and she can still move however many OA dollars you/she want into her Special Account. (Or your OA into your SA for that matter, but you're already earning maximum bonus interest. So she wins.) The only current limit is $46,633 from your OA to her SA since you need at least $90,500 in your OA+SA (the 2020 Basic Retirement Sum).

I don't think she needs to worry about keeping a mere $374 in her OA, so it seems like a no brainer for her to shift that $374 to her SA so she gets some of her own retirement financial security nailed down.

Make sure you both have CPF nominations in place.

I should correct something I wrote earlier. Currently her OA is actually earning 3.5% interest, not 2.5%. That's because her CPF balances are currently low, so her $374 of OA is also earning bonus interest. Shifting the OA dollars to SA means interest on those dollars jumps from 3.5% to 5.0%. That's still a big jump up.
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Old 21-07-2020, 04:02 AM   #2516
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Hi BBCW,

Would you have any recommendations on what to do with a lump sum in these times? Roughly ~200k SGD, about 60-70% in SSBs I bought a while back at about 1.88-1.96% and the rest in a 0.7-0.8% savings account. Would DCA still be advisable? In which case what kind of amount per month would make sense/be suitable?

Last edited by JadenQ; 21-07-2020 at 04:28 AM..
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Old 21-07-2020, 08:06 AM   #2517
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Would you have any recommendations on what to do with a lump sum in these times? Roughly ~200k SGD, about 60-70% in SSBs I bought a while back at about 1.88-1.96% and the rest in a 0.7-0.8% savings account. Would DCA still be advisable?
If these funds are available for long-term investing — not needed for short-term objectives — then you’d invest them, sure. Dollar cost averaging to a minor degree is OK.

In which case what kind of amount per month would make sense/be suitable?
Whatever is mathematically convenient and not too long. How about $20,000/month for 10 months?
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Old 21-07-2020, 05:50 PM   #2518
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BBC,

Just an update on S27, I was finally able to get all the accounts, certifications and authorizations for making my first purchase via SRS. It was confirmed that the SRS account is the custodian and the SRS operator is the one responsible for providing my W-9 status to the dividend payor. It seems like the transaction cost wasn’t as bad as expected. The spread, exchange rate, commissions and fees could be as low as 0.5%. I will provide an update once I know more on the 1099 vs 1042 thing.

Any chance you might reconsider the merits of SRS for yourself?
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Old 21-07-2020, 05:58 PM   #2519
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Any chance you might reconsider the merits of SRS for yourself?
I don't think so, but we'll see.
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Old 22-07-2020, 01:05 AM   #2520
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Hi BBCW,

Thank you for sharing your knowledge on the forum, I'm a big fan of your general advice on investing as well as insurance tips.

Incidentally this time, I need your advice on whether or not to surrender my current life insurance and use the premiums instead to "buy term & invest the rest".

To give some context, my parents signed me up for a 25 years paying par life plan back in 2016 (Annual premium: $1749.68) with a death benefit of 240K, and have paid 4 years worth of premiums ($6999) so far. This plan will cover me up to age 99, but I intend to surrender it at age 70, which based on 4.75% projected return is stated to amount to $151,173 (G: $49,840 + NG:$101,733). On the flipside, if I were to surrender the policy right now, I would get meagre SV of $1675 in return.

I will be turning 28 this year, and am just a month away from paying my 5th year of premium. I am currently investing with a 100% IWDA portfolio, and if I were to surrender this life plan, I would be planning to use the premiums to invest in the same portfolio, with a few conditions:

  1. I am planning return the SV to my mom who graciously paid for the plan in the initial years while I was schooling, so the SV will not be used for investing. Meaning to say the premiums paid thus far ($6999) will be written off as a “loss” from my perspective.

  2. I intend to get a term plan 5 years from now (age 33) when I settle down with my partner which covers up to age 70. For comparison sake I picked a 300K benefit term plan on moneyowl, with the cheapest annual premiums approx. $500 (to be paid yearly from age 33 to 70).

Do you think under this circumstances, would choosing to surrender the plan and follow “buy term & invest the rest” eventually generate sufficient returns to both recoup my “losses” and return additional surplus as compared to if I continued to hold this life insurance till age 70? If so, what kind of %returns must I see in my portfolio by age 70 to be able to do so?

Pardon the long question, I have tried to do the math myself but it’s too complex for my simple mind. Hoping for some clarity before I make the decision to surrender, thanks in advance!

P.s. I have also tried reaching out to those firms that buys life insurance from policyholders, unfortunately they did seem not interested.

Last edited by awckay; 22-07-2020 at 01:08 AM..
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