*Official* Shiny Things club - Part 2

[hwckhs]

I've just finished reading RbR and and wondering how many % of your income do you put into this retirement investment?
If I'm saving some money to buy a car or to upgrade to a larger property, should I put that into investment as well?

I invest all disposable income, which means income - expenses - known/planned expenses.

Your car or a property upgrade belong to planned expenses. You need to know how much $ you need, and when you need it. Make separate savings for these planned expenses (with SSB, FD, endowment, or even bonds) first, before you even think about investment. Do not blindly lump them into investment.

The reason is simple. If you need the money in 5 years, are you sure your investment will yield a positive return when you need the money? Your investment can't guarantee that. Investment is best approached with a much longer time perspective, like 10-40 years or more. At least, that's what RbR plans you for.

 

[littleredboy]

I meant EIMI is vested in the currency HKD, yes quoted in USD haha. Puzzled why not in the yuan.

For now the CPF portion with Pru emerging fund is around $35k, held for 3 years now. The expense ratio is around 1+%, its alot but my OA exceeds the $60k, balance keep inside will only be 2.5%, not that worth to keep inside for now. Unless some other products can give me higher returns.

EIMI is quoted/priced in U.S. dollars, actually.


Whether that happens or not, it doesn't matter except to the extent it affects the real businesses (and their valuations in any/every currency). You're not buying or holding any currency when you buy a stock fund. You're buying stocks, i.e. fractional shares of real companies and their businesses.


How much does that cost?


Probably not, although it'd depend on your overall exposure and whether it makes sense (from a cost point of view especially) to maintain that CPF-based holding.

 

[BBCWatcher]

I meant EIMI is vested in the currency HKD, yes quoted in USD haha. Puzzled why not in the yuan.

No, EIMI is holding shares of stock. Shares of stock are not any currencies -- not U.S. dollars, not Hong Kong dollars, not Chinese yuan, not Turkish lira.

What are you asking here? Are you asking about H-Shares v. A-Shares, for the portion of EIMI that is holding company shares listed/traded in China?

For now the CPF portion with Pru emerging fund is around $35k, held for 3 years now. The expense ratio is around 1+%, its alot...

If it's the PruLink Emerging Markets Fund, it's 1.75%. Yes, that's a lot, plus there's the CPF Investment Scheme (OA) custodian's costs on top of that. It's awfully, awfully expensive.

...but my OA exceeds the $60k, balance keep inside will only be 2.5%, not that worth to keep inside for now. Unless some other products can give me higher returns.

Your CPF Special Account earns 4% (or more if you're still not collecting all bonus interest), so OA to SA transfers end up with higher yielding dollars, assuming you're under age 55 and have not reached the Full Retirement Sum yet -- the two key requirements to be able to do any OA to SA transfers.

Let's suppose that you want to invest in an emerging markets stock fund. Sure, you could do that with OA dollars, but it's an awfully expensive way to invest in emerging markets stocks. Schroeder offers a very slightly less expensive emerging markets unit trust (1.68%/year fee), but that's not exciting either. Since you cannot use OA dollars to invest in emerging markets stocks except in very expensive ways, then it's best not to use those specific dollars in that way. How about directing OA dollars that you want to invest (via the CPF Investment Scheme) into something else that you'd like to invest in that isn't so expensive? One possible, popular example is a STI stock fund, in the lowest cost way you can do it.

Other dollars available for investment could then go into emerging markets stocks in much lower cost ways (such as EIMI), if that's what you want to do.

 

[littleredboy]

ah i get it on the currency part.

I have not gotten a flat yet, so that OA will actually be used to purchase, but meanwhile before that, i hope to grow the excess OA dollars for more than 2.5%.

What do you mean by custodian cost? I thought there's only the sales charge and wrap fee? These 2 will be lowered next year 2020.

https://www.mom.gov.sg/newsroom/pre...investment-scheme-fees-deferred-to-1-oct-2020

Are you talking about G3B, Nikkoam?

No, EIMI is holding shares of stock. Shares of stock are not any currencies -- not U.S. dollars, not Hong Kong dollars, not Chinese yuan, not Turkish lira.

What are you asking here? Are you asking about H-Shares v. A-Shares, for the portion of EIMI that is holding company shares listed/traded in China?


If it's the PruLink Emerging Markets Fund, it's 1.75%. Yes, that's a lot, plus there's the CPF Investment Scheme (OA) custodian's costs on top of that. It's awfully, awfully expensive.


Your CPF Special Account earns 4% (or more if you're still not collecting all bonus interest), so OA to SA transfers end up with higher yielding dollars, assuming you're under age 55 and have not reached the Full Retirement Sum yet -- the two key requirements to be able to do any OA to SA transfers.

Let's suppose that you want to invest in an emerging markets stock fund. Sure, you could do that with OA dollars, but it's an awfully expensive way to invest in emerging markets stocks. Schroeder offers a very slightly less expensive emerging markets unit trust (1.68%/year fee), but that's not exciting either. Since you cannot use OA dollars to invest in emerging markets stocks except in very expensive ways, then it's best not to use those specific dollars in that way. How about directing OA dollars that you want to invest (via the CPF Investment Scheme) into something else that you'd like to invest in that isn't so expensive? One possible, popular example is a STI stock fund, in the lowest cost way you can do it.

Other dollars available for investment could then go into emerging markets stocks in much lower cost ways (such as EIMI), if that's what you want to do.

 

[BBCWatcher]

I have not gotten a flat yet, so that OA will actually be used to purchase, but meanwhile before that, i hope to grow the excess OA dollars for more than 2.5%.

"Hope is not a plan."

Investing in emerging market stocks is a long-term proposition, not for short-term or even medium-term capital appreciation in advance of a major purchase, such as a home. I don't think the fund you chose is a good fit for your objectives and time horizon.

What do you mean by custodian cost? I thought there's only the sales charge and wrap fee? These 2 will be lowered next year 2020.

You need a CPF Investment Account from one of the "Big 3" local banks to participate in the CPF Investment Scheme (OA). Let's consider UOB as an example. UOB publishes its CPF Investment Account fee schedule here. UOB charged you $2 per transaction for each PruLink purchase, and UOB also charges you $2 per counter or holding per quarter as a custodial fee. If there are sales charges and wrap fees that Prudential charges (yes, probably), that's even more expense.

This emerging market stock fund's cost ranges from shockingly expensive to damn shockingly expensive. Exactly where in that range is harder to pin down, but somewhere in that range.

Are you talking about G3B, Nikkoam?

Yes, as the notable example, but G3B is also not appropriate for your home buying objectives as you've stated them.

 

[drkcynic]

I intend to go with the IWDA:ES3:A35 ratio using a portion of my mthly wages.

However I weren't born yesterday meaning I had prior investments in equities, bonds, insurance which I either have no wish to unwind or that it is not profitable to do so. How does that affect my risk ratio working towards my retirement?

Also, even with the monthly outlay for these etfs, I intend to separately invest in some growth etfs and bonds. How does that impact the ratio?

Is it wise to follow ST's strategy and still do my separate investments even though i fully understand the risk in doing so.

 

[Ilovemathstutor]

funny people live amongst us, and it wasn't born yesterday

I intend to go with the IWDA:ES3:A35 ratio using a portion of my mthly wages.

However I weren't born yesterday meaning I had prior investments in equities, bonds, insurance which I either have no wish to unwind or that it is not profitable to do so. How does that affect my risk ratio working towards my retirement?

Also, even with the monthly outlay for these etfs, I intend to separately invest in some growth etfs and bonds. How does that impact the ratio?

Is it wise to follow ST's strategy and still do my separate investments even though i fully understand the risk in doing so.

you already made up your mind and u like us to validate you, comfort you, cheer you up?

Or???

 

[littleredboy]

Ah thanks BBC. I think I shall use cash for EIMI

"Hope is not a plan."

Investing in emerging market stocks is a long-term proposition, not for short-term or even medium-term capital appreciation in advance of a major purchase, such as a home. I don't think the fund you chose is a good fit for your objectives and time horizon.


You need a CPF Investment Account from one of the "Big 3" local banks to participate in the CPF Investment Scheme (OA). Let's consider UOB as an example. UOB publishes its CPF Investment Account fee schedule here. UOB charged you $2 per transaction for each PruLink purchase, and UOB also charges you $2 per counter or holding per quarter as a custodial fee. If there are sales charges and wrap fees that Prudential charges (yes, probably), that's even more expense.

This emerging market stock fund's cost ranges from shockingly expensive to damn shockingly expensive. Exactly where in that range is harder to pin down, but somewhere in that range.


Yes, as the notable example, but G3B is also not appropriate for your home buying objectives as you've stated them.

 

[FrostWurm]

However I weren't born yesterday meaning I had prior investments in equities, bonds, insurance which I either have no wish to unwind or that it is not profitable to do so.

Not being born yesterday has little to do with investing, apart from the fact that you probably can't invest if you are one day old .

 

[drkcynic]

you already made up your mind and u like us to validate you, comfort you, cheer you up?

Or???

Just checking how can I proceed with the programme if I already have tons of other investments and plans etc. Nothing is cast in stone.

Or do you prefer to spoon feed me?

 

[Ilovemathstutor]

Just checking how can I proceed with the programme if I already have tons of other investments and plans etc. Nothing is cast in stone.

Or do you prefer to spoon feed me?

I would, since u asked... give u my opinion.
I take ST's guide as a reference cause I agree with it.
I like active stock-pickings, so far, I only stick with v simple things that I know and has been hugely positive.
but I will go back to what Warren B, Jack Bogle, ST advocates for simple, plain compounding.

I also understand the folk here tend to be more risk-adverse than necessary... so ya, different folks, different folks, I guess?

you have to find your own answers, ST is not writing a Quran/Torah where it must be abided to the letter.

But his experience and portfolio brings with him a wealth of knowledge... that's why I stick around.

Find your own balance

if you have ILPs, investment linked products or insurance induced investments, be it savings, endowment or even life-plans... I would seriously consider cutting all at a whim at breakeven and look into the life insurance and see if I can go for Term insurance while ensuring that I do not have any pre-existing conditions so that it's viable.

It's that simple... yes, insurance agents are pushers of financial instruments that enrich them, their co first... I find it incredible that lots of people still buy them, and are willing to be paid last amidst the pack.

 

[Kopisi_xiudai]

I invest all disposable income, which means income - expenses - known/planned expenses.

Your car or a property upgrade belong to planned expenses. You need to know how much $ you need, and when you need it. Make separate savings for these planned expenses (with SSB, FD, endowment, or even bonds) first, before you even think about investment. Do not blindly lump them into investment.

The reason is simple. If you need the money in 5 years, are you sure your investment will yield a positive return when you need the money? Your investment can't guarantee that. Investment is best approached with a much longer time perspective, like 10-40 years or more. At least, that's what RbR plans you for.

Thanks for your reply, that make sense. I will go and rework my sums.

 

[Mecisteus]

I intend to go with the IWDA:ES3:A35 ratio using a portion of my mthly wages.

However I weren't born yesterday meaning I had prior investments in equities, bonds, insurance which I either have no wish to unwind or that it is not profitable to do so. How does that affect my risk ratio working towards my retirement?

Also, even with the monthly outlay for these etfs, I intend to separately invest in some growth etfs and bonds. How does that impact the ratio?

Is it wise to follow ST's strategy and still do my separate investments even though i fully understand the risk in doing so.

You may want to split your investments into the passive and active portfolio.

The % allocation depends on your level of comfort. If you are such a lousy active investor, it is better to put 10% into the active portfolio and focus more into the passive portfolio.

Personally, I have a very small passive portfolio of RSP in STI ETF. A bigger portion of active portfolio is in overseas stocks and ETFs.

For your active portfolio, you may consider reviewing some of your dead stocks and bonds. If they are not profitable, why keep them? Don't be afraid of cutting losses. Channel the capital into better investment opportunities.

Maybe you like to create a separate thread to get opinions on some of your holdings?

As for the passive portfolio, Shiny's recommendation is just an example. You don't really have to follow the same selection of ETFs. Even the % allocation is just a guideline. But the very basic elements of a passive portfolio are no market timing, regular savings, DCA, discipline, indexing, etc are some rules that you really have to follow.

Actually, the selection of ETFs or assets are easy. The difficult part is the execution. Regardless of which ETFs or assets that you pick and as long as you execute them diligently, your portfolio will still do well in the long term.

 

[blue_line]

I will be working in UK for a year and receiving my income in GBP.

Will there be any difference in how I should invest for my time in UK?

 

[BBCWatcher]

I will be working in UK for a year and receiving my income in GBP.
Will there be any difference in how I should invest for my time in UK?

Only if you fall in love and end up staying a lot longer than you expect.

 

[blue_line]

Only if you fall in love and end up staying a lot longer than you expect.

Should I convert GBP to USD and buy IWDA or just purchase SWDA and incur a higher TER?

 

[BBCWatcher]

Should I convert GBP to USD and buy IWDA or just purchase SWDA and incur a higher TER?

You’d purchase SWDA, but where are you seeing a higher TER?

 

[blue_line]

You’d purchase SWDA, but where are you seeing a higher TER?

Sorry, the TER is the same for IWDA and SWDA. I was looking at IWDG and hence thought it had a higher TER.

 

[Shiny Things]

However I weren't born yesterday meaning I had prior investments in equities, bonds, insurance which I either have no wish to unwind or that it is not profitable to do so. How does that affect my risk ratio working towards my retirement?

Also, even with the monthly outlay for these etfs, I intend to separately invest in some growth etfs and bonds. How does that impact the ratio?

So here's the thing: with all the stuff you're asking to hold on to, you're making the bet that those extra things - your stocks you don't want to sell, your growth ETFs, your random bonds - will outperform just sticking it in ES3, or IWDA, or MBH.

How confident are you that you'll do better than the market?

---

Seriously, though - a couple of points here. Firstly, just because an investment isn't currently higher than when you bought it is no reason to hang onto it... if anything, it's a reason to ditch it. It's a crap investment; get rid of it. Go full Marie Kondo on it.

Secondly, I'm not averse to having a "fun money" account where you trade stuff that interests you. But keep it small: 5% of your portfolio is plenty; don't do this unless you have a decently-sized portfolio (mid six figures or more); and don't let it take up too much of your time and your mental energy.

(I do that myself! I sometimes trade eurodollars, FX, or single stocks, just to keep my fingers on the pulse of the markets; but I always keep the size tiny compared to the rest of my portfolio, which is all in a 110-minus-age allocation.)

---

So my answers to you would be "be realistic; do you actually think you can beat the rest of the market?". If you really do think you can beat the market, then it's fine to do that with a few percentage points of your portfolio; but the rest, you should park in a 110-minus-your-age allocation and leave alone.

And in a year or two's time, look back and be honest with yourself: have you actually beaten the market in your fun-money portfolio? Or have you actually cost yourself money?

 

[Ilovemathstutor]

the compounding from the decent, v safe S&P500 index fund of an average 8% will mean that you get v sweet returns over the years.

jack bogle vs his son has proven it so... quite an irony that jack spent all his life on passive index compounding only to have a son that is his polar opposite though.

his son only gathered an insignificant 1+% more than his dad, not factoring in his management fees for the investors.

my intention is to move up into a passive index fund at the later stage.