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foozgarden 25-06-2018 07:52 PM

Quote:

Originally Posted by BBCWatcher (Post 115137166)
I'll restate some basic facts about me and leave it at that:

* Living in Singapore
* CPF member
* U.S. citizen, and among the ~6%(*) of U.S. citizens living outside the United States who owe/pay some U.S. income tax on non-U.S. source income
* Lucky in several respects
* In broad agreement with John Bogle's saving/investing philosophies (diversification, simplicity, regularity, cost efficiency, etc.), and I'm also a Vanguard customer/member
* In broad agreement with Shiny Things, among others
* Do not work for any financial services firm, have no sales interest of any sort in any financial products, and don't want to
* Do not work for any government
* Work mostly because I enjoy my work

If I write something nice about a particular financial firm, financial product, or government offer it'll most probably be because I do it/use it personally because I think it's a good deal, or at least that I think it's a good deal in certain other circumstances. But I'm always looking for better deals, and I've learned about a few better deals in this forum. I try to do a lot of research and keep learning.

(*) J. Richard Harvey, Jr., a professor at Villanova University, estimated this particular percentage. It's the only estimate of its kind that I've found. That circa 6% is skewed toward U.S. citizens residing in comparatively low income tax jurisdictions who have relatively high or higher U.S. taxable non-U.S. source incomes. About 54% of adults residing in the U.S. owe/pay any U.S. income tax, for comparison.

which district do you live? 9, 10, 11? =)

BBCWatcher 25-06-2018 08:14 PM

BBCWatcher's Broad Views on Insurance
 
OK, so let's kick things off with a quick outline of my views on insurance. I think it's quite important to prioritize covering essential insurance needs first, ahead of saving and investing.

"Executive Summary": If you're a working adult in Singapore with a base public hospital Integrated Shield plan, disability income insurance (DII), and (only if you have dependents) term life insurance, then you've probably covered your genuine core personal insurance needs well.

Insurance is a financial tool that serves only one genuine purpose: it helps you reduce risks that you cannot reasonably handle on your own and that would seriously impair your basic lifestyle (and/or your loved ones' lives). In other words, good insurance helps you cope with genuine calamities. Like any other financial tool (or product), value for money is important. Often insurance companies will create complex products that include a little questionable insurance with a lot of even more questionable fluff. It's almost always best to avoid such "hybrid" products.

In the Singapore context, I think there is a "Big Three" set of insurance products for most adults, and here they are:

* Medical insurance, which is supposed to pay (or at least reimburse) your biggest medical bills. Within Singapore, fortunately there's a high quality and moderately priced (especially for citizens) public medical system, and that's your strong framework for nailing down this particular insurance need. Getting care from private medical providers might be nice, but it's not essential. In the government's view, compulsory MediShield Life coverage combined with a "reasonable" or better Medisave balance are sufficient for public hospital B2 ward (or C ward) stays. I happen to disagree with the government on this point, and I think there's a reasonable argument that an "as charged" public hospital B1 ward Integrated Shield plan is an insurance necessity, for working adults anyway. Integrated Shield plan riders are not essential, although if you decide to get a rider anyway then I'd opt for a "Lite" or "Saver" rider that caps but does not eliminate your annual out-of-pocket costs for covered services. Having to pay a $2,000 medical bill (partially Medisave payable), for example, is unpleasant perhaps but ought not be calamitous.

Integrated Shield coverage is quite reasonable for acute care involving hospitalization. It's not so great for "lingering" scenarios that involve chronic care needs. DII (see below) offers some help there.

If you venture outside Singapore, especially to high medical cost and/or poorly medically served areas, then travel medical insurance with medical repatriation and medical evacuation coverage is essential. The many other possible parts of common travel insurance, such as lost luggage and accidental death coverage, are not essential.

As of this writing, I think Great Eastern's "as charged" public hospital B1 ward Integrated Shield plan is the best in its category. I also like Bupa Global's "basic" annual travel medical insurance plan, purchased online in British pounds and with a coupon code (that's easily discoverable if you search online), unless you only make one or two trips outside Singapore per year when locally sold single trip policies could be better values. You just might get sufficient travel medical insurance coverage if you charge your tickets to a particular credit card and travel only to certain places where that limited level of coverage will be adequate.

* Disability income insurance (DII), sometimes called "income protection insurance," but be careful to find the genuine stuff. DII typically provides a monthly payout of up to 75% of your pre-disability income up until your 65th birthday. There's a waiting period, also called an elimination period, between the moment you experience a claimable disability and the first payout is made. Disability is grounded in employability, and partial loss of income can be covered. I'm in broad agreement with this article's explanation. Some fair warnings, though. First, DII is "expensive," but that's because it actually covers a lot of risk. (Keep the premium under better control by choosing the longest waiting period possible, such as 6 months. At equal premiums, a longer waiting period with a higher payout is much better than a shorter waiting period with a lower payout.) Second, you have to be earning an income from work to sign up, and that's hard to do if you're still pre-career, such as university student. (You may be able to finesse that point even with part-time work.) Third, Singapore's DII carriers might drop your coverage if you spend much time working overseas.

Aviva offers a MINDEF/SAF group disability insurance policy which might have some appeal, but it's quite a bit narrower than DII, including Aviva's own general DII coverage. As early as 2019 the government will introduce CareShield Life, a successor to ElderShield Life, which provides some disability insurance coverage from age 30. However, CareShield Life's definition of disability is dramatically narrower than DII definitions. It's better than nothing (and will be compulsory for all Singaporeans and PRs born after a certain date), but it's not adequate on its own. Life insurance nearly always provides "total and permanent disability" (TPD) coverage, but that too has a very narrow definition of disability. There are some insurance companies outside Singapore that offer internationally oriented DII policies, but extra careful investigation is merited when considering those products.

* Life insurance, just as its name suggests, pays a cash benefit to your survivor(s) when you die. So that's the first important point: if you have no dependents who would be in genuine and substantial financial distress if you were to die tomorrow, then you do not need any type of life insurance. Sadness and grief don't count for these purposes. "Dependents" means anybody you care about who is genuinely financially dependent on you and your income. It could be a spouse, partner, child, parent, a close friend, or even a pet. Simple term life insurance is usually the best value for money because it's easy to compare, it can be purchased online (for policies up to S$400,000 each; and it's generally a good idea to have more than one policy if you need more than that), and it provides coverage for the specific term -- the typical period of time when your untimely death would be financially calamitous to your loved one(s), but also the period of time when you're hopefully saving, investing, and building up wealth that will, at some point before the term ends, be more than sufficient to take care of your dependents. Also, at some point, dependents (such as your children) often grow up and no longer become financially dependent. So, for all those reasons, term life insurance is a good fit, and good fits represent better value for money than bad fits.

Life insurance salespeople will often argue that you should buy life insurance even before you have dependents, just in case you are not insurable later (due to a future medical or other condition). That's not a great argument, for a lot of reasons I've described elsewhere. It's certainly not a good argument for why paying for life insurance now is essential, and insurance essentials should be well covered before any and all insurance niceties or luxuries.

When considering how much term life insurance you need, tally up all your assets (including CPF savings, and net of debts), subtract some of that wealth for end of life care needs (if you "linger" and need to spend down some of those assets), and compare that remaining amount to what you think your dependents might genuinely need in the event of your untimely passing. You may get some free (or "free") life insurance from an employer, or from National Service, or with your NTUC membership, so include those opportunities in your coverage assessment.

If you cover these "Big Three" (or "Big Two" if you have no dependents) essential insurance needs, then you're doing rather well in terms of insurance. Once you've nailed down these insurance necessities then you can take a look at whether you ought to consider other insurance products. Remember, though, that insurance can only ever pay money, and unfortunately money alone cannot reduce or eliminate all of life's risks.

mrclubbie 25-06-2018 08:21 PM

Sticky !!!!!!

JuniorLion 25-06-2018 08:23 PM

I am sure we know this by now. I am a proponent of PMI for private hospital and rider. The savings you get from buying B1 ward won't make you much richer.

foozgarden 25-06-2018 08:41 PM

Quote:

Originally Posted by BBCWatcher (Post 115139527)
OK, so let's kick things off with a quick outline of my views on insurance. I think it's quite important to prioritize covering essential insurance needs first, ahead of saving and investing.

"Executive Summary": If you're a working adult in Singapore with a base public hospital Integrated Shield plan, disability income insurance (DII), and (only if you have dependents) term life insurance, then you've probably covered your genuine core personal insurance needs well.

Insurance is a financial tool that serves only one genuine purpose: it helps you reduce risks that you cannot reasonably handle on your own and that would seriously impair your basic lifestyle (and/or your loved ones' lives). In other words, good insurance helps you cope with genuine calamities. Like any other financial tool (or product), value for money is important. Often insurance companies will create complex products that include a little questionable insurance with a lot of even more questionable fluff. It's almost always best to avoid such "hybrid" products.

In the Singapore context, I think there is a "Big Three" set of insurance products for most adults, and here they are:

* Medical insurance, which is supposed to pay (or at least reimburse) your biggest medical bills. Within Singapore, fortunately there's a high quality and moderately priced (especially for citizens) public medical system, and that's your strong framework for nailing down this particular insurance need. Getting care from private medical providers might be nice, but it's not essential. In the government's view, compulsory MediShield Life coverage combined with a "reasonable" or better Medisave balance are sufficient for public hospital B2 ward (or C ward) stays. I happen to disagree with the government on this point, and I think there's a reasonable argument that an "as charged" public hospital B1 ward Integrated Shield plan is an insurance necessity, for working adults anyway. Integrated Shield plan riders are not essential, although if you decide to get a rider anyway then I'd opt for a "Lite" or "Saver" rider that caps but does not eliminate your annual out-of-pocket costs for covered services. Having to pay a $2,000 medical bill (partially Medisave payable), for example, is unpleasant perhaps but ought not be calamitous.

Integrated Shield coverage is quite reasonable for acute care involving hospitalization. It's not so great for "lingering" scenarios that involve chronic care needs. DII (see below) offers some help there.

If you venture outside Singapore, especially to high medical cost and/or poorly medically served areas, then travel medical insurance with medical repatriation and medical evacuation coverage is essential. The many other possible parts of common travel insurance, such as lost luggage and accidental death coverage, are not essential.

As of this writing, I think Great Eastern's "as charged" public hospital B1 ward Integrated Shield plan is the best in its category. I also like Bupa Global's "basic" annual travel medical insurance plan, purchased online in British pounds and with a coupon code (that's easily discoverable if you search online), unless you only make one or two trips outside Singapore per year when locally sold single trip policies could be better values. You just might get sufficient travel medical insurance coverage if you charge your tickets to a particular credit card and travel only to certain places where that limited level of coverage will be adequate.

* Disability income insurance (DII), sometimes called "income protection insurance," but be careful to find the genuine stuff. DII typically provides a monthly payout of up to 75% of your pre-disability income up until your 65th birthday. There's a waiting period, also called an elimination period, between the moment you experience a claimable disability and the first payout is made. Disability is grounded in employability, and partial loss of income can be covered. I'm in broad agreement with this article's explanation. Some fair warnings, though. First, DII is "expensive," but that's because it actually covers a lot of risk. (Keep the premium under better control by choosing the longest waiting period possible, such as 6 months. At equal premiums, a longer waiting period with a higher payout is much better than a shorter waiting period with a lower payout.) Second, you have to be earning an income from work to sign up, and that's hard to do if you're still pre-career, such as university student. (You may be able to finesse that point even with part-time work.) Third, Singapore's DII carriers might drop your coverage if you spend much time working overseas.

Aviva offers a MINDEF/SAF group disability insurance policy which might have some appeal, but it's quite a bit narrower than DII, including Aviva's own general DII coverage. As early as 2019 the government will introduce CareShield Life, a successor to ElderShield Life, which provides some disability insurance coverage from age 30. However, CareShield Life's definition of disability is dramatically narrower than DII definitions. It's better than nothing (and will be compulsory for all Singaporeans and PRs born after a certain date), but it's not adequate on its own. Life insurance nearly always provides "total and permanent disability" (TPD) coverage, but that too has a very narrow definition of disability. There are some insurance companies outside Singapore that offer internationally oriented DII policies, but extra careful investigation is merited when considering those products.

* Life insurance, just as its name suggests, pays a cash benefit to your survivor(s) when you die. So that's the first important point: if you have no dependents who would be in genuine and substantial financial distress if you were to die tomorrow, then you do not need any type of life insurance. Sadness and grief don't count for these purposes. "Dependents" means anybody you care about who is genuinely financially dependent on you and your income. It could be a spouse, partner, child, parent, a close friend, or even a pet. Simple term life insurance is usually the best value for money because it's easy to compare, it can be purchased online (for policies up to S$400,000 each; and it's generally a good idea to have more than one policy if you need more than that), and it provides coverage for the specific term -- the typical period of time when your untimely death would be financially calamitous to your loved one(s), but also the period of time when you're hopefully saving, investing, and building up wealth that will, at some point before the term ends, be more than sufficient to take care of your dependents. Also, at some point, dependents (such as your children) often grow up and no longer become financially dependent. So, for all those reasons, term life insurance is a good fit, and good fits represent better value for money than bad fits.

Life insurance salespeople will often argue that you should buy life insurance even before you have dependents, just in case you are not insurable later (due to a future medical or other condition). That's not a great argument, for a lot of reasons I've described elsewhere. It's certainly not a good argument for why paying for life insurance now is essential, and insurance essentials should be well covered before any and all insurance niceties or luxuries.

When considering how much term life insurance you need, tally up all your assets (including CPF savings, and net of debts), subtract some of that wealth for end of life care needs (if you "linger" and need to spend down some of those assets), and compare that remaining amount to what you think your dependents might genuinely need in the event of your untimely passing. You may get some free (or "free") life insurance from an employer, or from National Service, or with your NTUC membership, so include those opportunities in your coverage assessment.

If you cover these "Big Three" (or "Big Two" if you have no dependents) essential insurance needs, then you're doing rather well in terms of insurance. Once you've nailed down these insurance necessities then you can take a look at whether you ought to consider other insurance products. Remember, though, that insurance can only ever pay money, and unfortunately money alone cannot reduce or eliminate all of life's risks.

good stuff!

what plans are avail for foreign spouse?
out of the big three, my immediate concern is medical.
for simplicity sake, assume that no govt medical scheme is applicable.

is bupa as good , worse or better than cigna?
how easy or difficult are their claims process?

Battery Operator 25-06-2018 08:45 PM

Signing in BBCWatcher Fan Club (hey, it is a compliment) :s13:

BBCWatcher 25-06-2018 08:49 PM

Quote:

Originally Posted by klarklar (Post 115138443)
Do you stick to passive Vanguard passive products or do you invest in individual stocks/bonds, given your deep financial knowledge and analytical skills?

My fund holdings are not exclusively Vanguard's. I like a couple other fund managers' offerings, too. Lately Schwab is attractive for certain funds.

I'm in broad agreement with the "Bogle philosophy," so it's rare that I invest in individual stocks or bonds. (Bogle was/is also "well equipped" to invest in individual stocks and bonds -- more than I am -- and he doesn't. Not much, anyway.) But I allow some exceptions when there's strong merit, and so would John Bogle, I assume. Here are some examples of exceptions:

* If your employer offers a stock purchase program and a non-trivial discount (5% or more, let's say) on share purchases, it's usually a good idea to participate.

* If somebody gives you individual stocks and/or bonds, e.g. via inheritance, it might make sense to hold them for a while in that original form.

* Individual government bonds sold at initial auction and (usually) held to maturity are often good deals. I've personally done some of that, and I think that's particularly true in Singapore. Some older wealthy people like individual, high quality U.S. municipal government bonds (purchased at initial issue and held to maturity), and sometimes they make sense, too.

* In the depths of the Global Financial Crisis there was perhaps some merit in buying a few individual stocks (or sectors anyway) that were particularly battered down, and then only as a minor sideline. That particular event was, hopefully, truly exceptional.

* If your reliable and trustworthy broker is offering you participation in an IPO such that you get some shares and then quickly and reliably cash out for an instant profit, then you might as well accept that bit of generosity, as long as there's no insider trading. (Don't repeat Martha Stewart's mistakes.) That's bad for the corporation issuing the shares since they're leaving money on the table, but that's not your problem.

* When there's a highly peculiar intersection of tax-related reasons to hold particular individual stocks.

* Participating in a government-sponsored privatization floatation might make sense.

I haven't personally experienced most of these exceptions, but I can imagine them.

assiak71 25-06-2018 08:54 PM

Whats your view on Autowealth for a Singaporean? They use Vanguard ETFs for equity.

theokcoral 25-06-2018 09:08 PM

Any thoughts on EIMI ETF, BBCW?

swordsly 25-06-2018 09:14 PM

Quote:

Originally Posted by theokcoral (Post 115140468)
Any thoughts on EIMI ETF, BBCW?

To add on to this, what about EIMU (the dividend version of EIMI)? Also why is its volume and price so low? :s11:

BBCWatcher 25-06-2018 09:47 PM

Quote:

Originally Posted by assiak71 (Post 115140233)
Whats your view on Autowealth for a Singaporean? They use Vanguard ETFs for equity.

The Vanguard part is terrific, but my understanding is that AutoWealth uses U.S. domiciled Vanguard funds, probably because they really must for several legitimate reasons. Thus there will be a 30% tax on dividends (for the U.S. listed stocks) rather than the 15% dividend tax rate available with Irish domiciled funds, including Vanguard's Irish domiciled funds such as VWRD.

It looks like AutoWealth focuses on a fund that tracks the MSCI World Index of stocks. About 60% of the MSCI World Index consists of U.S. listed stocks. Currently the S&P 500 (a good proxy for the U.S. portion of the MSCI World Index) has a ~1.8%/year gross dividend yield. Taking 15% of that (the tax difference) yields 0.27%/year. Then, 60% of that (the U.S. portion), is ~0.16%/year. So the tax treaty differential is adding roughly 0.16%/year of cost to what AutoWealth is doing versus an Irish domiciled equivalent such as, notably, IWDA -- and assuming my math and information is accurate enough.

That ~0.16%/year of additional tax expense might still be tolerable, but you just have to run the numbers in your particular situation.

AutoWealth (and its competitors) are not really appropriate for U.S. persons.

BBCWatcher 25-06-2018 10:01 PM

Quote:

Originally Posted by swordsly (Post 115140590)
To add on to this, what about EIMU (the dividend version of EIMI)? Also why is its volume and price so low? :s11:

EIMI seems like a great, simple, low cost way for a non-U.S. person to get emerging markets stock exposure if that's what you want to do. EIMI is "accumulating," meaning dividends (net of any dividend taxes, as always) are automatically reinvested. EIMU is "distributing," meaning the dividends (again, net of any dividend taxes) are paid out to shareholders. They both have the same 0.18%/year management fee, which is really quite excellent by Irish domiciled/London traded fund standards (and rather good by global standards, for that matter). EIMU doesn't seem to have much trading volume, though, so you'd stick with EIMI. (EIMU should have a lower price than EIMI if they started off at the same price, which they probably did. The accumulating nature of EIMI tends to boost its share price over time relative to EIMU.)

A lot of non-U.S. persons resident in Singapore who are investing in stocks would pair IWDA with EIMI in a 90-10 ratio to simulate VWRD, Vanguard's single global stock index fund that has about 10% in emerging markets stocks. Of course, you're free to adjust that market weighted ratio if you wish to underweight or overweight emerging markets stocks. (I wouldn't, personally.)

swordsly 25-06-2018 10:04 PM

Quote:

Originally Posted by BBCWatcher (Post 115141377)
EIMI seems like a great, simple, low cost way for a non-U.S. person to get emerging markets stock exposure if that's what you want to do. EIMI is "accumulating," meaning dividends (net of any dividend taxes, as always) are automatically reinvested. EIMU is "distributing," meaning the dividends (again, net of any dividend taxes) are paid out to shareholders. They both have the same 0.18%/year management fee, which is really quite excellent by Irish domiciled/London traded fund standards (and rather good by global standards, for that matter). EIMU doesn't seem to have much trading volume, though, so you'd stick with EIMI. (EIMU should have a lower price than EIMI if they started off at the same price, which they probably did. The accumulating nature of EIMI tends to boost its share price over time relative to EIMU.)

A lot of non-U.S. persons resident in Singapore who are investing in stocks would pair IWDA with EIMI in a 90-10 ratio to simulate VWRD, Vanguard's single global stock index fund that has about 10% in emerging markets stocks. Of course, you're free to adjust that market weighted ratio if you wish to underweight or overweight emerging markets stocks. (I wouldn't, personally.)

EIMU seems to have just been introduced. There's no performance nor dividend records.

I know EIMI and EIMU track the same thing but why is the trading volume so much lower? Also, 28USD vs 4USD right now =\

BBCWatcher 25-06-2018 10:29 PM

Quote:

Originally Posted by swordsly (Post 115141441)
I know EIMI and EIMU track the same thing but why is the trading volume so much lower?

Investors simply prefer the accumulating version of the fund, that's all. That preference could be due to simple inertia.

Quote:

Also, 28USD vs 4USD right now =\
Whenever they started, EIMU's initial price was probably initially set to some EIMI "origin date" share price. And then they track(ed) along from there, with EIMI getting dividend accumulation/reinvesting along with any capital appreciation. EIMI should continue to widen its price gap with EIMU, as long as EIMI isn't split anyway. EIMI doesn't pay any cash dividends, whereas EIMU does, so that all makes sense.

I recall EIMI having a 0.25%/year management fee recently, so the lower 0.18%/year is quite nice to see.

....Net net, you can ignore EIMU, unless and until it develops higher trading volume.

swordsly 25-06-2018 10:40 PM

Quote:

Originally Posted by BBCWatcher (Post 115141865)
Investors simply prefer the accumulating version of the fund, that's all. That preference could be due to simple inertia.


Whenever they started, EIMU's initial price was probably initially set to some EIMI "origin date" share price. And then they track(ed) along from there, with EIMI getting dividend accumulation/reinvesting along with any capital appreciation. EIMI should continue to widen its price gap with EIMU, as long as EIMI isn't split anyway. EIMI doesn't pay any cash dividends, whereas EIMU does, so that all makes sense.

I recall EIMI having a 0.25%/year management fee recently, so the lower 0.18%/year is quite nice to see.

....Net net, you can ignore EIMU, unless and until it develops higher trading volume.

Good information. Just looking through EIMI as I look at the IWDA + EIMI recommendation.

Reason for being interested in EIMU instead being that given the volatility of emerging markets, I thought it might be safer to cash in the dividends first rather than bang on the appreciation and cumulation of the price.


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