hi ST,
could you tell us why u switch from the financial markets to crypto, specifically, Ripple?
Was this switch in career due to any change in your views, needs & lifestyle?
Fun question. I’ve changed jobs a few times over my career, and slowly iterated to where I am now; it wasn’t one big leap.
In 2012, I left financial markets and moved to tech. This was partly because my job was getting competed away and being replaced by a very small shell script running in
a datacenter somewhere in the Chicago exurbs; and partly because I wanted to move to the USA and my bank would only offer me transfers to our London or Frankfurt office.
(Spoiler alert: living in London
sucks compared to living in NYC, SF, Singapore, or Sydney. You could not pay me enough to live in London and deal with London winters and miserable Brits who still haven’t gotten over the sun setting on the British Empire.)
My second jump, in 2016, was from Calypso (which makes the trading software that I used to use as a trader) to Ripple… and to be frank, that was at least partly because of the money. Ripple was an interesting startup in a very interesting space, with a great corporate culture… but what really sealed it was that they offered me a substantial raise and a chunk of equity. Money, as they say, talks.
(Moral of the story—make sure you know your value! Your employer won’t just magically pay you what you’re worth; you have to go out there and find out for yourself how much you’re worth. Get a competing offer. Switch jobs if you have to.)
This is interesting. How do banks manage to implement negative interest rates? Won't there be a revolt from the general public?
This already happened. Swiss banks have imposed negative interest rates on deposits, and there’s even been a couple of stories about negative mortgage rates in Denmark. Basically there was a bit of grizzling from depositors, but as long as the banks’ systems can handle it there aren’t any technical problems.
Hi everyone
I have a few questions and would appreciate it if u will enlighten me. Sorry if these are elementary - i am trying to learn.
1. It seems hldgs in VWRD or IWDA through IB will attract US estate duty.
Nope, not true.
2. The other difficulty i find is forex. As the hldgs are in USD, do you track the real S$ return after adjusting forex?
Yes, you’ll track your return in SGD - but also, don’t forget that you don’t have any edge in trading FX. If you just ignore FX and ride the wave of FX rates up and down, you’ll do just as well as (probably better than) if you’d tried to actively hedge it.
3. As the VWRD/IWDA ETFs do not pay dividend, how do you then fit these into a portfolio of a person looking at say retirement in 10yrs? I mean, there will be no income streams from these hldgs so that means, one is looking at capital appreciation and divesting partially to fund retirement in future?
Yep, that’s exactly right. It’s totally OK to sell some of your holdings to fund your retirement—that’s the point of saving, in fact.
May be a dumb qn, but since previous poster(s) have said that transferring from SCB to IBKR is no longer possible, would it still be advisable to use SCB until you either invest more than 1k a mth or hit 100k, or would it be better to just go with IBKR now?
Not a dumb question at all. It’s still better to use SCB when you’re starting out, because IB has a pretty steep learning curve, and your costs at SCB will end up lower when you’re starting out. When you’re ready to graduate to IB, you can just sell your stock at Stanchart, transfer the funds, and then re-buy - it’s not a perfect solution but it’s not that bad.
Just wanted to get some opinion if I were to further diversify by investing in another type of ETF, for example IHAK ETF, which tracks cybersecurity industries.
That’s not really diversification - you already have a decent exposure to tech stocks (which includes cybersecurity companies) through IWDA’s holdings of US stocks. You’re doubling down on something you already own.
Assuming I have 10k interest free loan for 6 months..
Is it advisable to put them all into vwrd and then sell them off 6 months later? If not, what would be the best way to utilise these funds?
Oh god no. No. Do not do this. No.
VWRD could be anywhere in six months. It could be 10% higher, or it could be 10% lower… and then where are you going to find the money to repay the loan?
AWhat shocked me was that my portfolio now consists of a random mixture of ETFs and single stocks.
Right. This is a solvable problem.
Current predicament:
Dilemma 1. If I sell off the individual stocks now, I'd make a loss. If I don't sell them off, it means ~ SGD 45,180 is just sitting in the reds.
It looks like you’re getting stuck in a common thought pattern of anchoring on the price where you bought. The thing is—the price where you bought
doesn’t matter—the only thing that matters is the price right now. You can’t make the market magically go back to the price where you bought something.
A great way I’ve found to work around this thought pattern is to look at the position and ask myself: “if someone broke into my account and sold everything, and left me with cash… would I buy this position back today?”. If the answer is “no”, then you don’t really want to own that position - and you can sell it without feeling guilty.
Ask yourself this question about all your positions. If you didn’t already own it, would you buy it? I think in most cases, the answer would be no.
Dilemma 2. I still have around SGD 30,000 for investments. Should I throw all into the SWRD given that the price now is still low or should I bet it on say, C6L, Singapore Airlines Limited to potentially recoup the losses and earn dividends in 5 years' time?
I understand that you’re trying to “make up for lost time”, but my goodness, don’t go making stupid bets. This is not r/wallstreetbets, and the only people who get rich off of YOLOing are your brokers.
Dilemma 3. Having read up about the Trinity study,
Be careful. The Trinity study was run in the late 90s, when bond yields were much higher—30-year US treasury bond yields were north of 5%, so you could fund a 4% withdrawal rate by just parking the lot in Treasuries and you’d have cash left over.
These days, a safer withdrawal rate assumption is 3%.
(Also, you seem to be confusing yields on REITs with total return? SG-REITS have higher yields than the broad STI, but I don’t think they have a higher total return once you take into account their incessant cash calls.)
Dilemma 4. I have about SGD 67,000 which I could potentially not touch for the next 4-5 years. Should I keep this amount as the bond component or should I take the risk and invest into ES3 STI ETF
The question is when you’ll need that money. If this is money that you’ll need after the five year period, then it might make sense to keep it in bonds, separate from your broader retirement account. If you can hold onto that money for longer than five years, then drop it in with your retirement pot instead.
Dilemma 5. I've recently invested using Interactive brokers. However, after reading up, I realised that the stocks held in Saxo Capitals earn the bank yearly management fees. I would like to close the account to avoid the fees but that would mean losing the shares in it. Is there a way to transfer those shares over to IKBR? Is it worth it to do so or should I just sell everything and close the account?
IBKR can help you arrange the transfer. I’d definitely try to transfer the stocks out; Saxo has some absolutely extortionate fees on purchases and sales of overseas stocks that they hide in the FX rate, and transferring instead of selling might help you avoid those.
Help required:
What would experts like yourself do to bring some balance back to the portfolio while reaping more returns? I'd really like to hear your thoughts. Any help is appreciated!
If you were a consulting client of mine, I’d sit you down and walk you through each of your holdings. You know you have a bunch of random holdings, and you’re obviously annoyed about it - so why not give yourself the freedom of a clean slate?
For DCA, does it matter we buy the same amount everytime? Eg IWDA, if I’m investing $500 every month. There’s no fractional shares available? So I end up buying 8 shares everytime.. will it be easier if I just buy fixed number of shares?
So in most months you’ll buy 8 shares and you’ll have a little cash left over. Eventually that’ll add up to a ninth share.
What's the international bond etf equivalent to iwda? Supposedly if one wants to reduce its global equities into global bonds as one gets older?
I don’t think there’s any real need for international bonds in a three-fund portfolio, unless you’re planning to retire somewhere international as well. You’ve got an asset with a fixed future value, in a foreign currency - so it effectively becomes an FX position, short SGD / long the foreign currency.
idtl is longterm bond, y not short term bonds?
I have to say, Swan02 and I have tangled before about bond allocation; I think he’s missing the point a bit, if I’m being honest?
Swan is focused on getting maximum negative correlation between stocks and equities in downturns, so they buy long-date USTs. There are three bets implied in that:
- Betting that USDSGD will rise in downturns; and,
- Betting that USD yields will drop in downturns; and,
- Betting that the USD curve will flatten in downturns.
These aren’t unreasonable on their face. There’s a couple of big problems, though:
- This is a huge bet on FX, as mentioned above. Swan’s long a truckload of USDSGD, and will be taking on all the attendant volatility of the USDSGD FX rate. USDSGD’s been down to 1.20 in pretty recent memory - taking a 15% long-term loss on a bond component that's supposed to have a relatively stable value doesn’t seem like a great idea. And this is very different from a short-term swing in, say, MBH that gets retraced in a couple of months, because that doesn't affect your withdrawals (don't forget, MBH is already 2% higher than where it was at the beginning of the year!); USDSGD spent most of four years below the 1.30 mark.
- Long-dated bonds are A LOT more volatile than short-dated bonds, and the swings and roundabouts in the bond price are going to completely wipe out your yield, when yields are as low as they are. If the long bond yield moves 7bps in a day - as it frequently does! - that’s going to wipe out an entire year’s yield on IDTL.
- IDTL yields about 1.5%. That’s not a lot. Swan doesn’t care about getting the extra yield available from corporate bonds, even when that’s historically been a great trade; Swan cares about protecting their portfolio in the very worst case.
- If the goal was to have maximum negative correlation, you’d buy SPY and an inverse-SPY ETF… those have 100% negative correlation, but that’s still an awful portfolio. It’s inherently going to have the same return as sticking the cash in the bank (actually less).
The goal of the three-fund portfolio is not to maximize negative correlation, because returns are what puts money on the table. (“You can’t eat correlation”, is another way I’ve heard this described.) The goal is to use correlation to reduce the volatility of the portfolio enough that you feel comfortable with it in downturns, while not sacrificing the upside when markets are doing well (which is most of the time).
So, like I said—Swan is focusing on optimizing how their portfolio performs in a crash, because they’re worried about crashes, and that’s fine. But I think for most people, that’s not the right approach.
If you capitulated and sold back in March, that means your portfolio was too risky, and that's OK. Take advantage of today's spew to buy back in, but dial down your equity-to-bond ratio. That gets you a much more stable portfolio, without having to take on whacking great lumps of duration risk and FX risk.
Hi peeps,
I have some IWDA positions, thinking whether I should continue to pile into IWDA or get into VWRA for emerging markets exposure?
Hope to hear your thoughts. Cheers!
Both are fine. I like IWDA, because VWRA is still a relatively new fund.
