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Old 14-09-2018, 09:23 PM   #646
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why are most recommendations about investing in ETFs?
The exchange traded (ET) part isn't necessary, but the popular ETFs are more accessible and have lower costs than their unit trust/mutual fund cousins.

Sure the risk profile or time frame of some people would indicate that they can invest in sectoral or other equity funds?
Well, one big problem is that over the typical multiple decades of an accumulation phase whole new sectors might arise. As a notable example, the world's second most valuable publicly traded company, Amazon, only listed in 1997, barely 20 years ago. If you had picked sectors A, B, and C back in 1996, let's suppose, you probably would not have picked whatever sector included Amazon. (And what sector would that have been? Book selling? Hard to say.) The sectors themselves are volatile over these timespans, with whole new sectors popping up that didn't exist in the past.
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Old 14-09-2018, 09:37 PM   #647
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Hey BBCW, what are your thoughts on the Dependents' Protection Scheme? I don't think anybody's really mentioned it despite all the posts about CPF and insurance.
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Old 14-09-2018, 09:57 PM   #648
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The exchange traded (ET) part isn't necessary, but the popular ETFs are more accessible and have lower costs than their unit trust/mutual fund cousins.
With the performance comparable to managed funds as well?

Well, one big problem is that over the typical multiple decades of an accumulation phase whole new sectors might arise. As a notable example, the world's second most valuable publicly traded company, Amazon, only listed in 1997, barely 20 years ago. If you had picked sectors A, B, and C back in 1996, let's suppose, you probably would not have picked whatever sector included Amazon. (And what sector would that have been? Book selling? Hard to say.) The sectors themselves are volatile over these timespans, with whole new sectors popping up that didn't exist in the past.
Understood. Just seems to me that a Biotech fund *for example* or even a regular customer oriented or healthcare fund bought say 5 or 7 years ago would have brought someone with a high risk appetite and significant surplus higher gains than a broad based ETF. Again, conditional on a high risk appetite aren't there are potentially higher rewards to be reaped?
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Old 14-09-2018, 10:09 PM   #649
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Newbie questions

Hi BBC and experts,

I can ask which DIY Insurance you guys use? Is diyinsurance.com any good?

Best Regards
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Old 14-09-2018, 10:09 PM   #650
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On a related note, what advice would you give, BBCW, to someone like myself who was in the US (specifically, perhaps) for a long time, built up a US$50K equity portfolio via managed mutual funds like Vanguard or Fidelity, but is now in Singapore?

You've often asked that some plans are determined by where one plans to retire. Short answer is, not back in the US.

Sell the US-based portfolio, move the money back to Singapore *in SGD* and invest afresh? Keep as is? Move it directly somewhere else or into something else for tax purposes?

Risk appetite: high, the money left behind in the US is money that I don't see dipping into for 15 years.

Last edited by vegavega25; 14-09-2018 at 10:19 PM..
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Old 14-09-2018, 11:49 PM   #651
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Hey BBCW, what are your thoughts on the Dependents' Protection Scheme?
It's term life insurance, and assuming you need some (have at least one dependent), it can fit in well.

Pls pardon my ignorance but why are US stocks more actively sought after, despite the 30% dividend tax?
First of all, residents of most developed (and some other) countries don't pay a 30% dividend tax rate. They often pay 15%. U.S. persons don't pay 30% either; we pay at most 23.8% (top marginal federal rate, qualified dividends). It's you lucky residents of Singapore (who are not U.S. persons) who pay the 30% non-treaty rate. If you'd like to ask your MP to push Singapore to sign a tax treaty with the United States, you too could join the 15% club, probably.

Second, taxes are only one factor and not even a particularly important factor.

With the performance comparable to managed funds as well?
Actively managed funds, on average, do less well than passive index funds.

Just seems to me that a Biotech fund *for example* or even a regular customer oriented or healthcare fund bought say 5 or 7 years ago would have brought someone with a high risk appetite and significant surplus higher gains than a broad based ETF.
Hindsight is always 20-20.

Again, conditional on a high risk appetite aren't there are potentially higher rewards to be reaped?
Potentially.

On a related note, what advice would you give, BBCW, to someone like myself who was in the US (specifically, perhaps) for a long time, built up a US$50K equity portfolio via managed mutual funds like Vanguard or Fidelity, but is now in Singapore?
Those funds are in U.S. tax advantaged accounts -- 401(k) and/or IRA -- aren't they? If not, why not?

"Vanguard" and "Fidelity" don't really tell me much. Both of those firms can provide practically any/every security. Both are full service brokers. You'll likely have something like "Vanguard Total Stock Market Index Fund Investor Shares," to pick a random example -- some specific fund. The 3 to 5 letter trading symbols would be helpful if you'd like me to evaluate what you're holding.
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Old 15-09-2018, 12:06 AM   #652
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Something I haven't understood:

why are most recommendations about investing in ETFs? Sure the risk profile or time frame of some people would indicate that they can invest in sectoral or other equity funds? I get the bit about funds domiciled in Ireland and Luxembourg.
The reason I'm not a fan of that is that it amounts to trying to pick which sector's going to be hot. And picking sectors, or even picking countries, is just like picking individual stocks; the average person probably isn't going to be any better at stockpicking than a professional, and the average person is probably going to buy things that are hot and sell them when they're cold. Better to own the broadest portfolio possible, consistent with their investment goals.

And as for "why index ETFs instead of managed equity funds": the long and the short of it is that on the whole, after fees, managed equity funds deliver worse performance than boring low-cost index ETFs. Why pay for your fund manager's Maserati? That money belongs in your pocket, not theirs.
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Old 15-09-2018, 03:46 PM   #653
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"Vanguard" and "Fidelity" don't really tell me much. Both of those firms can provide practically any/every security. Both are full service brokers. You'll likely have something like "Vanguard Total Stock Market Index Fund Investor Shares," to pick a random example -- some specific fund. The 3 to 5 letter trading symbols would be helpful if you'd like me to evaluate what you're holding.
Here you go:

FBGRX
FOCPX
FSPHX
FSRPX

from Fidelity. I can't seem to be able to login to my Vanguard account for now.

Specific, as well as overall advice would be appreciated. I am not a US citizen or greencard holder, not Singaporean citizen or PR either, although child here in SG is a US citizen and this may very well be a source of funds that supplement Univ 15 years from now, or a bequest. Nothing otherwise for me to go back to the US to, in terms of property or family (ex-wife's back in the US, with fully severed financial or family ties), and I only retain financial assets such as a bank account, CDs, and those mutual funds mentioned above. No 401(k) or IRA.

Thanks!

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Old 15-09-2018, 04:21 PM   #654
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The bank I work for, offers us EP holders something similar to CPF. They cut $800(actually 10% of our salary limited to 1k) from our salary and give $800 and we have a choice of funds managed by Manulife HK.

I chose international equity fund. But not happy with its performance. I am in the program since Jan 2016. I was up 27% this Jan now it is up only 14%.

https://www.manulife.com.hk/wps/wcm/...df?MOD=AJPERES



Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

Last edited by revhappy; 15-09-2018 at 04:39 PM..
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Old 15-09-2018, 04:35 PM   #655
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Here is my account statement. Not happy. I wish my bank allowed this going into ETFs rather than active fund management.






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Last edited by revhappy; 15-09-2018 at 04:37 PM..
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Old 15-09-2018, 07:33 PM   #656
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Here you go:
FBGRX
FOCPX
FSPHX
FSRPX
OK, duly noted.

I am not a US citizen or greencard holder, not Singaporean citizen or PR either, although child here in SG is a US citizen and this may very well be a source of funds that supplement Univ 15 years from now, or a bequest.
That’s very interesting. I may have some ideas for you. May I confirm that you were issued (and thus have for life) a U.S. Social Security Number?

Nothing otherwise for me to go back to the US to, in terms of property or family (ex-wife's back in the US, with fully severed financial or family ties), and I only retain financial assets such as a bank account, CDs, and those mutual funds mentioned above. No 401(k) or IRA.
Before we get too deep into this, are you telling me/us that you spent some time working in the United States, invested in mutual funds, and somehow managed NOT to buy any of those funds within a U.S. 401(k) or IRA (tax advantaged account)? Is that correct? How did THAT happen?

As a separate matter, I have some possible good news for you. It’s possible that you will qualify for U.S. Social Security retirement benefits either based on your own contributions into the U.S. Social Security system (plus any treaty country contributions) or even based on your ex-spouse’s U.S. Social Security contributions. The latter is a slightly difficult needle to thread, but it can be done. How many years did you work in the United States? Have you remarried?

A couple ideas I’m likely to explore, pending some more information from you, is whether it’s possible to set up what’s called a “529” education savings account for your U.S. citizen child and/or a UGMA (Uniform Gifts to Minors Act) investment account. If you do the latter then the advantage is that your 30% dividend tax rate on these funds probably drops to zero. (U.S. citizens enjoy a lower tax rate, and since presumably this would be your child’s only income, zero would be the most likely answer.) There are some disadvantages, though. First, you’d need a few years to transfer the assets since there’s an annual gift limit. Second, you’d have to file U.S. tax returns for your child, so the paperwork gets more complicated. Third, UGMA assets count as your child’s own assets for purposes of U.S. higher education financial aid calculations, and thus they could reduce future need-based scholarships and student loans if your child attends a U.S. university.

Setting up a “529” might be difficult for a non-U.S. person who is not U.S. resident, but if you have a SSN then that’s one major hurdle cleared. I think it might be possible to pull off. But the advantage is again zero tax provided the funds are used for qualified educational expenses.

May I also assume that you maintain a U.S. mailing address on your Fidelity and Vanguard accounts? Ordinarily Fidelity and Vanguard get a little upset, eventually anyway, if otherwise.

The bank I work for, offers us EP holders something similar to CPF. They cut $800(actually 10% of our salary limited to 1k) from our salary and give $800 and we have a choice of funds managed by Manulife HK.
The key question here is whether your employer provides any matching funds, or if there’s otherwise any sort of financial attraction to your participation in this arrangement. So what’s the basic deal you’re getting here?

Last edited by BBCWatcher; 15-09-2018 at 07:36 PM..
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Old 15-09-2018, 07:42 PM   #657
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OK, duly noted.


That’s very interesting. I may have some ideas for you. May I confirm that you were issued (and thus have for life) a U.S. Social Security Number?


Before we get too deep into this, are you telling me/us that you spent some time working in the United States, invested in mutual funds, and somehow managed NOT to buy any of those funds within a U.S. 401(k) or IRA (tax advantaged account)? Is that correct? How did THAT happen?

As a separate matter, I have some possible good news for you. It’s possible that you will qualify for U.S. Social Security retirement benefits either based on your own contributions into the U.S. Social Security system (plus any treaty country contributions) or even based on your ex-spouse’s U.S. Social Security contributions. The latter is a slightly difficult needle to thread, but it can be done. How many years did you work in the United States? Have you remarried?

A couple ideas I’m likely to explore, pending some more information from you, is whether it’s possible to set up what’s called a “529” education savings account for your U.S. citizen child and/or a UGMA (Uniform Gifts to Minors Act) investment account. If you do the latter then the advantage is that your 30% dividend tax rate on these funds probably drops to zero. (U.S. citizens enjoy a lower tax rate, and since presumably this would be your child’s only income, zero would be the most likely answer.) There are some disadvantages, though. First, you’d need a few years to transfer the assets since there’s an annual gift limit. Second, you’d have to file U.S. tax returns for your child, so the paperwork gets more complicated. Third, UGMA assets count as your child’s own assets for purposes of U.S. higher education financial aid calculations, and thus they could reduce future need-based scholarships and student loans if your child attends a U.S. university.

Setting up a “529” might be difficult for a non-U.S. person who is not U.S. resident, but if you have a SSN then that’s one major hurdle cleared. I think it might be possible to pull off. But the advantage is again zero tax provided the funds are used for qualified educational expenses.

May I also assume that you maintain a U.S. mailing address on your Fidelity and Vanguard accounts? Ordinarily Fidelity and Vanguard get a little upset, eventually anyway, if otherwise.


The key question here is whether your employer provides any matching funds, or if there’s otherwise any sort of financial attraction to your participation in this arrangement. So what’s the basic deal you’re getting here?
Yes, it is just like CPF. Employer matches, employees' contribution.

Many foreign banks do this in Singapore. Atleast I know Credit Suisse and Barclays offer this for EP holder employees. Credit Suisse offers it through HSBC Hong Kong ORSO scheme. Barclays through PWC.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

Last edited by revhappy; 15-09-2018 at 07:44 PM..
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Old 15-09-2018, 07:57 PM   #658
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Yes, it is just like CPF. Employer matches, employees' contribution.
OK, so you just pick the “best” available on the menu, which in this case is heavily dependent on management costs/year. (What are the management fees?) And max out the employer match, if you can afford it. Keep it all well diversified and at least fairly aggressive, and leave it alone.
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Old 15-09-2018, 08:11 PM   #659
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Vegavega25, are you aware of the U.S. Additional Child Tax Credit and how it operates? I have to check the details again, but if your income is not too high then your U.S. citizen child should be eligible for US$1,000 per year in free money from the IRS — and possibly more going forward. This is one of the weird, quirky, happy aspects of global taxation associated with U.S. personhood.

I believe the way it works (for tax year 2017 and prior) is as follows. Let’s assume that you have not remarried, and your U.S. citizen child is living with you in Singapore at least most of the year. That should make you a “Head of Household” tax filer, which then means if you have an adjusted gross income (AGI) of US$75,000 or less, bingo, US$1,000 in free money. If that free money has gone unclaimed then it’s collectable up to 3 years after the original due date for the tax form. The due date is June 15 for those living overseas, so that’d mean the free money is still recoverable for tax years 2015, 2016, and 2017. (The 2015 tax return was due on June 15, 2016, and we’re less than 3 years away from that date as I write this.) Of course, if your child wasn’t alive at any time in 2015, that doesn’t count.

It’s also a somewhat difficult needle to thread, but wow, wouldn’t that be something if you could collect US$3,000 in free money — or even some portion of that. I was under the impression that the custodial parent/guardian also has to be a U.S. citizen or U.S. permanent resident, but no, that doesn’t seem to be a requirement.

If you’ve remarried it’s still potentially workable, but the income threshold is different.

Anyway, this’ll be something to examine more closely pending further information. Also, I should point out that the rules are changing for tax year 2018, and I’m not familiar with how the new Child Tax Credit rules work yet. They could be more favorable, though. The refundable portion is increasing to US$1,400, so that could be the new amount if you and your child are eligible. What I’m not sure about is whether they changed the eligibility rules in any impactful ways.

On edit: Before you get too excited, this isn’t going to work particularly well in Singapore in many scenarios. It’s very, very speculative and will depend on the nature of your income. Singapore is a comparatively low income tax country, and that’s not helpful for trying to grab this free money. However, even if it doesn’t work now, if in the future you move to a comparatively high income tax country with your child (while still a child under age 17), this’ll become interesting and relevant, probably.

Last edited by BBCWatcher; 15-09-2018 at 08:16 PM..
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Old 15-09-2018, 08:36 PM   #660
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FBGRX
This is a large cap, actively managed, expensive (0.7%/year) U.S. stock market fund. Fortunately it has performed quite well over the past several years, so if you’ve been holding it for a while, congratulations.

FOCPX
This is a NASDAQ-heavy, actively managed, expensive (0.81%/year) U.S. stock market fund. Same thing, with even higher performance over the past several years.

FSPHX
An actively managed, expensive (0.73%/year) fund that invests in healthcare sector stocks. Same thing: congratulations if you bought this a while ago and held onto it.

FSRPX
An actively managed, expensive (0.78%/year) fund that invests in U.S. retail sector stocks. Same thing again.

Basically you bet heavily on the U.S. stock market, and doubled down on some high flying sectors and companies within the U.S. stock market, and that all did well. High risk, high reward (in a bull market when a monkey throwing darts did pretty well). The fund manager (Fidelity) collected a pretty big share of your paper winnings, but since the U.S. stock market has been on such an amazing bull run, you should have done quite well, on paper so far.

The retail sector overall hasn’t been stellar, but it looks like the fund managers basically threw all in (just about) on Amazon and on dollar stores, and that mix worked. They notably didn’t bet much on Sears, J.C. Penney, Tandy (Radio Shack), and Toys R Us, as counter examples.
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