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tmkedmw 26-07-2018 09:29 AM

Bank's Structured Deposit?

An easy way to remember is that Structured Deposit are "structured" heavily in bank's favor.

peipei1 26-07-2018 02:25 PM

Hey BBC, what is your present LTD investment returns % shown on IB portfolio analysis? I guessing at least 100% or more, investing since GFC, let us drool a little lol

BBCWatcher 26-07-2018 04:30 PM

Quote:

Originally Posted by peipei1 (Post 115686782)
I guessing at least 100% or more, investing since GFC, let us drool a little lol

I'm a U.S. person, so Interactive Brokers really isn't best for me, except in a couple ways. Firms like Vanguard, Fidelity, and Schwab work better for me, in other ways.

I'll answer your question this way, and please bear in mind we're looking at an inappropriately "interesting" 10 year period right now -- that's a very important caveat. Of course the financial world is going to look pretty good when you're comparing today versus 10 years ago. Also, this information is in U.S. dollar terms.

Vanguard is the custodian for slightly over half my household wealth, and Vanguard makes it quite easy to look at the last 10 years since you can pull up a report. So, I'll just look at that part since I'm lazy. ;) For that biggest chunk, the annualized nominal rate of return has been 7.4%. That's at least 5 percentage points above the U.S. dollar inflation rate over the same interval, so I certainly cannot complain. That's a pre-tax figure to some extent, I should point out. (My dividend tax rate is decent, but I also owe/pay capital gains tax.)

This is all nothing "special" -- it's just math. For comparison, DQYDJ reports that for approximately the same interval (mid-June, 2008, to mid-June, 2018) -- the latest data they have available -- the U.S. S&P 500 had an annualized nominal total rate of return of 9.666%. But that's not really the right comparison. The 9.666% number is based on taking X dollars and dumping them all into the U.S. S&P 500 on June 15, 2008, reinvesting the dividends, and adding no more dollars. And it wouldn't be quite that high anyway since a fund manager would collect a small fee along the way. That's not me. I had/have a more diverse portfolio, and I also saved/save every month along the way.

I'm going to mask the following figures by expressing them after applying a random divisor. At Vanguard, on July 1, 2008, I had a total balance of approximately 115 "units." (I started well before 10 years ago.) Over the next 10 years I added approximately 292 "units" -- doggedly, monthly. The total account value is now approximately 660 "units."

bobobob 26-07-2018 04:38 PM

Quote:

Originally Posted by BBCWatcher (Post 115688804)
I'm a U.S. person, so Interactive Brokers really isn't best for me, except in a couple ways. Firms like Vanguard, Fidelity, and Schwab work better for me, in other ways.

I'll answer your question this way, and please bear in mind we're looking at an inappropriately "interesting" 10 year period right now -- that's a very important caveat. Of course the financial world is going to look pretty good when you're comparing today versus 10 years ago. Also, this information is in U.S. dollar terms.

Vanguard is the custodian for slightly over half my household wealth, and Vanguard makes it quite easy to look at the last 10 years since you can pull up a report. So, I'll just look at that part since I'm lazy. ;) For that biggest chunk, the annualized nominal rate of return has been 7.4%. That's at least 5 percentage points above the U.S. dollar inflation rate over the same interval, so I certainly cannot complain. That's a pre-tax figure to some extent, I should point out. (My dividend tax rate is decent, but I also owe/pay capital gains tax.)

This is all nothing "special" -- it's just math. For comparison, DQYDJ reports that for approximately the same interval (mid-June, 2008, to mid-June, 2018) -- the latest data they have available -- the U.S. S&P 500 had an annualized nominal total rate of return of 9.666%. But that's not really the right comparison. The 9.666% number is based on taking X dollars and dumping them all into the U.S. S&P 500 on June 15, 2008, reinvesting the dividends, and adding no more dollars. And it wouldn't be quite that high anyway since a fund manager would collect a small fee along the way. That's not me. I had/have a more diverse portfolio, and I also saved/save every month along the way.

I'm going to mask the following figures by expressing them after applying a random divisor. At Vanguard, on July 1, 2008, I had a total balance of approximately 115 "units." (I started well before 10 years ago.) Over the next 10 years I added approximately 292 "units" -- doggedly, monthly. The total account value is now approximately 660 "units."

Scrooge mcduck over here! :D

BBCWatcher 26-07-2018 05:10 PM

Fidelity is the custodian for approximately 20% of my household wealth, the next biggest chunk. That's a "legacy" account, meaning that I haven't been adding to it for several years. And Fidelity doesn't make it easy to find 10 year figures, but I do have the 1, 3, and 5 year annualized nominal total account return figures since those are easy to find, U.S. dollars of course:

1 Year: 9.28%
3 Year: 7.76%
5 Year: 8.28%

These are pre-tax figures. Future tax may effectively reduce these returns. It's no great surprise these numbers are a bit higher than the Vanguard 10 year number. Since these Fidelity funds are more aggressively invested (quite intentionally), and since I haven't been adding funds (except for dividend reinvestments), they shine a little brighter. Also, the last 5 years in the markets have been a bit better than the 5 prior, as I recall.

Finally, let's look at Schwab, which is only approximately 3% of my household wealth, but it's getting monthly inflow now and for more than 3 years running. Since account opening just over 3 years ago the annualized total account return (nominal, pre-tax, U.S. dollars) is currently...15.79%. But don't get excited about that. It's nothing meaningful. Obviously it's better to have a nice positive number like that, but it's a statistical blip. I don't really take it seriously.

How can I explain Schwab? On extremely rare occasions I might see a distressed stock that I like, and I might buy a minor amount of it. Well, that's what I did at account opening at Schwab. That particular stock has doubled over this time span, plus paid some dividends. It's just dumb luck. I very rarely do this, and never in a big way. That particular rare event skews that total return figure in my smallest brokerage account.

Gainduia 26-07-2018 05:15 PM

Hi BBCW,

Wondering if it is wise to have a 'no bond' portfolio?

Planning to DCA into IWDA+EIMI and ES3 only.
I'm also looking into asia pacific or europe ETF. Any recommendations?

Thanks!

Milla3113 26-07-2018 05:23 PM

Hi everyone,

I’m new to this forum and am pretty new to investing. I saw someone asked about structured deposits a while back. What are your views on Structured Notes?

I am holding on to some USD currency, do not own any US shares and thought this might be a way to start for a newbie. Or am I being naive?

US Tech shares - Google + Apple + Microsoft + Amazon

Structure : Stepdown

Currency: USD

Tenor: 15Months

Underlyings : Google + Apple + Microsoft + Amazon

Autocallable Coupon : 8%p.a, payable on KO, or at Maturity if no share conversion

KO: 99%, stepping down -1% every subsequent month

KI: EKI, indicative 65%, observed at Final Observation date only

Thank you.

tangent314 26-07-2018 05:23 PM

Quote:

Originally Posted by Gainduia (Post 115689579)
Wondering if it is wise to have a 'no bond' portfolio?
Planning to DCA into IWDA+EIMI and ES3 only.

You should be fine with decent CPF holdings as your bond component. Just make sure you have enough emergency cash.

Quote:

I'm also looking into asia pacific or europe ETF. Any recommendations?
Those regions are already included in IWDA+EIMI. There is little value in favoring a particular region unless you are speculating.

tangent314 26-07-2018 05:29 PM

Quote:

Originally Posted by Milla3113 (Post 115689728)
Hi everyone,

Iím new to this forum and am pretty new to investing. I saw someone asked about structured deposits a while back. What are your views on Structured Notes?

I am holding on to some USD currency, do not own any US shares and thought this might be a way to start for a newbie. Or am I being naive?

US Tech shares - Google + Apple + Microsoft + Amazon

Structure : Stepdown

Currency: USD

Tenor: 15Months

Underlyings : Google + Apple + Microsoft + Amazon

Autocallable Coupon : 8%p.a, payable on KO, or at Maturity if no share conversion

KO: 99%, stepping down -1% every subsequent month

KI: EKI, indicative 65%, observed at Final Observation date only

Thank you.


BBCW has already responded to a similar query a few hours ago: https://deluxeforums.hardwarezone.co...#post115681858

BBCWatcher 26-07-2018 05:34 PM

Quote:

Originally Posted by Gainduia (Post 115689579)
Wondering if it is wise to have a 'no bond' portfolio?

I would answer "no" in the Singapore context, for at least two reasons:

1. I think it's prudent to nail down an emergency reserve fund first, and Singapore Savings Bonds (SSBs) are an excellent way to store most of those reserves.

2. CPF assets are bond-like, and they are attractive. Singapore Citizens and Singapore Permanent Residents have that opportunity, and they should take advantage of it, even if they're not required to.

Quote:

Planning to DCA into IWDA+EIMI and ES3 only.
I'm also looking into asia pacific or europe ETF. Any recommendations?
I'm not a big fan of trying to pick regional winners/losers. That said, EIMI and ES3 already cover Asia-Pacific rather well if you look at the composition of those funds. Taking a quick look at Europe, IMEU (Blackrock iShares ETF) looks like the best of the pan-European stock funds. The management fee is reasonably low, it's a big enough fund, and it has broad European coverage, including the EU and the Brexiting United Kingdom, and including large and medium cap stocks.

crimsontactics 26-07-2018 05:40 PM

Dear Bro BBC,

I'm 26 this year.

My net worth is 200k, but 95k is inside CPF.

5k in OA
85k in SA
5k in MA

Is it too much in CPF? Should I stop putting money in CPF?

Sent from . using GAGT

Gainduia 26-07-2018 05:54 PM

Thanks tangent and BBCW advice.

I do have emergency fund (in maxigain) and monthly CPF into my account.

Will stick to having some % in SSB (bond) for my portfolio.

Milla3113 26-07-2018 06:21 PM

Hi Tangent314,

I did see that thread but it was for structured deposits while this is a structured note.

If there is an old thread on structured note, pls let me know as I was not able to find it when I did a search. Thanks!

Tiger9119 26-07-2018 06:26 PM

Quote:

Originally Posted by Shiny Things (Post 115680224)
There's no such thing as a good structured deposit, to be quite frank; they're all an exercise in gouging fees out of you and sticking you with terrible risks.

I'm going to guess that if any of those stocks closes below that knock-in price in any one of the six months, that you get stuck with the returns of the stock... after it's dropped 20-30%. That's a pretty awful deal!

And do you know anything about Viacom, Baidu, or CVS that makes you want to own the stock? Not just "I know this is a company", but do you know about Baidu's corporate structure? Do you know about Viacom's wrangling with CBS and National Amusements? Do you have a view on how the US retail and pharma sectors are going to be affected by Donny Two Scoops' economic policies?

Thank you to Shiny Things and BBCWatcher for the replies. Looks like I have to temporary put the USD in 3 months FD @ 2.1% pa.

BBCWatcher 26-07-2018 06:36 PM

Quote:

Originally Posted by crimsontactics (Post 115690035)
I'm 26 this year.
My net worth is 200k, but 95k is inside CPF.
5k in OA
85k in SA
5k in MA
Is it too much in CPF? Should I stop putting money in CPF?

First of all, congratulations. You've maxed out your CPF bonus interest (5%) by age 26 (or 25?), and that's remarkable, really. You've hit the Basic Retirement Sum for all intents and purposes ($85,500 in 2018)! My guess is you've done some OA to SA transfers and also SA top-ups for tax relief to get to this point. Well played.

What next? It really depends on whether you need OA for housing going forward. If you don't, or don't any time soon, I'd keep transferring OA to SA. That strategy is sound. If you do need OA for housing, you can ease back to partial monthly OA to SA transfers or stop the transfers altogether.

I'm assuming you don't have a spouse or partner yet, so we'll skip that part.

I don't think I'd recommend cash SA top-ups at this point. I actually prefer MA top-ups for tax relief first, since they're tougher to squeeze within the CPF Annual Limit as your work career progresses, since they can be useful at any age, and since the "spillover" behavior from MA to SA (thence to OA) is nice. You're also going to have the compulsory CareShield Life premiums coming up soon enough (30th birthday) -- you're part of the compulsory CareShield Life cohorts -- so you can juice up MA a little if you wish. Anyway, if you've got spare cash that doesn't have a better outlet, I'd give MA a little more love, for the tax relief of course.

If you "never" need OA for housing then what you could do is continue topping up MA (first) and SA (second) for tax relief, continue the full OA to SA transfers, and then, at some point (Full Retirement Sum), your OA will start to swell from compulsory contributions. Whereupon you could consider dabbling in the CPF Investment Scheme-OA. This is maybe the one exceptional situation when I think the CPF Investment Scheme has some merit: MA/SA full, OA piling up, don't need OA for housing. And/or you use OA to service your mortgage, if 2.5% (or whatever the OA yield is) just isn't appealing enough. But that's in the possible future, some years hence.

CPF at 5% (or 4% now) is "weird." It's bond-like, but it's strangely high yielding. I view it as roughly similar to ES3 (Straits Times Index fund) in terms of expected yield, and that's just...weird, in a good way. And having that base allows you, prudently, to be somewhat more aggressive elsewhere in your investing. That's pretty special.


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