*Official* Shiny Things club - Part 2

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BBCWatcher

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If I do not average down, my fear is that I may have to sit on the stocks for a long time till they recover back to original value.
Or they might never recover. I used to hold a small number of shares in three companies that all went bankrupt -- mostly not my choice. I'm still waiting for those stocks to recover. ;)

So in order to convert to a pure index fund portfolio, your advice would be for me to focus on averaging down the stocks till I hit a position that I can exit? Then sell and convert to etfs? I have limited funds e.g. at most 3k per month to inject. So I would not be able to buy IWDA AND average down at the same time.
Sorry, I think we're talking past each other. "Average down" to me means "gradually liquidate," i.e. sell increments of those share holdings over some number of months until they're all gone. In which case, you have proceeds from those stocks sales to fund your new, reoriented investment flow.
 

bobobob

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One cannot predict one's lifespan, or that of one's spouse/partner. And it's much, much more fun and beneficial to spend and to give wealth while you're still alive. To do things like pay for your grandchildren's university educations, for example. (Or do you want to wait until your grandchildren are 40, so that they can inherit something, maybe, to pay for university? That doesn't make sense.)

A bedrock, basic level of assured income for life gives you total financial freedom for the rest of your days, including the freedom to enjoy life to the fullest for however long it lasts. It's just that simple. No extra points are awarded if you die with a bigger balance or indeed any residual, but extra points are often awarded if you're generous earlier and while you're alive.

I don't think this is a difficult concept to grasp, but evidently it is too difficult for some.

You don't think a stock and bond portfolio and a Conservative draw down rate is enough to provide that freedom and security?
 

BBCWatcher

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You don't think a stock and bond portfolio and a Conservative draw down rate is enough to provide that freedom and security?
Not if you're going to maximize your own enjoyment and earlier philanthropy, no. You have to hoard that much more to defend against the longevity uncertainty, and for two people if you're a couple. That's more expensive in lifestyle terms than putting a reasonable real lifetime income floor underneath yourselves.

Saving is only ever deferred consumption, to spend on real goods and services. If you and all the people and causes you care about can safely bring forward more of that consumption -- university tuition is an excellent example -- then that's fantastic. And you can, very safely, if you're adequately defended up to a floor real lifetime income level.

There's also the fact that theft, fraud, creditors, court judgments, and other "black swan" events are always possible. It's not a bad thing to have a couple sovereigns (ideally) keeping you out of destitution, even if one part of one of those sovereigns might be pushing you closer to destitution because of something bad you allegedly did (or didn't do, but that doesn't actually matter in a "black swan" event).

If you carry your argument to its logical conclusion, why not drop all insurance, including medical insurance? After all, if you have loads of wealth that you're hoarding, why do you need any insurance? Well, there is that argument I suppose, but "s*** happens" on occasion. Even very wealthy people buy a little core foundational insurance, rationally so.

There are those famous stories of (former) European royals ending up penniless or practically penniless. Disasters are possible, unfortunately, so defense in depth is helpful...and comparatively cheap.
 
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Oldycat

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Or they might never recover. I used to hold a small number of shares in three companies that all went bankrupt -- mostly not my choice. I'm still waiting for those stocks to recover. ;)


Sorry, I think we're talking past each other. "Average down" to me means "gradually liquidate," i.e. sell increments of those share holdings over some number of months until they're all gone. In which case, you have proceeds from those stocks sales to fund your new, reoriented investment flow.

Averaging down to me means to buy more of the same stock but at the current lower market value.

So for you, option 2 is actually the best?
 

BBCWatcher

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Averaging down to me means to buy more of the same stock but at the current lower market value.
So for you, option 2 is actually the best?
Modified, i.e. to pick some reasonable pace of exit from the position you really shouldn't have taken -- 12 or 18 months, as examples -- and exit over that time period. You want to be somewhat sensible about it, though. If you're subject to minimum commissions and/or odd lot issues (probably) that are silly to pay if you're selling shares every month, then sell a portion every two months, or every quarter, and/or in even lots. That works, too.

If the stocks you want to exit rebound, OK, you capture some of the rebound since you've paced the exit. If they fall further, OK, you've captured some of that, too. ;) Who knows? Chalk it up as a lesson learned, and move on.

And yes, sure, it's not ideal to wake up and say, "Oh s**t! I have the wrong investment plan!" when your stocks have fallen. It's not the ideal time for that epiphany. But if you genuinely have the wrong investment plan -- if you would have that epiphany any/every day you woke up -- OK, start correcting it now, and don't wait too long to correct it fully. Then follow the new plan, doggedly and robotically.

I'm also OK with a hybrid of 1 and 2 provided your "wrong" stocks already (or soon will) represent a relatively small and declining fraction of your investing.
 

Shiny Things

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1) Sorry, what is MBH? And why do you not recommend Maybank for non-SG stocks?
2) HKSE because they don't seem to offer LSE.

1a) MBH is an ETF that owns high-grade SGD-denominated corporate bonds. It gives you a higher yield than A35, with very little extra risk - more than compensated by the higher yield on the bonds.
1b) Because Maybank charges dividend and custody fees on overseas stocks that are completely unnecessary. On Singapore stocks they're fine.
2) It's worth the effort to find a broker that does offer the LSE, because the tax benefits of the London-listed Irish-domiciled ETFs are absolutely worth it.

It sems that with the uncertain global outlook ahead, isn't the best decision to park all liquid funds in short term us treasuries or money market funds? (rather than SGD)

Hoooooo boy there is a lot going on here.

The only time that the outlook hasn't been "uncertain" lately was in January when everything was ripping higher, and we all saw how that ended. (The VIX-plosion was this year? 2018's been a LONG year.)

Anyway, if you look hard enough you can always find uncertainties that will give you an excuse to say "no I shouldn't invest right now, I should hide under the bed". That's not what gets you rewarded, though. What gets you rewarded is taking sensible, thoughtful investments, and continuing them regularly as markets go up and down.

ST, can u share your views on the optimal withdrawal strategies? how to accumulate a wealth building portfolio has been discussed to death, but i don't see many people talking about the end game.

i came across this article lately, which highlights some of the issues with the 4% withdrawal rule. any thoughts?

BBCW has some excellent thoughts on the nuance and the detail of withdrawal strategies. Generally though, I think a good rule of thumb is that portfolios can sustain 3% withdrawal rates - not 4% - with only a very small risk of running out of money.


I do have a question I was hoping you could help me with: my bank accounts only seem to allow me to send SGD. As a result, I have SGD in my Interactive Brokers account, which i then have to convert into USD before buying IWDA. This is rather awkward and leaves an open usd.sgd position on my account.

I was wondering if you do the same thing or if you had a workaround?

Thanks!

So you definitely want to send SGD and convert it within Interactive Brokers, because IBKR's FX spreads are so much tighter than you'll get anywhere else. To avoid those annoying USD.SGD positions, just do the following:
  • Use Trader Workstation to execute the trade;
  • In the trade ticket window, click on the "Advanced +" button. You'll see a field labeled Destination, and it'll say "IDEALPRO". Change that to "FXCONV".
  • Submit the trade as you normally would.
Using FXCONV instead of IDEALPRO doesn't create the weird USD.SGD position lines, so you won't have phantom PnL sitting around.



Do you advise that I
1. Keep these stocks at current value and channel new savings into IWDA
Or
2. Sell these stocks at a loss and channel the money into IWDA which is also trading at a good discount now
OR
3. Continue to average down the stocks?

Thanks!

Option 2; flog 'em.

Focusing on the price you bought a stock at is a mistake that a lot of people make. People think "oh if it gets back to a profit I'll just sell it, just bail me out!"... but the market doesn't care about the price you bought it at. The only thing that matters is the price it's at now.

I'd personally sell them off - slowly or quickly, but my inclination would be to do it quickly, get it over with, unless your holdings are a significant chunk of the average daily volume (above 5% or so) - and move the money into IWDA.

Sorry, I think we're talking past each other. "Average down" to me means "gradually liquidate," i.e. sell increments of those share holdings over some number of months until they're all gone. In which case, you have proceeds from those stocks sales to fund your new, reoriented investment flow.

Mmm - I'd disagree with your usage there, even though I'm normally as descriptivist as they come. "Averaging down" to me is "buying more of something that's gone down"; what you're using the term for, I'd probably just say "gradually liquidating".
 

peipei1

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ABF bond dividend is announced at the same rate as last year, despite bond interest going up this year? Are the fund managers not generous? I redeemed it from Invest saver and expect a $10-30 net returns after dabbling in it for year.

I feel bonds ETF in singapore is not good with annual dividend payout. Prices will fall for first half or first 3 months after XD in Jan, it is like very hard to do asset allocation with unstable returns.
 

BBCWatcher

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I'm not a big fan of ABF since Singapore Savings Bonds (SSBs) were introduced, unless and until you've exhausted your SSB opportunities, and perhaps not even then.

MBH is a little more interesting, although it's not ideal either. But for certain purposes it's the best available choice.
 

Listopad

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I'm not a big fan of ABF since Singapore Savings Bonds (SSBs) were introduced, unless and until you've exhausted your SSB opportunities, and perhaps not even then.

MBH is a little more interesting, although it's not ideal either. But for certain purposes it's the best available choice.

how do I read MBH's recent dividend payout? it's so low coz only for 2 months worth of coupon? even if annualise, it's only say approx. 2.5%
 
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mianbao321

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1a) MBH is an ETF that owns high-grade SGD-denominated corporate bonds. It gives you a higher yield than A35, with very little extra risk - more than compensated by the higher yield on the bonds.
1b) Because Maybank charges dividend and custody fees on overseas stocks that are completely unnecessary. On Singapore stocks they're fine.
2) It's worth the effort to find a broker that does offer the LSE, because the tax benefits of the London-listed Irish-domiciled ETFs are absolutely worth it.

Thanks for the explanation. Just wondering why does MBH offer higher yield than A35?

Companies are willing to pay more to borrow as compared to government?
 

bobobob

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Thanks for the explanation. Just wondering why does MBH offer higher yield than A35?

Companies are willing to pay more to borrow as compared to government?

Yeah because there is higher risk of default when lending to companies, so they must give you higher interest to compensate you for the risk.
 

fixture

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I am 23 years old and bought SWDA at 4098 in October, down about 5% at the moment. Nothing to be worried about I imagine? Lots of doom and gloom everywhere with regards being at the tail end of a bull run, rising rates bringing down equities etc. Just posting here because I figure you lot are much more sensible than the other sources I read. I have 25% bonds, 5% cash, and 70% equity. If it goes lower I should just rebalance to my set distribution some time next year, right?

On one hand I am pessimistic about having potentially missed out on the gains of these past years, and on the other I know market movements should be for the most part ignored and that I have many years ahead of me. I am still studying at the moment and will start working around 2021. New to this and scouting for some reassurance. Thx for this thread guys
 

Purplestars

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I am 23 years old and bought SWDA at 4098 in October, down about 5% at the moment. Nothing to be worried about I imagine? Lots of doom and gloom everywhere with regards being at the tail end of a bull run, rising rates bringing down equities etc. Just posting here because I figure you lot are much more sensible than the other sources I read. I have 25% bonds, 5% cash, and 70% equity. If it goes lower I should just rebalance to my set distribution some time next year, right?

On one hand I am pessimistic about having potentially missed out on the gains of these past years, and on the other I know market movements should be for the most part ignored and that I have many years ahead of me. I am still studying at the moment and will start working around 2021. New to this and scouting for some reassurance. Thx for this thread guys

Hold on tight. It is going to be rough for a while. You may see your money go down some more. You bought in at the peak of the crash
 

JetStorm

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Quick question. After reading so much on investing in etfs, ssbs and the various methods to boost retirement income via cpf, how do one decide which to do first if one is a small time investor? Max cpf of 7k first then start to invest the rest into etfs?

I believe majority do only one of the two. The more wealthy can do both.

Appreciate everyone on their various thought on this.

Sent from Samsung SM-G950F using GAGT
 

Wishdom

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Quick question. After reading so much on investing in etfs, ssbs and the various methods to boost retirement income via cpf, how do one decide which to do first if one is a small time investor? Max cpf of 7k first then start to invest the rest into etfs?

I believe majority do only one of the two. The more wealthy can do both.

Appreciate everyone on their various thought on this.

Sent from Samsung SM-G950F using GAGT
Invest into ETF. The long run expected return is far larger. But this is assuming that you are indifferent to the risk.

Realistically, you can do a bit of both. For example, contribute into cpf until you are ''tax free.'' Then, put the rest into etf.

Sent from Ilovennp using GAGT
 
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JetStorm

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Invest into ETF. The long run expected return is far larger. But this is assuming that you are indifferent to the risk.

Realistically, you can do a bit of both. For example, contribute into cpf until you are ''tax free.'' Then, put the rest into etf.

Sent from Ilovennp using GAGT

I feel the same way too but thats the thing... with so different topics in Money Mind on maxing CPF tax benefits, SSB, ETFs... every topic is specialized.

We all want to retire with sufficient cashflow during our retirement but middle income folks with limited spare cash has a dilemma on which is the better option to maximize their retirement returns.

ST has the 110 minus age strategy for ETFs

BBCW talks about following Vanguard to hit 30/70 at retirement.

BBCW also talks about maxing CPF to ensure more than adequate funds when CPF life starts.

I don't recall reading on where to put you money into this first followed by that if one is an average Joe. I believe that not everyone here has "happy problems" like BBCW, thus the question above.

I would think that if one has appetite for risk, go all out on ETFs? While the risk adverse should contribute into CPF until one is ''tax free'' then, put the rest into ETF/SSB?
 

Ole Gunner

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I want to invest into EM etf. Any recommendations? Is now even a good time to invest?

Ideally it would be through my SRS funds (just opened and topped up 15k) but I have a SCB trading account so it could be through there too.

Risk appetite I would say is fairly high
 

Wishdom

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I feel the same way too but thats the thing... with so different topics in Money Mind on maxing CPF tax benefits, SSB, ETFs... every topic is specialized.

We all want to retire with sufficient cashflow during our retirement but middle income folks with limited spare cash has a dilemma on which is the better option to maximize their retirement returns.

ST has the 110 minus age strategy for ETFs

BBCW talks about following Vanguard to hit 30/70 at retirement.

BBCW also talks about maxing CPF to ensure more than adequate funds when CPF life starts.

I don't recall reading on where to put you money into this first followed by that if one is an average Joe. I believe that not everyone here has "happy problems" like BBCW, thus the question above.

I would think that if one has appetite for risk, go all out on ETFs? While the risk adverse should contribute into CPF until one is ''tax free'' then, put the rest into ETF/SSB?
I personally put all my money into vwrd only. I also do transfers from OA to SA every month.

Guidelines are not hard and fast rules. Portfolio allocation is essentially a balancing act by yourself, for yourself. Just go with what you are comfortable with.

26AHqxDl.jpg


Sent from Ilovennp using GAGT
 
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