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Old 22-05-2019, 09:23 PM   #1246
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So if interest on US Treasuries are not taxable, what about the bond funds VGSH / VGIT / VGLT? Are the distributions also tax-free?
Use the Ireland-domiciled ETFs from iShares and Vanguard instead.

Recently, I checked the annual report for one of the Ireland-domiciled bond ETFs - LQDE from iShares. There was no tax paid by the fund manager. The dividend yield is almost the same as that of its US-listed sibling - LQD. There is no reason for a non-US person to use an US-listed bond ETF, unless you are sure it is not subject to DWT.
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Old 23-05-2019, 04:05 PM   #1247
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Hi BBCWatcher, what is your take on the various integrated shield plans and insurance products for a newborn? In term of insurance protection, will you go for term or life policy considering a newborn has a clean bill of health right now? Should I also get a private integrated shield plans for him since I read it is easier to downgrade in the future? I DCA regularly on etf, which should take care of the education cost for my kid. I will love to hear your expertise on this matter.
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Old 23-05-2019, 08:35 PM   #1248
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Hi BBCWatcher, what is your take on the various integrated shield plans and insurance products for a newborn? In term of insurance protection, will you go for term or life policy considering a newborn has a clean bill of health right now?
No. A newborn has no dependents and does not need life insurance of any kind. However, the newborn’s caregivers (parents usually) might need to adjust their life and disability insurance coverages. The newborn is a new responsibility, ordinarily for 20+ years.

Should I also get a private integrated shield plans for him since I read it is easier to downgrade in the future?
I personally wouldn’t go any “higher” than Raffles Shield A with the Raffles Hospital Option. KK Hospital is an excellent pediatric medicine center.

I DCA regularly on etf, which should take care of the education cost for my kid. I will love to hear your expertise on this matter.
Grab all of the government’s matching Child Development Account dollars as soon as you can. A 100% match is outstanding.

Get him/her all the vaccinations, including the optional ones, unless there’s a legitimate, rare medical exception. Look at both the U.S. CDC and Singapore MOH immunization recommendations, and get ‘em all done. For example, Varicella is optional but CDC recommended and a really good idea. The polyclinics don’t offer Varicella, but KKH and TTSH do, as I recall. HPV is at about age 9, and Gardasil 9 is the current best-of-breed. Hep A and Hib are recommended, so do ‘em. And so on. Public health authority recommended preventive medicine is wonderful stuff.

Congratulations.
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Old 28-05-2019, 10:16 PM   #1249
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For some very strange reasons, there are a few people who seem to want to park U.S. dollars in "holding patterns," kept out of long-term investments. I don't recommend you do this, but if you do this, here's a quick update on some possible parking places.

I'll start with what I don't recommend: parking U.S. dollars (or any other foreign currencies) at banks in Singapore. There's absolutely no deposit insurance, and you're not particularly well compensated for assuming this risk.

Moving on, I'll consider options appropriate for non-U.S. persons that have a high degree of safety....

1. The absolute safest place to park U.S. dollars is in directly held U.S. Treasuries: t-bills, notes, and bonds. U.S. Treasuries are backed by the full faith and credit of the U.S. federal government. If you already have U.S. dollars and can get them to/from Schwab free or inexpensively, that's probably the place to go. Schwab can help you buy any U.S. Treasury at original issue free of charge, and there's also no charge if you hold the U.S. Treasury to maturity. Interactive Brokers is the champion when it comes to low cost currency conversion, but IB does charge a small commission to buy/sell U.S. Treasuries regardless of whether they're original issue.

As I write this, 6 month U.S. T-Bills are yielding about 2.39%.

2. Brokered Certificates of Deposit (CDs). Schwab makes it very convenient to get these. As I write this, Schwab is offering a ~15 month CD at 2.45%. Brokered CDs might also be available via IB, but you need to use TWS to find them.

3. High quality U.S. state general obligation bonds. As I write this, Schwab is listing a State of Texas general obligation bond with ~10 months to maturity with a yield of 2.495%. Texas has the highest S&P and Moody's bond ratings.

4. A Certificate of Deposit directly placed with a U.S. bank, for those able to do so (those with a preexisting U.S. bank or U.S. credit union savings or checking account, basically). According to DepositAccounts.com, as I write this there's a 2.87% APY 12 month CD on offer.

5. A high quality bond ETF, preferably Irish domiciled if you're not a U.S. person. There is some possible variation in the ETF's share price.
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Old 28-05-2019, 10:57 PM   #1250
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Hi BBC,

How do we use IB to buy US treasury bills? Just search for US Tbills?

Thanks!
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Old 29-05-2019, 07:13 AM   #1251
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If you’re trying to find new issue U.S. Treasuries, look at the auction calendar here then match it up with auction announcements here. Find the CUSIP of the U.S. Treasury you’re interested in, then search at your favorite broker for the CUSIP.

Last edited by BBCWatcher; 29-05-2019 at 07:22 AM..
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Old 30-05-2019, 08:02 AM   #1252
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The Tax Justice Network has released its 2019 report on the world’s corporate tax havens. Singapore broke into the top 10, at number 8.

The British Virgin Islands are #1 on this list.
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Old 31-05-2019, 05:49 PM   #1253
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The Tax Justice Network has released its 2019 report on the world’s corporate tax havens. Singapore broke into the top 10, at number 8.

The British Virgin Islands are #1 on this list.
That's not a good thing, right? Small country/poor people can't afford ethics?

On a tangent, I've been reading about unexplained wealth orders lately. Quite interesting with a good dollop of schadenfreude.
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Old 17-06-2019, 10:53 AM   #1254
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term vs whole life insurance

Hi BBCWatcher,

thank you very much for all the information provided in this thread. You recommend life insurance for individual with dependants. Could you share your view on term vs whole life insurance?

My understanding:
1) term insurance
-you are covered for a limited period, ideally until your dependants become financially independant.
-lumpsum if you pass away
-The premiums are cheap and the insurance company earns if you don't pass away


2) whole life insurance
- you are covered as long as you pay the premium (so it can be for your whole life).
- lumpsum if you pass away + investment component
-The premiums are expansive. The insurance company earns money by investing the investment component of the premium. The yield is capped (the insurance pockets the difference) but you take the loss if any.

Is it better to get term insurance and invest your savings by yourself?

Thank you in advance!
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Old 17-06-2019, 11:32 AM   #1255
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thank you very much for all the information provided in this thread. You recommend life insurance for individual with dependants.
If those dependents would be genuinely, materially, negatively impacted with your untimely passing and the loss of your income(*) (not only grief stricken, which is no small thing), if a monetary payout could ameliorate the negative impact, and if you cannot adequately self-insure.

Dependents may or may not have any family connection to you. In principle they can be anybody you care about that is dependent on you. They can even potentially be non-persons, such as a charitable organization you care about that greatly depends on your generosity -- the generosity of your time, for example.

Kim Kardashian West (for example) most probably doesn't need any life insurance.

There are possible rare, exotic exceptions for tax-related reasons, but those rare, exotic exceptions are even less common among residents of Singapore. Also, if you know with high confidence you're going to die soon (you're diagnosed with a terminal illness, for example), if you can convince a life insurance company to issue you a policy with no strings attached, and if all of that is legal, then go for it, with or without dependents. Donate the proceeds to your favorite charity, for example.

A death benefit that would be enough to pay off the remaining mortgage and to pay for your children's undergraduate university educations is a reasonable, rough, preliminary answer to the primary income earner's question "How much term life insurance do I need?" Your survivor wouldn't necessarily use life insurance proceeds in this way. For example, it might make perfect sense to sell the home in order to "right size" and/or be nearer other family members who might help out in this calamity. But having that choice available would be useful.

Could you share your view on term vs whole life insurance?
Financially speaking you're much better off buying term life insurance and doggedly saving/prudently investing the rest.

There's one major exception: if you're incapable of doggedly saving and prudently investing the rest. There are some people who need the "power" of a whole life insurance premium bill to maintain discipline, even if that's a high cost solution.

I don't criticize such individuals. I haven't met anyone yet who isn't flawed in at least one way, and it's what makes us human and often charming.

(*) Which helps explain why I keep harping on the importance of disability income insurance (DII). But DII applies whether or not you have dependents, because you're still living in DII payout scenarios.
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Last edited by BBCWatcher; 17-06-2019 at 11:52 AM..
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Old 17-06-2019, 11:45 AM   #1256
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Kim Kardashian West (for example) most probably doesn't need any life insurance.
Hi BBCWatcher,

For some people who take risks for a living (entrepreneurs and financial speculators who use leverage), I think it's advisable to buy life/health insurance even if they are rich enough to self-insure. In the event of bankruptcy, they will still be protected by insurance.

Imagine if someone who used to be super-rich becomes bankrupt. All his money will be taken away by creditors. NO money to see doctor. At least health insurance would have protected him from that event, however low the probability is.

Do you agree? DO you see any flaws in the above reasoning?
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Old 17-06-2019, 12:09 PM   #1257
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For some people who take risks for a living (entrepreneurs and financial speculators who use leverage), I think it's advisable to buy life/health insurance even if they are rich enough to self-insure. In the event of bankruptcy, they will still be protected by insurance.
And now we're getting into the rare, exotic exceptions.

Let's just try to agree at the outset that Kim Kardashian West doesn't need life insurance (in all probability), OK?

I think you're on the right track, but you've got the wrong product(s) in mind. Kim Kardashian West very much needs liability insurance -- what's called an "umbrella" policy in the United States. That is, if she screws up intentionally or negligently -- if a household staff member slips on a wet floor that got wet due to a drink Kim Kardashian West had, and is seriously injured -- then Kim Kardashian West would be well advised to have adequate insurance to cover such mishaps.

She may also be advised to keep a home in Florida, as a notable example. Florida offers strong "homestead" protections. Infamously, O.J. Simpson got to keep his home in Florida.

She ought to have a 401(k) plan, because those assets are very well protected. IRAs in most states are also well protected.

When she's run down that list (and a few others), and if she still wants to protect even more assets from legal seizure or forfeiture, then some sort of life insurance might be advisable.

Up until this current tax year (2019) Kim Kardashian West really had no choice about whether she ought to carry U.S. Patient Protection and Affordable Care Act ("Obamacare") compliant health insurance. If she didn't have such insurance, she would have paid a significant tax penalty through tax year 2018. That tax penalty no longer applies, but even so health insurance is a good value for most wealthy people (and seen that way, generally) simply because it's the only realistic mechanism to enjoy lower, pre-negotiated prices on medical care. However, she'd probably purchase a "bronze" plan -- or have an employer-provided high deductible medical plan -- because "high" deductibles would not be high for her, and she might even get a little bit of a high marginal bracket tax break that way.

That said, even for Kim Kardashian West, health insurance isn't really about asset protection per se. If Kim Kardashian West were ever to descend into genuinely low income status then she'd be eligible for Medicaid, even if she maintains any amount of preserved wealth as long as it's not income producing -- easy enough to do, generally, if you're so inclined. (Medicaid is only subject to an income test now, not a wealth test. This is a good thing, by the way, except that the income limit should be raised significantly in all states and everyone ought to have the option to buy into Medicaid or Medicare, as Congress prefers -- I'm not fussy about which one, just at least one.) At age 65 she'd undoubtedly qualify for Medicare. I'm 100% sure she has already clocked the minimum 10 years of Social Security/Medicare contributions to qualify on her own merits.

I think whole and universal life insurance policies used to be popular among wealthy/high income Americans, but I don't see that as much any more. Trusts of certain types seem to be the rage these days, plus the vehicles I mentioned above.
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Last edited by BBCWatcher; 17-06-2019 at 12:13 PM..
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Old 17-06-2019, 01:04 PM   #1258
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BBC is medishield life sufficient?
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Old 17-06-2019, 02:19 PM   #1259
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BBC is medishield life sufficient?
The government says it is, with the important caveats that you're a citizen and (preferably) have a "reasonable" MediSave balance.

I hope that's true, but I'm a little conservative on this point and take the view that an Integrated Shield plan designed to cover care in public hospital B1 ward on an "as charged" basis ought to be deemed an insurance necessity.

Non-citizens ought to be a little more careful. MediShield Life definitely isn't enough (and available only to PRs), some Integrated Shield plan variants aren't available to non-citizens, and some of the carriers apply proration factors to the benefits in their public hospital B1 ward Integrated Shield plans when a non-citizen is the policyholder. Upon quick review it looks like Aviva's MyShield Plan 3 is the best in its class for non-citizens.
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Old 17-06-2019, 02:29 PM   #1260
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Thanks. Liability insurance seems to be neglected in Singapore.

One question. Is my assumption that insurance payouts, say health payouts, are protected from creditors for bankrupt individuals? It will be a disaster if a bankrupt falls sick and cannot pay his hospital bills.

And now we're getting into the rare, exotic exceptions.

Let's just try to agree at the outset that Kim Kardashian West doesn't need life insurance (in all probability), OK?

I think you're on the right track, but you've got the wrong product(s) in mind. Kim Kardashian West very much needs liability insurance -- what's called an "umbrella" policy in the United States. That is, if she screws up intentionally or negligently -- if a household staff member slips on a wet floor that got wet due to a drink Kim Kardashian West had, and is seriously injured -- then Kim Kardashian West would be well advised to have adequate insurance to cover such mishaps.

She may also be advised to keep a home in Florida, as a notable example. Florida offers strong "homestead" protections. Infamously, O.J. Simpson got to keep his home in Florida.

She ought to have a 401(k) plan, because those assets are very well protected. IRAs in most states are also well protected.

When she's run down that list (and a few others), and if she still wants to protect even more assets from legal seizure or forfeiture, then some sort of life insurance might be advisable.

Up until this current tax year (2019) Kim Kardashian West really had no choice about whether she ought to carry U.S. Patient Protection and Affordable Care Act ("Obamacare") compliant health insurance. If she didn't have such insurance, she would have paid a significant tax penalty through tax year 2018. That tax penalty no longer applies, but even so health insurance is a good value for most wealthy people (and seen that way, generally) simply because it's the only realistic mechanism to enjoy lower, pre-negotiated prices on medical care. However, she'd probably purchase a "bronze" plan -- or have an employer-provided high deductible medical plan -- because "high" deductibles would not be high for her, and she might even get a little bit of a high marginal bracket tax break that way.

That said, even for Kim Kardashian West, health insurance isn't really about asset protection per se. If Kim Kardashian West were ever to descend into genuinely low income status then she'd be eligible for Medicaid, even if she maintains any amount of preserved wealth as long as it's not income producing -- easy enough to do, generally, if you're so inclined. (Medicaid is only subject to an income test now, not a wealth test. This is a good thing, by the way, except that the income limit should be raised significantly in all states and everyone ought to have the option to buy into Medicaid or Medicare, as Congress prefers -- I'm not fussy about which one, just at least one.) At age 65 she'd undoubtedly qualify for Medicare. I'm 100% sure she has already clocked the minimum 10 years of Social Security/Medicare contributions to qualify on her own merits.

I think whole and universal life insurance policies used to be popular among wealthy/high income Americans, but I don't see that as much any more. Trusts of certain types seem to be the rage these days, plus the vehicles I mentioned above.
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