*Official* BBCWatcher club

[BBCWatcher]

So I can VC to my CPF accounts up to the annual limit?

Here's a quick summary of the rules on self top-ups:

1. You can top up your Medisave Account, with tax relief. Your MA top-up must fit within both the Basic Healthcare Sum (BHS) and CPF Annual Limit.

2A. You can top up your Special Account, with tax relief for the first $7,000. Your SA top-up must fit within the Full Retirement Sum (FRS), but no other limits apply.

2B. You can transfer Ordinary Account funds to your Special Account. There is no additional tax relief for this transfer, and again the only limit is the FRS.

3. You can top up all three of your CPF subaccounts using CPF Form VC/1 or electronic equivalent, with no tax relief. Your "all three" top-up must fit within the CPF Annual Limit.

You can check your CPF contribution history online to see where you stand in terms of room below the CPF Annual Limit. If your bonus paid in January was credited as "December 2017" in your CPF contribution history, then you should be able to ignore it when calculating how far along you are toward this year's CPF Annual Limit.

Don't forget about your spouse, if your spouse is a CPF member, particularly if your spouse has not yet maxed out CPF bonus interest.

 

[MrHighlander]

Thank you, BBCW!

I checked - the bonus is indicated on CPF Contribution History as for the month of Jan 2018, so there won’t be any room for VC for me this year

Here's a quick summary of the rules on self top-ups:

1. You can top up your Medisave Account, with tax relief. Your MA top-up must fit within both the Basic Healthcare Sum (BHS) and CPF Annual Limit.

2A. You can top up your Special Account, with tax relief for the first $7,000. Your SA top-up must fit within the Full Retirement Sum (FRS), but no other limits apply.

2B. You can transfer Ordinary Account funds to your Special Account. There is no additional tax relief for this transfer, and again the only limit is the FRS.

3. You can top up all three of your CPF subaccounts using CPF Form VC/1 or electronic equivalent, with no tax relief. Your "all three" top-up must fit within the CPF Annual Limit.

You can check your CPF contribution history online to see where you stand in terms of room below the CPF Annual Limit. If your bonus paid in January was credited as "December 2017" in your CPF contribution history, then you should be able to ignore it when calculating how far along you are toward this year's CPF Annual Limit.

Don't forget about your spouse, if your spouse is a CPF member, particularly if your spouse has not yet maxed out CPF bonus interest.

 

[BBCWatcher]

I checked - the bonus is indicated on CPF Contribution History as for the month of Jan 2018, so there won’t be any room for VC for me this year

You can still voluntarily top up your Special Account since there's no CPF Annual Limit on that. If your SA has not yet reached the Full Retirement Sum.

Also, while you can reasonably forecast you'll hit the CPF Annual Limit, it hasn't happened yet. If you're fired or must quit your job before the end of the year, and if you have a gap in your employment income, then you probably won't hit the Annual Limit.

 

[workingmen]

Hi BBCWatcher,

I have been following your thread for quite some time and will like your advice on Emergency Fund, optimizing mortgage payment and growing a small investment pool.

Profile
early thirties
Mortgage Liability - $600k @ 30 year loan @1.8% interest together with wife
Savings - $2.5k/mth (not inclusive of bonus)
Expenses - $5k/mth (joint account expense/savings, $1.2k/mth mortgage, insurance, income tax etc)


Plan
Emergency Fund - $70k
$30k (SSB ) + $25k (OCBC 360) + $15k (Maxigain)
Open Maxigain account and let the counter reach 12 before shifing $15k from OCBC 360 to Maxigain or buying another $20k of SSB and not open Maxigain account

Stocks - $30k
$8k (SGX 78% reits) +$22k (investing cash)
Invest $1k per mth of ES3 (30%) and IWDA (70%) via SC brokerage. $5k added to investing cash per year.

Mortgage -
Savings of $35k - $40k/yr (after contributing $5k to investing cash) to pay off principle of loan until loan is $300k to reduce monthly obligation and overall liability. Plan to use cash to service monthly payment and CPF contribution from employer will act as safety net with higher OA interest earned.

Also contemplating if i should use my excess cash top up SRS or CPF and not pay off the loan?

Appreciate your input if there can a better way to manage the above.

Thanks!

 

[BBCWatcher]

Profile
early thirties
Mortgage Liability - $600k @ 30 year loan @1.8% interest together with wife
Savings - $2.5k/mth (not inclusive of bonus)
Expenses - $5k/mth (joint account expense/savings, $1.2k/mth mortgage, insurance, income tax etc)

So that's $7.5K/month in take home pay (after CPF deductions), is that correct? Is that from one or two income earning spouses?

Feel like taking a guesstimate what a realistic income trajectory might look like? That could be up or down, or both. For example, one spouse might take some time off if/when there's an addition to the family.

Plan
Emergency Fund - $70k

I'll pause here and say "bravo." That's equal to 14 months at your current non-emergency spending level, and that's pretty special.

Any major expenses coming up?

$30k (SSB ) + $25k (OCBC 360) + $15k (Maxigain)
Open Maxigain account and let the counter reach 12 before shifing $15k from OCBC 360 to Maxigain or buying another $20k of SSB and not open Maxigain account

Citibank's Maxigain is a nice account, but Citibank can and probably will change the rules any time it wishes. That's quite different than a 10 year government guarantee on a particular pre-defined step-up interest schedule, which is what a SSB offers.

There are no hard and fast rules here about how you split this, except that you shouldn't depend on SSBs for the first two emergency months since SSB redemption requests are processed on monthly cycles. Also, try to avoid going above $50K (or $75K from April 1, 2019) in a bank (per depositor), which is the SDIC bank deposit insurance limit.

Stocks - $30k
$8k (SGX 78% reits) +$22k (investing cash)

That's really $8K in stocks right now, then, with $22K cash on standby, right?

Invest $1k per mth of ES3 (30%) and IWDA (70%) via SC brokerage. $5k added to investing cash per year.

I'm a max 20% STI sort of person, as you might have read. But let's see if I have the math right first. Let's leave the $8K out of the picture for now. It appears you've got $22K ready to roll into investments (stocks, bonds, whatever), another $2.5K/month also available to save, and some or all of an annual bonus (to save) of $5K/year. So that's $22K now and $35K/year to follow. Is that math right?

If that is correct, I can't quite square it with the $1K/30% number for ES3. So let me see if I can offer a suggestion or two.

Assuming you're aiming for the traditional starting drawdown age of 65, you've got over 30 years to run. For the next 20+ years I'd be comfortable if you were up to an 80:20 ratio of stocks and stock-likes to bonds and bond-likes, looking across your total household wealth. If you want to make it really simple, you can count the growing equity in your home and that $8K of REITs as part of the "stocks" portion, and CPF, emergency reserve funds, and ordinary bank balances as part of the bonds/bond-likes. When you're starting out you'll be far from 80:20, and that's perfectly OK.

OK, so now you've got that 14+ month emergency reserve nailed down, so you can start the dogged, decades-long sustained process (I hope) of working on the stocks part, mainly. For simplicity I prefer IWDA (or VWRD) for the lion's share. I prefer the local stocks to be no greater than 20% during the accumulation/saving years. So I might quibble with your 30-70 split there, but that's my preference.

To the extent you do bond/bond-like saving at this point in time, I would suggest CPF MA and/or SA to the extent you and your spouse qualify for tax relief. Mortgage strategy comes next....

Mortgage -
Savings of $35k - $40k/yr (after contributing $5k to investing cash) to pay off principle of loan until loan is $300k to reduce monthly obligation and overall liability. Plan to use cash to service monthly payment and CPF contribution from employer will act as safety net with higher OA interest earned.

Yes, this one is "interesting."

First of all, I hate debt, too -- I get it. It doesn't feel "right." However, a 1.8% mortgage interest rate on Singapore dollars is genuinely cheap money. The lowest risk 12 month Singapore government t-bill is paying right around 1.8%, and that's a bit crazy. So you really, really don't want to accelerate repayment on a 1.8% mortgage, especially (but not only) if there's a prepayment penalty. For the moment, the bank is throwing cheap money at you, and it's best to enjoy it while it lasts and put your savings dollars to more productive use.

The problem occurs when your interest rate goes up. What about 2.0%, for example? Well, that's still cheap given other available options. Your CPF Ordinary Account is earning 2.5%, for example. How about 2.2%? 2.4%? Higher? At some point the currently cheap money might not be as cheap, and at some point you might get more interested in accelerating repayment. And you'd like to be in a position to accelerate repayment then, since $600K of mortgage debt (or maybe $570K by that point, let's suppose) is pretty chunky.

....But accelerating now is the wrong choice. You will reliably have more money to accelerate repayment on your mortgage when/if the mortgage gets expensive if you direct your savings to higher yielding outlets. Heck, ICBC is offering 1.85% on a one year fixed deposit -- crazy, isn't it? That might seem hard to grasp at first, but it really is true. While the water is free (or nearly free), fill your buckets as much as you can as full as you can, so that when water is expensive you'll be able to cope much better -- it's that kind of logic, and it is logical.

On occasion, I've taken out loans when somebody was offering 0% interest, or 1.9% interest. That happens in certain countries for certain large purchases, such as cars that aren't selling as well as the manufacturer hoped. And it makes perfect sense to take that low interest loan, of course, when bonds are reliably yielding 2.X% and stocks (over the long term) would probably yield 6% or better. (STI maybe lower.) Yes, it feels weird because it is weird -- this all shouldn't be! But if you get such opportunities to enjoy cheap money for a while, enjoy it as long as you can.

Why do you have a 1.8% interest mortgage (so far)? Well, for some odd reasons lots of Singaporeans have tons of cash parked in bank deposits earning much lower interest rates. I'm slightly guilty of this particular "sin," I must admit. The loans are still cheap, for now, and the cost of capital (bank deposits) to the banks is even cheaper, still.

When's the first interest rate adjustment happening on your mortgage?

 

[workingmen]

So that's $7.5K/month in take home pay (after CPF deductions), is that correct? Is that from one or two income earning spouses?

Feel like taking a guesstimate what a realistic income trajectory might look like? That could be up or down, or both. For example, one spouse might take some time off if/when there's an addition to the family.

Yes, that's the take home of one income and trajectory might be flat for a few years.

I'll pause here and say "bravo." That's equal to 14 months at your current non-emergency spending level, and that's pretty special.

Any major expenses coming up?

There will be a couple of major expenses coming up but it should be covered by our the monthly contribution my spouse and i saved into our joint account for the last 2 years which is separate from the emergency fund. The joint account should deplete from the now $42k to probably $5k for our new house but our monthly contribution of $2k per month should have a net surplus of $1k after incurring our common expenses ( utilities, internet, conservancy charges etc).

Citibank's Maxigain is a nice account, but Citibank can and probably will change the rules any time it wishes. That's quite different than a 10 year government guarantee on a particular pre-defined step-up interest schedule, which is what a SSB offers.

There are no hard and fast rules here about how you split this, except that you shouldn't depend on SSBs for the first two emergency months since SSB redemption requests are processed on monthly cycles. Also, try to avoid going above $50K (or $75K from April 1, 2019) in a bank (per depositor), which is the SDIC bank deposit insurance limit.

I am skeptical about Maxigain and believe that they will adjust their rates when SIBOR increases beyond a certain point. I will park more of my Emergency fund to SSB then.

That's really $8K in stocks right now, then, with $22K cash on standby, right?


I'm a max 20% STI sort of person, as you might have read. But let's see if I have the math right first. Let's leave the $8K out of the picture for now. It appears you've got $22K ready to roll into investments (stocks, bonds, whatever), another $2.5K/month also available to save, and some or all of an annual bonus (to save) of $5K/year. So that's $22K now and $35K/year to follow. Is that math right?

If that is correct, I can't quite square it with the $1K/30% number for ES3. So let me see if I can offer a suggestion or two.

Assuming you're aiming for the traditional starting drawdown age of 65, you've got over 30 years to run. For the next 20+ years I'd be comfortable if you were up to an 80:20 ratio of stocks and stock-likes to bonds and bond-likes, looking across your total household wealth. If you want to make it really simple, you can count the growing equity in your home and that $8K of REITs as part of the "stocks" portion, and CPF, emergency reserve funds, and ordinary bank balances as part of the bonds/bond-likes. When you're starting out you'll be far from 80:20, and that's perfectly OK.

OK, so now you've got that 14+ month emergency reserve nailed down, so you can start the dogged, decades-long sustained process (I hope) of working on the stocks part, mainly. For simplicity I prefer IWDA (or VWRD) for the lion's share. I prefer the local stocks to be no greater than 20% during the accumulation/saving years. So I might quibble with your 30-70 split there, but that's my preference.

To the extent you do bond/bond-like saving at this point in time, I would suggest CPF MA and/or SA to the extent you and your spouse qualify for tax relief. Mortgage strategy comes next....

$22k on standby now for investing and the $1k per month was set arbitrary. So i will have a 22 mth DCA of $1k/mth on ES3 (20%) and IWDA (80%)?
Is this 22 month too long/short? or should i increase the amount and do over a shorter period?

Yes, this one is "interesting."

First of all, I hate debt, too -- I get it. It doesn't feel "right." However, a 1.8% mortgage interest rate on Singapore dollars is genuinely cheap money. The lowest risk 12 month Singapore government t-bill is paying right around 1.8%, and that's a bit crazy. So you really, really don't want to accelerate repayment on a 1.8% mortgage, especially (but not only) if there's a prepayment penalty. For the moment, the bank is throwing cheap money at you, and it's best to enjoy it while it lasts and put your savings dollars to more productive use.

The problem occurs when your interest rate goes up. What about 2.0%, for example? Well, that's still cheap given other available options. Your CPF Ordinary Account is earning 2.5%, for example. How about 2.2%? 2.4%? Higher? At some point the currently cheap money might not be as cheap, and at some point you might get more interested in accelerating repayment. And you'd like to be in a position to accelerate repayment then, since $600K of mortgage debt (or maybe $570K by that point, let's suppose) is pretty chunky.

....But accelerating now is the wrong choice. You will reliably have more money to accelerate repayment on your mortgage when/if the mortgage gets expensive if you direct your savings to higher yielding outlets. Heck, ICBC is offering 1.85% on a one year fixed deposit -- crazy, isn't it? That might seem hard to grasp at first, but it really is true. While the water is free (or nearly free), fill your buckets as much as you can as full as you can, so that when water is expensive you'll be able to cope much better -- it's that kind of logic, and it is logical.

On occasion, I've taken out loans when somebody was offering 0% interest, or 1.9% interest. That happens in certain countries for certain large purchases, such as cars that aren't selling as well as the manufacturer hoped. And it makes perfect sense to take that low interest loan, of course, when bonds are reliably yielding 2.X% and stocks (over the long term) would probably yield 6% or better. (STI maybe lower.) Yes, it feels weird because it is weird -- this all shouldn't be! But if you get such opportunities to enjoy cheap money for a while, enjoy it as long as you can.

Why do you have a 1.8% interest mortgage (so far)? Well, for some odd reasons lots of Singaporeans have tons of cash parked in bank deposits earning much lower interest rates. I'm slightly guilty of this particular "sin," I must admit. The loans are still cheap, for now, and the cost of capital (bank deposits) to the banks is even cheaper, still.

When's the first interest rate adjustment happening on your mortgage?

My mortgage has no lock in and early pre-payment penalty but it is pegged to fixed deposit rate plus a constant. Hence, the bank will increase the interest rate of my loan when they adjust the interest rate they give for fixed deposit.

 

[BBCWatcher]

I am skeptical about Maxigain and believe that they will adjust their rates when SIBOR increases beyond a certain point.

Me too. However, it’s fun while it lasts, and I like Citibank’s “Tap and Save” debit/ATM card that goes along with their Tap and Save account. I don’t like Citibank’s $15,000 minimum (across all accounts) to avoid a monthly fee, but their Maxigain account is a reasonable way to keep that minimum in place.

$22k on standby now for investing and the $1k per month was set arbitrary. So i will have a 22 mth DCA of $1k/mth on ES3 (20%) and IWDA (80%)?
Is this 22 month too long/short? or should i increase the amount and do over a shorter period?

I’d pick up the pace a bit. Especially if the transaction costs are lower, try $2K every 6 weeks, for example. Then it’d take only 66 weeks (a little over a year) to move $22K into position. ES3 should be good for at least 3.X% on a long-term basis, and I think 22 months is too long to get ~30+ year money into position.

My mortgage has no lock in and early pre-payment penalty but it is pegged to fixed deposit rate plus a constant. Hence, the bank will increase the interest rate of my loan when they adjust the interest rate they give for fixed deposit.

OK. So the same advice applies: enjoy the 1.8% while it lasts. Just maintain regular payments at normal pace for now. If the overall savings/investment environment is broadly similar in the future, but the bank raises your mortgage to 1.95% for example, still no cause for panic — it’s still cheap money. Every once in a while you just evaluate whether it’s still cheap money or not. If it’s no longer cheap money at some point in the future — if the next best use of your dollars is to accelerate repayment — then you do that. But not before.

You can sanity check this assessment every once in a while fairly easily. Just look at external “benchmark” alternatives. For example, if the 12 month t-bill yield is basically the same as your mortgage (yes), or if a 12 month bank fixed deposit is basically the same as your mortgage (yes, ICBC is offering 1.85% right now), then you certainly have a cheap mortgage. On the other hand, if a significant gap opens up — if the mortgage rate is about one percentage point or more above those other things, for example — then the mortgage is getting more expensive, and you’d consider accelerating repayment. And note there are degrees of acceleration. If you were laboring under a 8% mortgage interest rate today with everything else the same (t-bill yields, CPF yields, likely stock market yields, etc.) then of course you’d throw a lot of money toward paying down that 8% loan — you’d accelerate quite aggressively. That would be a lovely guaranteed yield, to accelerate repayment of an expensive loan like that. If the mortgage is only a little expensive, or might be expensive (you’re not sure — it’s a close call), then you could accelerate a little, maybe add $100/month.

 

[Tiger9119]

Hi BBCWatcher,

What is your opinion on the following investment (Structured Deposit??):

Equity Fixed Coupon Memory Callable Investment (With Monthly Knock-In)
Entity: VIAB, BIDU & CVS
Fixed Coupon Rate 0.6667% per month (8% pa)
Knock-In Price: VIAB - USD20.09, BIDU - USD117.98 USD, CVS - USD45.87
Investment Period: 6 months
Investment Currency: USD

 

[Shiny Things]

Hi BBCWatcher,

What is your opinion on the following investment (Structured Deposit??):

Equity Fixed Coupon Memory Callable Investment (With Monthly Knock-In)
Entity: VIAB, BIDU & CVS
Fixed Coupon Rate 0.6667% per month (8% pa)
Knock-In Price: VIAB - USD20.09, BIDU - USD117.98 USD, CVS - USD45.87
Investment Period: 6 months
Investment Currency: USD

There's no such thing as a good structured deposit, to be quite frank; they're all an exercise in gouging fees out of you and sticking you with terrible risks.

I'm going to guess that if any of those stocks closes below that knock-in price in any one of the six months, that you get stuck with the returns of the stock... after it's dropped 20-30%. That's a pretty awful deal!

And do you know anything about Viacom, Baidu, or CVS that makes you want to own the stock? Not just "I know this is a company", but do you know about Baidu's corporate structure? Do you know about Viacom's wrangling with CBS and National Amusements? Do you have a view on how the US retail and pharma sectors are going to be affected by Donny Two Scoops' economic policies?

 

[BBCWatcher]

What is your opinion on the following investment (Structured Deposit??)....

How’s this: WTF?

 

[tmkedmw]

Bank's Structured Deposit?

An easy way to remember is that Structured Deposit are "structured" heavily in bank's favor.

 

[peipei1]

Hey BBC, what is your present LTD investment returns % shown on IB portfolio analysis? I guessing at least 100% or more, investing since GFC, let us drool a little lol

 

[BBCWatcher]

I guessing at least 100% or more, investing since GFC, let us drool a little lol

I'm a U.S. person, so Interactive Brokers really isn't best for me, except in a couple ways. Firms like Vanguard, Fidelity, and Schwab work better for me, in other ways.

I'll answer your question this way, and please bear in mind we're looking at an inappropriately "interesting" 10 year period right now -- that's a very important caveat. Of course the financial world is going to look pretty good when you're comparing today versus 10 years ago. Also, this information is in U.S. dollar terms.

Vanguard is the custodian for slightly over half my household wealth, and Vanguard makes it quite easy to look at the last 10 years since you can pull up a report. So, I'll just look at that part since I'm lazy. For that biggest chunk, the annualized nominal rate of return has been 7.4%. That's at least 5 percentage points above the U.S. dollar inflation rate over the same interval, so I certainly cannot complain. That's a pre-tax figure to some extent, I should point out. (My dividend tax rate is decent, but I also owe/pay capital gains tax.)

This is all nothing "special" -- it's just math. For comparison, DQYDJ reports that for approximately the same interval (mid-June, 2008, to mid-June, 2018) -- the latest data they have available -- the U.S. S&P 500 had an annualized nominal total rate of return of 9.666%. But that's not really the right comparison. The 9.666% number is based on taking X dollars and dumping them all into the U.S. S&P 500 on June 15, 2008, reinvesting the dividends, and adding no more dollars. And it wouldn't be quite that high anyway since a fund manager would collect a small fee along the way. That's not me. I had/have a more diverse portfolio, and I also saved/save every month along the way.

I'm going to mask the following figures by expressing them after applying a random divisor. At Vanguard, on July 1, 2008, I had a total balance of approximately 115 "units." (I started well before 10 years ago.) Over the next 10 years I added approximately 292 "units" -- doggedly, monthly. The total account value is now approximately 660 "units."

 

[bobobob]

I'm a U.S. person, so Interactive Brokers really isn't best for me, except in a couple ways. Firms like Vanguard, Fidelity, and Schwab work better for me, in other ways.

I'll answer your question this way, and please bear in mind we're looking at an inappropriately "interesting" 10 year period right now -- that's a very important caveat. Of course the financial world is going to look pretty good when you're comparing today versus 10 years ago. Also, this information is in U.S. dollar terms.

Vanguard is the custodian for slightly over half my household wealth, and Vanguard makes it quite easy to look at the last 10 years since you can pull up a report. So, I'll just look at that part since I'm lazy. For that biggest chunk, the annualized nominal rate of return has been 7.4%. That's at least 5 percentage points above the U.S. dollar inflation rate over the same interval, so I certainly cannot complain. That's a pre-tax figure to some extent, I should point out. (My dividend tax rate is decent, but I also owe/pay capital gains tax.)

This is all nothing "special" -- it's just math. For comparison, DQYDJ reports that for approximately the same interval (mid-June, 2008, to mid-June, 2018) -- the latest data they have available -- the U.S. S&P 500 had an annualized nominal total rate of return of 9.666%. But that's not really the right comparison. The 9.666% number is based on taking X dollars and dumping them all into the U.S. S&P 500 on June 15, 2008, reinvesting the dividends, and adding no more dollars. And it wouldn't be quite that high anyway since a fund manager would collect a small fee along the way. That's not me. I had/have a more diverse portfolio, and I also saved/save every month along the way.

I'm going to mask the following figures by expressing them after applying a random divisor. At Vanguard, on July 1, 2008, I had a total balance of approximately 115 "units." (I started well before 10 years ago.) Over the next 10 years I added approximately 292 "units" -- doggedly, monthly. The total account value is now approximately 660 "units."

Scrooge mcduck over here!

 

[BBCWatcher]

Fidelity is the custodian for approximately 20% of my household wealth, the next biggest chunk. That's a "legacy" account, meaning that I haven't been adding to it for several years. And Fidelity doesn't make it easy to find 10 year figures, but I do have the 1, 3, and 5 year annualized nominal total account return figures since those are easy to find, U.S. dollars of course:

1 Year: 9.28%
3 Year: 7.76%
5 Year: 8.28%

These are pre-tax figures. Future tax may effectively reduce these returns. It's no great surprise these numbers are a bit higher than the Vanguard 10 year number. Since these Fidelity funds are more aggressively invested (quite intentionally), and since I haven't been adding funds (except for dividend reinvestments), they shine a little brighter. Also, the last 5 years in the markets have been a bit better than the 5 prior, as I recall.

Finally, let's look at Schwab, which is only approximately 3% of my household wealth, but it's getting monthly inflow now and for more than 3 years running. Since account opening just over 3 years ago the annualized total account return (nominal, pre-tax, U.S. dollars) is currently...15.79%. But don't get excited about that. It's nothing meaningful. Obviously it's better to have a nice positive number like that, but it's a statistical blip. I don't really take it seriously.

How can I explain Schwab? On extremely rare occasions I might see a distressed stock that I like, and I might buy a minor amount of it. Well, that's what I did at account opening at Schwab. That particular stock has doubled over this time span, plus paid some dividends. It's just dumb luck. I very rarely do this, and never in a big way. That particular rare event skews that total return figure in my smallest brokerage account.

 

[Gainduia]

Hi BBCW,

Wondering if it is wise to have a 'no bond' portfolio?

Planning to DCA into IWDA+EIMI and ES3 only.
I'm also looking into asia pacific or europe ETF. Any recommendations?

Thanks!

 

[Milla3113]

Hi everyone,

I’m new to this forum and am pretty new to investing. I saw someone asked about structured deposits a while back. What are your views on Structured Notes?

I am holding on to some USD currency, do not own any US shares and thought this might be a way to start for a newbie. Or am I being naive?

US Tech shares - Google + Apple + Microsoft + Amazon

Structure : Stepdown

Currency: USD

Tenor: 15Months

Underlyings : Google + Apple + Microsoft + Amazon

Autocallable Coupon : 8%p.a, payable on KO, or at Maturity if no share conversion

KO: 99%, stepping down -1% every subsequent month

KI: EKI, indicative 65%, observed at Final Observation date only

Thank you.

 

[tangent314]

Wondering if it is wise to have a 'no bond' portfolio?
Planning to DCA into IWDA+EIMI and ES3 only.

You should be fine with decent CPF holdings as your bond component. Just make sure you have enough emergency cash.

I'm also looking into asia pacific or europe ETF. Any recommendations?

Those regions are already included in IWDA+EIMI. There is little value in favoring a particular region unless you are speculating.

 

[tangent314]

Hi everyone,

I’m new to this forum and am pretty new to investing. I saw someone asked about structured deposits a while back. What are your views on Structured Notes?

I am holding on to some USD currency, do not own any US shares and thought this might be a way to start for a newbie. Or am I being naive?

US Tech shares - Google + Apple + Microsoft + Amazon

Structure : Stepdown

Currency: USD

Tenor: 15Months

Underlyings : Google + Apple + Microsoft + Amazon

Autocallable Coupon : 8%p.a, payable on KO, or at Maturity if no share conversion

KO: 99%, stepping down -1% every subsequent month

KI: EKI, indicative 65%, observed at Final Observation date only

Thank you.

BBCW has already responded to a similar query a few hours ago: https://deluxeforums.hardwarezone.c...club-5855578-post115681858.html#post115681858

 

[BBCWatcher]

Wondering if it is wise to have a 'no bond' portfolio?

I would answer "no" in the Singapore context, for at least two reasons:

1. I think it's prudent to nail down an emergency reserve fund first, and Singapore Savings Bonds (SSBs) are an excellent way to store most of those reserves.

2. CPF assets are bond-like, and they are attractive. Singapore Citizens and Singapore Permanent Residents have that opportunity, and they should take advantage of it, even if they're not required to.

Planning to DCA into IWDA+EIMI and ES3 only.
I'm also looking into asia pacific or europe ETF. Any recommendations?

I'm not a big fan of trying to pick regional winners/losers. That said, EIMI and ES3 already cover Asia-Pacific rather well if you look at the composition of those funds. Taking a quick look at Europe, IMEU (Blackrock iShares ETF) looks like the best of the pan-European stock funds. The management fee is reasonably low, it's a big enough fund, and it has broad European coverage, including the EU and the Brexiting United Kingdom, and including large and medium cap stocks.