Index fund investing

[makav31i]

What is the cheapest way to invest in Vanguard index funds? Think most of the local banks/brokerages exchange rate spread will eat into profits.

Standard Chartered online equity trading charges 0.25% commission for US market...

 

[Shiny Things]

What is the cheapest way to invest in Vanguard index funds? Think most of the local banks/brokerages exchange rate spread will eat into profits.

The absolute dirt-cheapest is probably Interactive Brokers - you can transfer SGD into your account, convert it to USD at basically mid-market, and then buy as much VOO or VO or VWO or VEA or whatever as you like for one cent per share with a $1 minimum.

The problem is they're not for n00bs: their interface is notoriously user-unfriendly, and they have a USD 10k account minimum.

Otherwise, it's probably Stanchart.

 

[revenant]

Anyone has recommendation on commodity and emerging market ETF/index fund?

 

[genie47]

Standard Chartered online equity trading charges 0.25% commission for US market...

Standchart's exchange rate will cost. One investor also on this forum ditched Standchart for IB to buy the London Stock Exchange's VWRL.

The stock is domiciled in Ireland. So got a very big advantage. Search the posts for VWRL.

 

[genie47]

OK here it is.

http://forums.hardwarezone.com.sg/s...red-sc-investing-internationally-4342929.html

 

[Hyphos]

Standchart's exchange rate will cost. One investor also on this forum ditched Standchart for IB to buy the London Stock Exchange's VWRL.

The stock is domiciled in Ireland. So got a very big advantage. Search the posts for VWRL.

OK here it is.

http://forums.hardwarezone.com.sg/s...red-sc-investing-internationally-4342929.html

Yeah thanks I just found that thread earlier today. Think I will go for VUSA and VEUR instead of VTI and VEA for the dividend tax savings. Didn't consider VT/VWRL due to the relatively higher expense ratios.

 

[Shiny Things]

Anyone has recommendation on commodity and emerging market ETF/index fund?

The best bet for EM large-caps is Vanguard's VWO (or whatever the Irish-listed equivalent is).

 

[ochazuke]

Statistically speaking, rebalance yearly can be better to capture trends and get slightly higher returns. 6 months of rebalance period may be a bit too frequent - but if you have enough cash every 6 months, why not? As you said, see how it turns out.
The stock index is roughly about 2 times more volatile than A35. Meaning your 67% stock component can be 4 times as volatile as your A35 bond component. Meaning, both stock gains and loss will both be higher, because the 33% A35 does not have enough price movement to offset stock index drop significantly.

Thanks for the overview Epps... I think some time back you also replied to my question about A35 vs PH1S, I will look into getting PH1S in the future to add to portfolio.

My understanding is that in year 2022, we sell off the existing PH1S and grab new 30 year gov bonds?

 

[eveee99]

index funds vs hedge funds. Hard truths. You are better off investing by yourself into index funds.

I hope to include index fund (STI ETF) in my portfolio but am deciding whether to manually do it myself or through POEMS.

My main concern is cost and the ease of reinvesting the dividends. The advantage of PEOMS is that dividends are reinvested for me automatically but it imposes a dividend cost of 1%. However, the buying cost of STI ETF might be cheaper if I can get do it through standard chartered but it's still difficult to reinvest the dividends as I have to manually track and accumulate the dividends sufficiently to buy 1 lot.

Can any experts in index investing share how you manually do your investment to ensure your dividends are reinvested, so as to benefit from the compounding effect of reinvested dividends?

Appreciate advice from those who are into manual investment of index funds.

Thanks!

 

[hindsight]

I hope to include index fund (STI ETF) in my portfolio but am deciding whether to manually do it myself or through POEMS.

My main concern is cost and the ease of reinvesting the dividends. The advantage of PEOMS is that dividends are reinvested for me automatically but it imposes a dividend cost of 1%. However, the buying cost of STI ETF might be cheaper if I can get do it through standard chartered but it's still difficult to reinvest the dividends as I have to manually track and accumulate the dividends sufficiently to buy 1 lot.

Can any experts in index investing share how you manually do your investment to ensure your dividends are reinvested, so as to benefit from the compounding effect of reinvested dividends?

Appreciate advice from those who are into manual investment of index funds.

Thanks!

Just buy more of the same ETF when you get your dividends.

 

[Epps_Sg]

Thanks for the overview Epps... I think some time back you also replied to my question about A35 vs PH1S, I will look into getting PH1S in the future to add to portfolio.

My understanding is that in year 2022, we sell off the existing PH1S and grab new 30 year gov bonds?

Yes by year 2022, sell off all PH1S and grab new 30 year govt bonds. This is to keep the bond's time to till maturity 'long' to give it more volatility.

 

[Epps_Sg]

I hope to include index fund (STI ETF) in my portfolio but am deciding whether to manually do it myself or through POEMS.

My main concern is cost and the ease of reinvesting the dividends. The advantage of PEOMS is that dividends are reinvested for me automatically but it imposes a dividend cost of 1%. However, the buying cost of STI ETF might be cheaper if I can get do it through standard chartered but it's still difficult to reinvest the dividends as I have to manually track and accumulate the dividends sufficiently to buy 1 lot.

Can any experts in index investing share how you manually do your investment to ensure your dividends are reinvested, so as to benefit from the compounding effect of reinvested dividends?

Appreciate advice from those who are into manual investment of index funds.

Thanks!

When passive investing for long term, main priority is to keep running cost low, this is to maximize compounded profits over long term. If dividend is invested automatically, the dividends may be buying more shares when price is higher also - so auto dividend investing may also not be optimised.
On this two points, IMO it is better to invest yourself and set a quarterly, half yearly or yearly investment schedule to buy into more ETF with your savings, and don't sweat on optimizing the dividend reinvestment too much in the beginning.
If you need to force yourself to be disciplined to invest regularly, then consider to invest through some monthly auto-investment plans into the ETF. Just my two cents, you have to weigh the pros and cons yourself according to your particular situation and decide what is better for you.

 

[Bit Spark]

Anybody has recommendations for Europe ETF?

 

[Shiny Things]

Anybody has recommendations for Europe ETF?

VGK, the Vanguard FTSE Europe ETF. 0.12% expense ratio. Doesn't get better than that.

 

[eveee99]

Calling Index Fund investors,

Have you read this article?

http://www.valueaveraging.ca/docs/Nobody Gains from DCA.pdf

I'm still researching on index fund investing and am still undecided. It seems DCA has its limitations.

Any comments from the experienced index fund investors would be appreciated. Thanks!

 

[Hyphos]

Calling Index Fund investors,

Have you read this article?

http://www.valueaveraging.ca/docs/Nobody Gains from DCA.pdf

I'm still researching on index fund investing and am still undecided. It seems DCA has its limitations.

Any comments from the experienced index fund investors would be appreciated. Thanks!

Index fund advocators don't recommend DCA though. What they recommend is portfolio balancing, which they recommend to do annually or half annually at most. Any more frequent and you start to incur losses in the form of transaction costs.

 

[eveee99]

Index fund advocators don't recommend DCA though. What they recommend is portfolio balancing, which they recommend to do annually or half annually at most. Any more frequent and you start to incur losses in the form of transaction costs.

Ok. However, if you want to put in regular savings maybe every quarter to buy an index fund through value averaging (rather than DCA) where I would buy or sell the fund to maintain a certain value of my portfolio, is this considered balancing? Something like this, http://www.wikihow.com/Value-Average
seems much more superior than DCA and also allow regular savings ...

 

[Shiny Things]

Something like this, How to Value Average: 11 Steps - wikiHow
seems much more superior than DCA and also allow regular savings ...

This "value averaging" thing (never heard of it before) seems to completely miss the point of DCA. The point of DCA is that you invest the same amount every month - which works for most people because that's what they have to invest with, a steady stream off the top of their paycheck.

Let's say you have a hundred bucks a month to invest with. DCA says "OK, buy $100 worth of shares each month" - so if the stock halves, you can buy 200 shares instead of 100. Fine. VA says "OK, you need to keep the value of your portfolio going up by $100 a month" - so if the stock halves, you need to invest $200 a month instead of $100. Where are you supposed to find the extra hundo?

Certainly DCA doesn't work as well if you're investing a lump sum - if you assume that markets generally go up, which is true, then "investing it all up front" pretty obviously outperforms "investing some now and some later" because math. But VA assumes that you're sometimes buying and sometimes selling and sometimes doing nothing at all, which, nobody has cashflows like that. From the point of view of an investor looking to put cash to work, this VA thing is pretty meaningless.

Just curious, can share your portfolio of all index funds?

Sure. Here's my new weights for 2014 - I'm a California-based 30-year-old, so adjust the funds and weights to suit:

Stocks (80%)
SPY 45% (US large-caps)
VEA 30% (Eur/UK/Japan/Oz large-caps)
VO 5% (US mid-caps)

Bonds (20%)
CMF 8% (Cali muni bonds - not appropriate if you're outside California)
CSJ 9% (USD short-term high-grade bonds)
JNK 3% (USD junk bonds)

You're welcome. If you want advice on how to tweak this for your situation, buy me a beer and we'll talk.

I am not sure how I should tap into foreign index with S$. What do you think of the exchange rate fluctuation in the medium to long investment horizon like 10-20 years?

I reckon SGD weakens over 3-5 years, but I have no idea 10-20 years. If you want to know how to tap into it, it's a piece of cake - just open a brokerage account with Stanchart, buy some SPY from the NYSE, and voila, you've got all the foreign indices you need.

 

[IloveEmma]

Stocks (80%)
SPY 45% (US large-caps)
VEA 30% (Eur/UK/Japan/Oz large-caps)
VO 5% (US mid-caps)

Bonds (20%)
CMF 8% (Cali muni bonds - not appropriate if you're outside California)
CSJ 9% (USD short-term high-grade bonds)
JNK 3% (USD junk bonds)

Hi Shiny Things, why SPY and VO instead of something like VTI?

 

[Shiny Things]

Hi Shiny Things, why SPY and VO instead of something like VTI?

Great question - basically it's six of one, half a dozen of the other. Either way is equally good.