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Old 04-09-2018, 01:52 PM   #586
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I’m not a fan. Since they have S$250K minimums (generally), they would only ever be appropriate for someone with high net worth. I think the government requires a minimum S$2 million net worth to be accredited to buy them, but I’d advise S$5 million as a more realistic minimum. They’re also painfully difficult to buy and sell, with generally wide bid-ask spreads. And they’re almost always callable, often, plus most of them have clauses that allow the bank to bail on them first if the bank has any material financial trouble.

You can get more easily digestible exposure to a large collection of Singapore dollar denominated bonds, mostly high quality corporate bonds, through the new MBH ETF.
yup, understand. but was considering to up abit on the yield for a small portion (yes, 250K per lot) . have no intention to buy/sell but holding for yield on the good names. MBH ETF would still form the main portion of my portfolio . The MBH ETF is approx. 3.2% and to net exp ratio, we would be looking at ~3% thereabout right?
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Old 04-09-2018, 02:36 PM   #587
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but was considering to up abit on the yield for a small portion (yes, 250K per lot) . have no intention to buy/sell but holding for yield on the good names.
You could, but then Iím wondering whether you would have an age appropriate investment portfolio. Bonds and bond-likes are most appropriate when youíre approaching and within drawdown phase. (But, then again, perps are not an ideal component in a drawdown portfolio, because you do have to sell them outright at some point since they might not be called ó and they are quite lumpy.)

A perp could be somewhat interesting as a portion of a high net worth individualís bequest, still when that individual is approaching or within drawdown. The basic idea here is that the perps would be the last to be sold off, and theyíd be well defended using CPF LIFE and even a private life annuity (such as one purchased with SRS assets), both escalating preferably. Then again, why not just bequeath assets that are more appropriate to the heirsí investment time horizons if the odds are overwhelming that you wonít touch them? And why not give assets instead of waiting until youíre dead for the assets to rain down?

....Anyway, I guess if I look sideways in certain ways I can find a use for them, but I donít find them that useful.

The MBH ETF is approx. 3.2% and to net exp ratio, we would be looking at ~3% thereabout right?
Yes, thatís a reasonable long-term forecast. Upon further reflection I think MBHís annual dividend is a bad idea. It should either be an accumulating fund or a quarterly dividend paying fund, not some weird in between thatíll result in a wild fund price swing ex-dividend (wild in bond fund terms). But itís the best of its kind the local market has to offer right now.
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Old 04-09-2018, 02:53 PM   #588
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You could, but then I’m wondering whether you would have an age appropriate investment portfolio. Bonds and bond-likes are most appropriate when you’re approaching and within drawdown phase. (But, then again, perps are not an ideal component in a drawdown portfolio, because you do have to sell them outright at some point since they might not be called — and they are quite lumpy.)

A perp could be somewhat interesting as a portion of a high net worth individual’s bequest, still when that individual is approaching or within drawdown. The basic idea here is that the perps would be the last to be sold off, and they’d be well defended using CPF LIFE and even a private life annuity (such as one purchased with SRS assets), both escalating preferably. Then again, why not just bequeath assets that are more appropriate to the heirs’ investment time horizons if the odds are overwhelming that you won’t touch them? And why not give assets instead of waiting until you’re dead for the assets to rain down?

....Anyway, I guess if I look sideways in certain ways I can find a use for them, but I don’t find them that useful.


Yes, that’s a reasonable long-term forecast. Upon further reflection I think MBH’s annual dividend is a bad idea. It should either be an accumulating fund or a quarterly dividend paying fund, not some weird in between that’ll result in a wild fund price swing ex-dividend (wild in bond fund terms). But it’s the best of its kind the local market has to offer right now.
I am in my early 40s, looking to stop work soon. so in a way, I hope to have a good diversification of worldwide equity etf/MBH/1-2 corporate bond/perp, in a 60stock/40bond allocation. so looking to add a perp to boost yield (looking at only A rated ones). I hope to be able to "drawdown" within portfolio's returns (conservatively forecast at 4%, drawdown est at 2.8%-3%). Given my age and a large base, I will be vested in the market for good amount of time hence i am leaning towards stocks despite my early retirement plan. My thought process of no harm adding a good rated perp to my port for a bit of yield pickup.

As for bequest, my children are way too young to gift at this moment . Hence i hope to be well diversified in my port, within risk profile, and able to leave legacy behind if i manage this well.

I guess you can say on one hand , I am of mind should be leaning more towards stocks given my investment horizon yet on the other, I am wary of sequence return risk. so adding a good rated perp seem to meet in between my dilemma (if I am right in my thinking).

Last edited by Listopad; 04-09-2018 at 03:04 PM..
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Old 04-09-2018, 03:41 PM   #589
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I guess you can say on one hand , I am of mind should be leaning more towards stocks given my investment horizon yet on the other, I am wary of sequence return risk. so adding a good rated perp seem to meet in between my dilemma (if I am right in my thinking).
Not really, because the perp will presumably be called in a persistently low interest rate environment, which is the particular risk you're worried about if I understand correctly. I don't think there are any true perpetuals, at least not good ones. (Have you found a non-callable, high quality perp?)

One effective way to reduce that particular risk of being caught short is to put a really solid escalating life annuity floor (preferably joint) under what you're doing, then bridge to the annuity conventionally, using (in part) non-callable, quality bonds of sufficient duration. It's possible to find joint life annuities that start paying from age 55, or possibly even earlier. And there's some SDIC protection for those products. You could also raise a "double bridge," to bridge into CPF LIFE when that starts paying out at age 65 (or preferably age 70), although unfortunately CPF LIFE is not joint life. If you're going to try to retire at age 45, then you only need a 10 year bridge to age 55, and there are plenty of non-callable 10 year bonds, including the government's. For a bridge to age 70, that's 25 years, and same thing -- those are available. (Or 20 years to bridge to age 65, which is probably fine since you can make the decision at any time whether to kick off CPF LIFE payouts.)

Or you could lower the drawdown rate and see how that math works. Or retire 3 years later, i.e. boost retirement savings and reduce drawdown by 3 years. Or work part-time for 5 more years in something you like doing more (that doesn't necessarily pay as well), which might not boost retirement savings but which would reduce or eliminate drawdown for those 5 years. Or some of all of these options.
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Old 04-09-2018, 08:33 PM   #590
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What the hell is this new word "ideosyncratic"? I hear it being thrown around a lot these days on Bloomberg. It is like suddenly a new word got added to the dictionary.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT
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Old 04-09-2018, 11:48 PM   #591
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What the hell is this new word "ideosyncratic"? I hear it being thrown around a lot these days on Bloomberg. It is like suddenly a new word got added to the dictionary.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT
"Idiosyncratic"; it means "something that applies to only one member of a class".

So if NKE stock went down the toilet because of a slump in US consumer spending and retail sales, that would not be idiosyncratic risk, because it's affecting a wide range of companies. But if NKE stock dipped 2% because a bunch of right-wing nutjobs are cutting up their hundred-dollar Nike sneakers to own the libs, that would be idiosyncratic risk.

Last edited by Shiny Things; 04-09-2018 at 11:53 PM..
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Old 05-09-2018, 12:17 AM   #592
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"Idiosyncratic"; it means "something that applies to only one member of a class".

So if NKE stock went down the toilet because of a slump in US consumer spending and retail sales, that would not be idiosyncratic risk, because it's affecting a wide range of companies. But if NKE stock dipped 2% because a bunch of right-wing nutjobs are cutting up their hundred-dollar Nike sneakers to own the libs, that would be idiosyncratic risk.
Thanks

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Old 05-09-2018, 08:42 AM   #593
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just quick note, love your posts . learning something new every day. and a very good sounding board to bounce off ideas (same with the Shiny Thing thread)
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Old 05-09-2018, 03:02 PM   #594
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Hi BBCW,

Longtime lurker of this thread + the Shiny Things discussion, made an account to seek some insurance advice because it's abit confusing compared to the investment DCA advice.

I started work last year (27M) and took over paying some insurance that my parents originally paid for on my behalf. It adds up to quite an annual chunk but I don't know what the reasonable market rate is.

I'm currently on (Postcount too low to link images so I'm typing it out):
PruExtra Premier (467/yr)
Prushield Basic (143/yr CPF MA) and Premier (205/yr)

and the kicker:
PruLife 6th Series 140k assured (1555/yr) incl
Accelerated Term Illness
Crisis Waiver III (91/yr)
Accelerated Disability 140k assured (53/yr)
PruMultiple Crisis Cover 40k assured (187/yr)
Which alone adds up to 1888 annually.

I'm also under AVIVA's Group Term Life (200k Assured) and Group Personal Accident (100k Assured) for total 111/yr.

1) Correct me if I'm wrong, but PruLife here's not ideal as a whole life plan when I'm not really at risk in the near term (27M, no drinking/smoking, not morbidly obese, no major health issues, no kids in near future etc), but what about the others? Are they also wasteful purchases?
2) Am I overinsured on some issues and under on others? None of these look like DII to me, is that correct?
3) Is "Surrender and cut your losses" the only way out for cases like the PruLife above? Or is it actually not that bad of an insurance purchase that I should keep on?

Thanks for any help. The amount of products in insurance is quite confusing to traverse through compared to the relatively more clear-cut options for index investing to me. I'd ask my own parents about the insurance but they're not really good at managing money and they just bought whatever their friends in insurance pushed onto them (same reason why I'm reluctant to approach the agent as well). Hopefully someone can give advice for this situation x_x
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Old 05-09-2018, 03:33 PM   #595
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3) Is "Surrender and cut your losses" the only way out for cases like the PruLife above? Or is it actually not that bad of an insurance purchase that I should keep on?
You will need to post the latest version of your Benefits Illustration.

Generally though, for these plans, it is only worth surrendering if you are in your first or second year of the plan, where the insurance companies eat most of your premiums into "distribution costs". Beyond the 6th year, they do actually start giving you pretty good rates after having already helped themselves to much of your money.
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Old 05-09-2018, 04:28 PM   #596
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You will need to post the latest version of your Benefits Illustration.

Generally though, for these plans, it is only worth surrendering if you are in your first or second year of the plan, where the insurance companies eat most of your premiums into "distribution costs". Beyond the 6th year, they do actually start giving you pretty good rates after having already helped themselves to much of your money.
Thanks a lot for the help. I can't link it here coz of new account restrictions but:

Policy Inception Jun 2011 (Currently year 8)
Y8: Paid 12,869, Surrender - Guaranteed 6,300, Non-G 1,239, Total 7,539
Y9: Paid 14,477, Surrender - G 7,191, Non-G 1,670, Total 8,861
Y10: Paid 16,086, Surrender - G 8120, Non-G 2,334, Total 10,454

You're right in that if I include the NonGuaranteed value, the relative cost of insurance is quite low at this point (1.8k/yr paid, +800 guaranteed +400 non-guaranteed --> 600 "paid"?), but I'm skeptical about most of the eventual value tied up in the Non-guaranteed section (At Y20 on more than half is non-guaranteed and it only gets larger). Aren't there a lot of horror stories regarding this?

It does feel like it's an alright deal considering the increase in value seems to discount the base cost a fair bit by this point but I'm not sure how much I'm actually advantaged by this 8-year headstart on things vs how I'd pay on an equivalent term life plan.

Last edited by ChuQianYiDing; 05-09-2018 at 04:34 PM..
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Old 05-09-2018, 04:48 PM   #597
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I'm currently on...
PruExtra Premier (467/yr)
Prushield Basic (143/yr CPF MA) and Premier (205/yr)
That's hospitalization insurance: a private hospital Integrated Shield plan with "zero dollar" rider. Private sector medical inflation is quite likely to continue to put extreme pressure on these premiums, and of course the premiums increase with age.

If you're concerned about too lavish hospitalization insurance then, as it happens, Prudential offers what is most probably Singapore's best all-around public hospital A ward Integrated Shield plan: PRUshield Plus. You could pair that with the PRUextra Plus Lite rider, which would effectively cap out-of-pocket costs for covered services. Staying with the same carrier means there's no pre-existing condition reset.

and the kicker:
PruLife 6th Series 140k assured (1555/yr) incl
Accelerated Term Illness
Crisis Waiver III (91/yr)
Accelerated Disability 140k assured (53/yr)
PruMultiple Crisis Cover 40k assured (187/yr)
Which alone adds up to 1888 annually.
Wow, OK.

I'm also under AVIVA's Group Term Life (200k Assured) and Group Personal Accident (100k Assured) for total 111/yr.
OK.

1) Correct me if I'm wrong, but PruLife here's not ideal as a whole life plan when I'm not really at risk in the near term (27M, no drinking/smoking, not morbidly obese, no major health issues, no kids in near future etc), but what about the others? Are they also wasteful purchases?
You only need life insurance if you have at least one dependent who would be seriously financially impacted (not only sad) if you were to die -- and if your remaining assets alone could not adequately maintain your dependent's lifestyle. It appears you don't have any dependents yet.

2) Am I overinsured on some issues and under on others? None of these look like DII to me, is that correct?
That's correct. This list does not include disability income insurance (DII). At age 27, your future earning potential is probably your single biggest asset, by far.

It looks like Tangent314 answered your third question well.
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Old 05-09-2018, 05:20 PM   #598
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Thanks a lot for the help. I can't link it here coz of new account restrictions but:

Policy Inception Jun 2011 (Currently year 8)
Y8: Paid 12,869, Surrender - Guaranteed 6,300, Non-G 1,239, Total 7,539
Y9: Paid 14,477, Surrender - G 7,191, Non-G 1,670, Total 8,861
Y10: Paid 16,086, Surrender - G 8120, Non-G 2,334, Total 10,454
Try posting the BI on a free image hosting site like imgur.com then post a link to the image here.

You're right in that if I include the NonGuaranteed value, the relative cost of insurance is quite low at this point (1.8k/yr paid, +800 guaranteed +400 non-guaranteed --> 600 "paid"?), but I'm skeptical about most of the eventual value tied up in the Non-guaranteed section (At Y20 on more than half is non-guaranteed and it only gets larger). Aren't there a lot of horror stories regarding this?
The NG are projected values and the actual number will depend on the performance of the PAR fund. Currently, all insurance companies project their NG values based on a PAR fund performance of 4.75%. This used to be higher long ago, but the stock markets have not been performing as well as they used to have some decades ago, much of it due to two major crisis in the past 2 decades.

We can't really predict the future, but overall I would say that unless some major crap happens, the numbers you get will be a lot closer to the NG values than the G values.

It does feel like it's an alright deal considering the increase in value seems to discount the base cost a fair bit by this point but I'm not sure how much I'm actually advantaged by this 8-year headstart on things vs how I'd pay on an equivalent term life plan.
I can help you check on that with the full BI.
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Old 05-09-2018, 05:23 PM   #599
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If you're concerned about too lavish hospitalization insurance then, as it happens, Prudential offers what is most probably Singapore's best all-around public hospital A ward Integrated Shield plan: PRUshield Plus. You could pair that with the PRUextra Plus Lite rider, which would effectively cap out-of-pocket costs for covered services. Staying with the same carrier means there's no pre-existing condition reset.
Thanks for the advice. I'll read up a bit about PRUShield Plus and compare it a bit and see if I should switch over.

You only need life insurance if you have at least one dependent who would be seriously financially impacted (not only sad) if you were to die -- and if your remaining assets alone could not adequately maintain your dependent's lifestyle. It appears you don't have any dependents yet.
From what I understand from you and tangent, it's basically "you don't need life insurance because you don't have dependents, but if you do this isn't a bad product now that you're already this far in". From that PoV, if I do have dependents in 5-6 years (get married, have a kid or two etc) it's not unsound to keep this if the need for life insurance itself is there, right?

That's correct. This list does not include disability income insurance (DII). At age 27, your future earning potential is probably your single biggest asset, by far.
Thanks, I get that DII is atm more important than life insurance for me (at least until dependents is an issue, and possibly even then). Is it prudent to look for a different insurance agency for DII to not "put all your eggs in one basket"? I assume it applies somewhat to insurance still.

I really appreciate the help you're giving regarding this. Thanks a lot.

Try posting the BI on a free image hosting site like imgur.com then post a link to the image here.
I need to hit the minimum postcount before I can link images. I tried linking from Google Drive (just the image itself so no PII gets through) but the AutoMod won't let me do it. I need a postcount of 10 to PM links so maybe I can do that once I post a bit more?

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Old 05-09-2018, 06:26 PM   #600
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Hmm... try posting the code that appears after imgur.com i'll find it from there
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