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tangent314

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From what I see FSMOne does not broker with SRS funds.
The brokers that do work with SRS funds are pretty much all the same rates at ~0.28% with ~$25 minimum commission. I don't think you can go wrong with any one of them.

Me, I use DBS Vickers
 

Okenba

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hi BBCWatcher, i have another noob question.

As i know nothing abt investing and im doing it really to make my money work harder for me so that i can save up for retirement in like 15 to 20 years, does it make sense that I juz go with roboinvesting app like stashaway? or its better that i go with buying IWDA or VWRA?
*both employing the Dollar Cost Averaging strategy.

my considerations are: Stashaway seems to be super easy to use, dont need to worry abt exchange rate in the next 15 to 20 years when i finally wanna sell, potentially gives similar returns to investing in VWRA or IWDA. But im not so sure abt the sustainability unlike the conventional VWRA or IWDA where i know exactly what im buying into.

Thanks!!

StashAway buys US domiciled ETFs in USD, so it is affected by the exchange rate. It is also affected by 30% div withholding tax, and potentially estate taxes if you pass on.
 

assiak71

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Actually, the Straits Times Index (STI) stocks have performed fairly well. State Street Global Advisors has very recently published the standard performance data through year end 2019 for their STI stock fund, ES3, and here it is (annualized, dividends reinvested, net of estimated costs):

1 Year: 9.00%
3 Year: 7.29%
5 Year: 2.53%
10 Year: 4.07%
Inception (April 11, 2002): 6.93%

That's pretty decent, actually. I think long-term Singapore dollar-oriented investors should be quite satisfied with that record so far.
I would like to know the returns for MSCI World or S&P500 from 2002 till now.

In the last decade US did better but people forgot in the decade before that SG did better.

Any 17 year return figures?
 

BBCWatcher

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From what I see FSMOne does not broker with SRS funds.
They do, to some degree anyway.

As i know nothing abt investing and im doing it really to make my money work harder for me so that i can save up for retirement in like 15 to 20 years, does it make sense that I juz go with roboinvesting app like stashaway? or its better that i go with buying IWDA or VWRA?
*both employing the Dollar Cost Averaging strategy.

my considerations are: Stashaway seems to be super easy to use, dont need to worry abt exchange rate in the next 15 to 20 years when i finally wanna sell, potentially gives similar returns to investing in VWRA or IWDA. But im not so sure abt the sustainability unlike the conventional VWRA or IWDA where i know exactly what im buying into.

StashAway buys US domiciled ETFs in USD, so it is affected by the exchange rate. It is also affected by 30% div withholding tax, and potentially estate taxes if you pass on.
All true, plus you pay a pretty hefty fee for whatever convenience they offer, and I really don't think they offer much.

StashAway does have a heck of an online army promoting it, probably because they have a referral program. But I'm not a fan as they're presently constructed.

I would like to know the returns for MSCI World or S&P500 from 2002 till now.

In the last decade US did better but people forgot in the decade before that SG did better.

Any 17 year return figures?
I'm able to find the total gross returns of the Straits Times Index stocks from January 1, 2002, to the present date (as I write this) assuming reinvested dividends and decent fund costs. The way I can do that is to use EWS, which is a U.S. listed equivalent to ES3 and G3B. You wouldn't actually use EWS, but the math works since I'm incorporating a 0% dividend tax assumption.

Anyway, over that interval, EWS returned 8.55% per year. That's in U.S. dollar terms, please note. For a sample S&P 500 index fund (SPY) I get 7.96% over almost the same interval. (I can't quite get the intervals to line up to the exact day, but "close enough.")

That's a pretty arbitrary historical time interval, though. Any particular reason(s) for a January 1, 2002, baseline? Also, I'm rather skeptical that 8.55% figure was actually achievable, especially historically. These figures assume zero dividend reinvestment costs, and that's far, far away from Singapore's reality, especially historically. Please note that these figures assume a one-time investment on January 1, 2002, followed by dividend reinvestments only. They do not reflect a dollar cost averaging strategy.
 

BBCWatcher

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at a personal level, wont u recommend IWDA or VWRA? or maybe a mix of both?
A mix, no, unless it's "accidental," i.e. you start with one of them then switch your additional investments to another while keeping your existing position.

Take your pick. They're both fine. Flip a coin if you really cannot decide.
 

yesimvested

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haha... got it man. Thanks and appreciate

cheers!

A mix, no, unless it's "accidental," i.e. you start with one of them then switch your additional investments to another while keeping your existing position.

Take your pick. They're both fine. Flip a coin if you really cannot decide.
 

Okenba

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Thanks BCCWatcher... i guess i will do it the old skool way... at a personal level, wont u recommend IWDA or VWRA? or maybe a mix of both?

Thanks

They are different ETFs. As in they track different things.

IWDA: 0.20 Expense Ratio
Tracks developed markets according to MSCI index.

VWRA: 0.22 Expense Ratio
Tracks whole world markets according to FTSE index.

If developed markets do better than emerging markets, IWDA will outperform VWRA. (VWRA will still 'catch' the performance of developed markets, but will be dragged down by emerging markets.)

If emerging markets do better than developed markets, VWRA will outperform IWDA. IWDA will not catch emerging market performance at all. VWRA will catch emerging market performance, but only to the extent that it is represented in the basket of shares. (Roughly 12%)

On the flip side, if emerging markets tank, IWDA will not be affected at all, while VWRA will tank slightly (to the tune of 12%).
If developed markets tank, IWDA will tank along with them. VWRA will also tank, but may not tank as much as emerging markets will help to cushion the fall.

In summary, VWRA is more diversified. It is less affected when segments of the markets tanks (as the other parts of the market will buffer.) But at the same time, if a particular market segment rises, it will also not register a full rise as it will be dragged back by other segments of the market.

IWDA if you think developed markets will continue to outperform emerging markets.
VWRA if you're not sure and are willing to have slightly lower gains in order to also catch all markets. (and potentially have slightly less drastic dips.)
 

yesimvested

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hey..thanks for the analysis!

i personally think emerging market has more upside potential given a 10 to 15 years horizon

They are different ETFs. As in they track different things.

IWDA: 0.20 Expense Ratio
Tracks developed markets according to MSCI index.

VWRA: 0.22 Expense Ratio
Tracks whole world markets according to FTSE index.

If developed markets do better than emerging markets, IWDA will outperform VWRA. (VWRA will still 'catch' the performance of developed markets, but will be dragged down by emerging markets.)

If emerging markets do better than developed markets, VWRA will outperform IWDA. IWDA will not catch emerging market performance at all. VWRA will catch emerging market performance, but only to the extent that it is represented in the basket of shares. (Roughly 12%)

On the flip side, if emerging markets tank, IWDA will not be affected at all, while VWRA will tank slightly (to the tune of 12%).
If developed markets tank, IWDA will tank along with them. VWRA will also tank, but may not tank as much as emerging markets will help to cushion the fall.

In summary, VWRA is more diversified. It is less affected when segments of the markets tanks (as the other parts of the market will buffer.) But at the same time, if a particular market segment rises, it will also not register a full rise as it will be dragged back by other segments of the market.

IWDA if you think developed markets will continue to outperform emerging markets.
VWRA if you're not sure and are willing to have slightly lower gains in order to also catch all markets. (and potentially have slightly less drastic dips.)
 
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BBCWatcher

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A brief update....

It's another January, so here's what I'm up to (in no particular order):
[....]
3. I'm considering another regular sale of Employee Stock Purchase Program (ESPP) shares, to keep that particular individual stock holding from becoming too big a share of total assets.
Mission accomplished.

4. This month I'll finish closing my least useful financial account, to keep life relatively simple....
Mission accomplished.
 

hwckhs

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Mission accomplished.

If you don't mind, I am interested to know what's your max allocation (in % of household wealth) for a single stock.

Not sure if there is a general consensus in what this number should be, for people who invests in individual stocks?
 

BBCWatcher

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If you don't mind, I am interested to know what's your max allocation (in % of household wealth) for a single stock.

Not sure if there is a general consensus in what this number should be, for people who invests in individual stocks?
I'm not a fan of investing (really speculating) in/on individual stocks as a general matter. ESPPs are a fairly common exception, but I agree with the often suggested "rule of thumb" to cap a single stock (or bond issuer) at 4% of household wealth. I wouldn't freak out if I were to see that single stock drift up to 4.02% or whatever, but that might mean adding a few more shares to the next planned sale.
 

celtosaxon

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Is the rule of thumb based on household wealth or % of total equity holdings? My impression was it’s the latter, since 4% is based on 1 out of 25 stocks (portfolio theory, to be sufficiently diversified).

I'm not a fan of investing (really speculating) in/on individual stocks as a general matter. ESPPs are a fairly common exception, but I agree with the often suggested "rule of thumb" to cap a single stock (or bond issuer) at 4% of household wealth. I wouldn't freak out if I were to see that single stock drift up to 4.02% or whatever, but that might mean adding a few more shares to the next planned sale.
 

hwckhs

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I'm not a fan of investing (really speculating) in/on individual stocks as a general matter. ESPPs are a fairly common exception, but I agree with the often suggested "rule of thumb" to cap a single stock (or bond issuer) at 4% of household wealth...

Thank you!
 

BBCWatcher

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Is the rule of thumb based on household wealth or % of total equity holdings? My impression was it’s the latter, since 4% is based on 1 out of 25 stocks (portfolio theory, to be sufficiently diversified).
Good question. I tend to align everything with household wealth. I don't think a percentage-on-percentage cap makes much sense here. If stocks represent 3% of your household wealth, then "disaster" strikes and you lose 5% of 3%.... Well, that doesn't seem like anything to worry about, not much anyway.

And it's only a "rule of thumb." Early career you might very well have a negative net worth (student loans to pay off, for example), and the shares you buy at a discount through the ESPP that you have to hold for a minimum period of time might represent a gigantic fraction of household wealth ex-debt. That's still OK. The ESPP is still a good deal, still a reasonable and calculated risk, and you'll eventually honor that 4% "rule of thumb" cap as your wealth accumulates. As an example, you'll also grab your employer's full 401(k) matching funds at least, and you certainly won't invest your 401(k) in your company's shares.
 

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I see where you are coming from, and from what I know about diversification, even a 12 stock portfolio is still reasonable — when you go below that the risks start to climb exponentially higher with each reduction as you get closer to 1. So assuming 50% of household assets are in equities, you could go as high as 8% as a % of total equity and still be fine.

Do you count home equity in your primary residence as part of your household wealth? I would guess not, unless you can 100% guarantee that you will downgrade (or move to a lower priced real estate market) in the future, since you can’t totally count on ever unlocking that wealth.

Good question. I tend to align everything with household wealth. I don't think a percentage-on-percentage cap makes much sense here. If stocks represent 3% of your household wealth, then "disaster" strikes and you lose 5% of 3%.... Well, that doesn't seem like anything to worry about, not much anyway.

And it's only a "rule of thumb." Early career you might very well have a negative net worth (student loans to pay off, for example), and the shares you buy at a discount through the ESPP that you have to hold for a minimum period of time might represent a gigantic fraction of household wealth ex-debt. That's still OK. The ESPP is still a good deal, still a reasonable and calculated risk, and you'll eventually honor that 4% "rule of thumb" cap as your wealth accumulates. As an example, you'll also grab your employer's full 401(k) matching funds at least, and you certainly won't invest your 401(k) in your company's shares.
 

BBCWatcher

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Do you count home equity in your primary residence as part of your household wealth?
Sure, that's just definitional.

I would guess not, unless you can 100% guarantee that you will downgrade (or move to a lower priced real estate market) in the future, since you can’t totally count on ever unlocking that wealth.
Oh, you can count on it being unlockable: just sell the house. (You'd typically allow a few months of lead time since real estate isn't all that liquid.) You then need alternative housing, but liberated home equity can typically buy a great deal of rental housing.

Whether you actually sell your house is a separate question. Said another way, you'd typically treat it as fairly illiquid. But it still counts.
 

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Interesting perspective.

How about the value of future life annuities, like CPF LIFE and Social Security, do you count those as well?

Sure, that's just definitional.


Oh, you can count on it being unlockable: just sell the house. (You'd typically allow a few months of lead time since real estate isn't all that liquid.) You then need alternative housing, but liberated home equity can typically buy a great deal of rental housing.

Whether you actually sell your house is a separate question. Said another way, you'd typically treat it as fairly illiquid. But it still counts.
 

BBCWatcher

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How about the value of future life annuities, like CPF LIFE and Social Security, do you count those as well?
It depends on what I'm counting, but certainly any/all high confidence retirement income streams count in retirement financial modeling.
 

celtosaxon

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Future yes... but do you count them as bond equivalents in your present asset allocation model today (i.e. allowing for a higher stock % due to these considerations)?

The reason I ask is because experts do not generally recommend this.

Jack Bogle was in the minority in his view that Social Security should be considered as a bond equivalent, as well as recommending the more aggressive 120 minus your age guideline.

Michael Kitces opined that in theory you could put Social Security on your balance sheet, but he doesn’t recommend it, since ordinary people typically wouldn’t have the stomach for the higher volatility resulting from the higher stock allocation.

It depends on what I'm counting, but certainly any/all high confidence retirement income streams count in retirement financial modeling.
 
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