*Official* Shiny Things club - Part 2

[paythel]

*clap emoji* THAT’S
*clap emoji* THE
*clap emoji* POINT.

Most investors in here are Singaporean, and going to retire in Singapore. They’re going to need SGD. Having Singaporean investors make huge hidden FX bets (by investing in non-SGD bonds) is almost always a bad idea.

If you’re not planning to retire in Singapore (if you might retire in the USA, say), then it does make sense to have some allocation to other currencies’ bonds.

Okay so this here is what always confuses me about this argument. Sure, if you invest in non-SGD bonds, you're implicitly going long on that currency. However, if you're investing in SGD bonds, you're also implicitly going long on SGD. So to me it seems like if it's important to spread your geographic exposure in equities, why is this not true with in bonds? Why would the eventual currency you expect to spend in be the determining factor of what you choose to go long on?

I want to make sure you know what you actually want to invest in, first, before you start picking particular funds. (At least you’re not mixing up USD bonds with unhedged global bonds, which, points for that.) You were complaining that MBH only gives you corporate bonds and A35 only gives you govvies, but… that’s the majority of what bond markets are.

Okay, so regarding corporate debt and government debt, yes, obviously together they basically make up the bond market (including stuff issued by sub-national entities and MBS and whatever). However, my point was that each individually is not.

And regarding AGGU and BND and BNDX yes these are all USD or USD-hedged - Though honestly, your question of "what actually want to invest in" is a good one. I wonder if you could comment on the thought process.



Overall, I expect that productivity grows in the long run, and factors accumulate, so the economy will grow in the long run. More specifically (separately?), I believe that the return on capital is positive and will not fall to 0.

I accept that financial markets are largely efficient, and so to beat market returns I need an edge over other active investors. Given that I don't have any, I look to passive vehicles that attempt to replicate market returns. Given that these are passive, their services are essentially commodities, and so I try to use the lowest cost options.

Overall, this market replication means I try to even out my exposure to different asset classes, geographies, sectors, entities.

• For equities, there are many vehicles that seem to expose you to these different things in a systematic way (market cap usually, but would revenue arguably make more sense for the thesis of "economy will expand forever"?).

• As for bonds, I'm basically trying to achieve the same thing, hence the search for a global bond ETF that includes all kinds of issuers.
  
  • Again here I'm unsure about the right way to proportion exposure - by size of debt issued actually seems contrary to common sense (you'd take the most debt from the most indebted issuers?).
  • I was also thinking that the US dollar could serve as the closest thing to an "international dollar", but would unhedged global bonds make more sense? Then I suppose the currency it was denominated in wouldn't really matter then, right?

• For real estate and raw materials, there hardly seems to be any kind of vehicle that amalgamates a broad swarth of assets into an investible vehicle, so I've held off on REITs or metals ETFs and the like for now.

Edit: Oh, and I don't really know how to think of CPF. Seems like free money so I'm gonna max it out, but not sure what that means for the rest of my portfolio.

 

[sgiceboy]

Advice on my portfolio

Hi


46 this year.


Cash = $80K (Maxigain Accoun)
FD = $20K (CIMB)
Units Trust = $10K (cash)(united growth path 2040)
AIA = $30K (tranche, maturing next year 2.23%)
Units Trust= $5K (First State Bridge) (monthly $100 using OA)
Stashaway = $2.5K (monthly $100 using cash) (balanced portfolio)
ETF = G3B via POSB this month ($100)
BIP = invest $500 annually via OCBC.


Any advice to better my portfolio is appreciated.


If opening SC trading account does one need to open an SC and maintain $1k per month?



Thank you.

 

[beefjerky]

I believe you exchanged SGD to USD today? If so, there will be a delay to your USD settlement due to Deepavali. For USD.SGD trade, you need to consider SG and US holidays. If there is any market holiday between T and T+2, the settlement gets delayed. Without holidays, T+2 should fall on Oct 28th (Monday). Since, we have Deepavali holiday on that day, the settlement of your USD will be on the Oct 29th (Tue) instead.

When purchasing IWDA, you only need to consider LSE holidays (there is none today or in the coming days). You can place your IWDA trade tomorrow, as T+2 will be on 29th (Tue), the same day your USD settles.

I have these URLs in my bookmark:
- https://www.tradinghours.com/exchanges/sgx/market-holidays/
- https://www.tradinghours.com/exchanges/nyse/market-holidays/
- https://www.tradinghours.com/exchanges/lse/market-holidays/

For people who trade on a fixed schedule (DCA), you can check if your next trade will be affected by upcoming holidays. You can plan around it (like trade USD.SGD a day earlier) to avoid disappointment.

Thank you, your explanation is crystal clear!

 

[BBCWatcher]

46 this year.
Cash = $80K (Maxigain Accoun)
FD = $20K (CIMB)
Units Trust = $10K (cash)(united growth path 2040)
AIA = $30K (tranche, maturing next year 2.23%)
Units Trust= $5K (First State Bridge) (monthly $100 using OA)
Stashaway = $2.5K (monthly $100 using cash) (balanced portfolio)
ETF = G3B via POSB this month ($100)
BIP = invest $500 annually via OCBC.
Any advice to better my portfolio is appreciated.

How are your (and your spouse’s/partner’s) CPF accounts looking?

I see a couple issues:

1. You’ve got a lot of complexity, and that complexity results in some higher than necessary costs.

2. The investment mix is rather odd for your age.

 

[loveboon]

MBH’s dividend yield is not 0.47%, it’s closer to 3%. It’s only that low because MBH launched late in 2018, so it didn’t have a lot of time to accumulate dividends before paying them out at the beginning of 2019.

Thank you Shiny and BBC. I will switch from A35 to MBH from next month onwards.

Currently, i use the invest saver to invest:
300 to G3B,
200 to A35 (changing to MBH next month)

A quick question on IWDA, I understood that the dividends are automatically reinvested to buy more of it so does that mean as a investor who is looking to live off the dividends in the future, IWDA wouldn’t be a very wise choice unless I sell it off in the future?

 

[sgiceboy]

How are your (and your spouse’s/partner’s) CPF accounts looking?

I see a couple issues:

1. You’ve got a lot of complexity, and that complexity results in some higher than necessary costs.

2. The investment mix is rather odd for your age.

Me $100k OA & SA
Spouse $200k OA & SA

Yes the mix is weird. I am still learning, kindly teach me.

 

[BBCWatcher]

OK, let's run through these items....

46 this year.
Cash = $80K (Maxigain Accoun)

This account is currently paying roughly 2.5% interest per year if you've reached the 12th counter month, assuming Citibank doesn't change the rules which it could at any time. (Also, as the one month SIBOR fluctuates, this account's interest rate does, too.) I assume this account is your emergency reserve. Of course if you actually withdraw from it the interest rate falls.

FD = $20K (CIMB)

This one doesn't make much sense unless you're expecting some large ~$20K bill to pay when it matures. You're dragging rather a lot of cash already in that Citibank account.

Units Trust = $10K (cash)(united growth path 2040)

This fund is a "target date" fund, which would be quite nice as a separate matter if you allocated all or nearly all your long-term investment dollars into this fund. The major problem is that it has a typical unit trust cost: a 1.22% annual expense ratio. That's not good.

AIA = $30K (tranche, maturing next year 2.23%)

OK, that's kind of like your fixed deposit. At this point I should say something like, "Great portfolio, Grandma."

Units Trust= $5K (First State Bridge) (monthly $100 using OA)

Using the CPF Investment Scheme, I assume. It's icky. On top of the CPF Investment Account costs, which are awful when you're buying monthly because there's a charge for each transaction, you're paying the fund manager's fee of 1.44% (annual expense ratio).

If you and your spouse don't need all your OA dollars for housing -- and you do have relatively a lot of cash sitting around, I'd point out -- then you can transfer some or all of your OA dollars into your Special Accounts, up to the Full Retirement Sum. Your SA earns at least 4%, possibly 5% if you haven't yet maxed out bonus interest. That's way better than some expensive CPFIS unit trust.

After your SAs have reached the FRS you might take a look at the CPFIS for remaining OA dollars, but not with that unit trust.

Stashaway = $2.5K (monthly $100 using cash) (balanced portfolio)

This is also a bit on the expensive side. You can do better.

ETF = G3B via POSB this month ($100)
BIP = invest $500 annually via OCBC.

What's BIP? Do you mean BCIP (Blue Chip Investment Plan)? If so, what's it going into?

Me $100k OA & SA
Spouse $200k OA & SA

And what do your respect MAs look like at this point? Are you both making $7,000/year SA top ups for tax relief? (I'm assuming your spouse's SA is still below the FRS.)

 

[zwogbwog]

CPF/Bond allocation advice

Need some advice on my portfolio:

Age: mid-forties
Bond:CPF(SA maxed)+SSB(200k)+A35(~20k) (~35%)
Equities: World/STI ETFs (~32.5%-32.5%)

A pretty standard portfolio and I am satisfied with its performance. Suffice to say that I am done with the "growth phase" of my investment and settling down into a "cruise/capital-protection" phase.
Looking ahead, I am trying to settle on a strategy with everyone's help and advice:

CPF
This is the only component in my "bond" allocation so far. Average return is currently around 3+ percent. Small issue I encounter is that with a maxed SA, my OA is growing 3.5 times the rate of my SA (no property commitment), forseeably dragging down the future return.

A35 is not convincing as its return since inception is 2.74%, barely beating the OA's 2.5%. Hence, I would appreciate any ideas on how to manage the CPF OA (other than buying property )


Bond/Fixed income
My current idea: plough any new capital into bond/income component. I am aware of A35 and MBH and they will form the core. I am just wondering (a) whether there are other bond ETFs (global ones) that I can consider to give the bond component a better return (I accept FX risks) (b) would doing a bond ladder buying SGS bonds directly be worth the effort compared to A35?

Many thanks in advance!

 

[Geeezz]

Thank you Shiny and BBC. I will switch from A35 to MBH from next month onwards.

Currently, i use the invest saver to invest:
300 to G3B,
200 to A35 (changing to MBH next month)

A quick question on IWDA, I understood that the dividends are automatically reinvested to buy more of it so does that mean as a investor who is looking to live off the dividends in the future, IWDA wouldn’t be a very wise choice unless I sell it off in the future?

short ans: no
long ans: assuming we hv $100 worth of iwda n it declare a dividend of 3% which will be reinvested. this means that iwda will now be worth $103. we can then sell away units equivalent to $3 and use it, so it works the same way as compared to getting dividends str8 frm companies. yes yes there’s brokerage fees which can be minimal if we do this only once per yr.

 

[Kyubi]

Any advise on which bank investment account to open as I wanted to start investing for long term. Based on shiny advise previously.. the 110-age.. stocks and bonds.. I have a vickers account but understand it’s closing soon.

 

[ftpofmpo]

1) That's one of thirty index components;
2) The STI might not have the exciting go-go tech stocks that the US has, but it's got lots of solid, boring, unexciting dividend payers that will be around for the foreseeable future. It's fine.

There are about 7 out of 30 that are reasonably lacklustre and does not seem to have more potential than the notorious GE:

yzj shipbuilding
keppel
sembcorp
sph
cdg
sgx
sia

The rest are mostly properties and some commodities, banks, telcos
Seems unlikely that stocks in sgx will be dynamic enough to capture competitive returns for investors in the long run, relative to a global portfolio

 

[flowerpalms]

How much are you investing monthly?

Any advise on which bank investment account to open as I wanted to start investing for long term. Based on shiny advise previously.. the 110-age.. stocks and bonds.. I have a vickers account but understand it’s closing soon.

 

[BBCWatcher]

Need some advice on my portfolio:
Age: mid-forties
Bond:CPF(SA maxed)+SSB(200k)+A35(~20k) (~35%)
Equities: World/STI ETFs (~32.5%-32.5%)

A pretty standard portfolio and I am satisfied with its performance. Suffice to say that I am done with the "growth phase" of my investment and settling down into a "cruise/capital-protection" phase.

It's a little early for that, isn't it?

Looking ahead, I am trying to settle on a strategy with everyone's help and advice:

CPF
This is the only component in my "bond" allocation so far.

You have ~$20K in A35, and those are definitely bonds.

Average return is currently around 3+ percent. Small issue I encounter is that with a maxed SA, my OA is growing 3.5 times the rate of my SA (no property commitment), forseeably dragging down the future return.

Not really among bonds/bond-likes. OA is currently yielding 2.5%, and A35 is currently yielding about 1.5%. (I'm basing that A35 estimate on the current 10 year SGS yield less some fund management cost.)

A35 is not convincing as its return since inception is 2.74%, barely beating the OA's 2.5%. Hence, I would appreciate any ideas on how to manage the CPF OA (other than buying property

Assuming there are reasonable, low cost ways to get into them: ES3/G3B and/or MBH via the CPF Investment Scheme. That'll mean your cash portion should shift much more heavily to the global stocks, other things being equal.

Bond/Fixed income
My current idea: plough any new capital into bond/income component. I am aware of A35 and MBH and they will form the core. I am just wondering (a) whether there are other bond ETFs (global ones) that I can consider to give the bond component a better return (I accept FX risks) (b) would doing a bond ladder buying SGS bonds directly be worth the effort compared to A35?

OK, a couple points:

1. For your age (and with typical retirement ages) you're already rather bond heavy, or at least bond reasonable.

2. MBH, SSBs, and CRPA are available alternatives.

Seems unlikely that stocks in sgx will be dynamic enough to capture competitive returns for investors in the long run, relative to a global portfolio

We should give some consideration to the SGX's long-term prospects for long-term investors. I'm on the pessimistic side simply because I don't see any way we're going back to a world without much international capital flow. It's the "IPO problem" that I've mentioned before.

Take a look back at the original Dow Jones index stocks and think about whether you'd like to be holding that index in 2019 or even in 1950. Here they are:

American Cotton Oil
American Sugar
American Tobacco
Chicago Gas
Distilling & Cattle Feeding
General Electric
Laclede Gas
National Lead
North American
Tennessee Coal and Iron
U.S. Leather
U.S. Rubber

And that's the basic problem with the SGX and the STI. I suppose one counter argument is that over a generational period the "corporate fade" isn't worrisome enough, but then again the SGX has already experienced a generation of fade.

 

[Wonderer haha]

I have a vickers account but understand it’s closing soon.

Don't think Vickers closing down isn't it?

 

[Kyubi]

Don't think Vickers closing down isn't it?

I thought I read somewhere that individual account transferring to uobkh?

 

[Kyubi]

How much are you investing monthly?

Hi.. I’m thinking of putting a lump sum as a start .. and rebalance half yrly or yearly..
the rest of spare cash as and when

 

[flowerpalms]

Split your lump sum into 4 parts and invest 1 part every month. Rebalance in May and Nov.

Most importantly, stick to the allocation and target % esp so if you are doing lump sum

Hi.. I’m thinking of putting a lump sum as a start .. and rebalance half yrly or yearly..
the rest of spare cash as and when

 

[hwckhs]

I thought I read somewhere that individual account transferring to uobkh?

That is if you use a remisier. If you use online trading, there is no interruption and no transfer. I did not receive any kind of notification from DBSV.

https://www.dbs.com.sg/vickers/en/transfer

https://forums.hardwarezone.com.sg/...vickers-bought-over-uob-kay-hian-6089452.html

According to the DBS link above, the Completion Date is 28 October 2019. If you did not receive any notification, then it does not affect you.

 

[Kyubi]

Split your lump sum into 4 parts and invest 1 part every month. Rebalance in May and Nov.

Most importantly, stick to the allocation and target % esp so if you are doing lump sum

Ic.. so basically split up my lump sum to 4 parts and invest each 1 small part monthly.. so by the 4th month.. my lump sum should be in.. can I know why this is better? Is it related to the fees?

That is if you use a remisier. If you use online trading, there is no interruption and no transfer. I did not receive any kind of notification from DBSV.

https://www.dbs.com.sg/vickers/en/transfer

https://forums.hardwarezone.com.sg/...vickers-bought-over-uob-kay-hian-6089452.html

According to the DBS link above, the Completion Date is 28 October 2019. If you did not receive any notification, then it does not affect you.

Thanks for the info!

 

[flowerpalms]

Ic.. so basically split up my lump sum to 4 parts and invest each 1 small part monthly.. so by the 4th month.. my lump sum should be in.. can I know why this is better? Is it related to the fees?



Thanks for the info!

No problem. It's not really about the fees.

According to Shiny's book:

If you put all your money into the market in one lump and everything promptly dropped 5%, you feel you want to withdraw all your money. But you can fight this by splitting your lump sum into 4 parts and invest one part each month. Why?

This way,
1. If you invest your first lump of cash and then the market goes up, you were invested for the move and you can keep investing more

2. If you invest your first lump of cash and the market goes down, dont worry as you didn't have all your money invested. so you lost only a small amount and now you can buy more at cheaper prices