Official Shiny Things thread—Part III

[chrisloh65]

Having most of your assets consolidated in just 1 broker is taking enormous risk!

You just need to remember MF Global (or you don't know about this, go google to find out). Remember, Cash in MF Global's accounts were not recovered (only the stocks were, and that is only after 3 years being stuck there)!

Better keep your local stocks under custodian of CDP and your cash in your bank accounts!

Hi Shiny,

With our IBKR accounts being moved to IBKR SG, some of us will have to rethink if we are to continue with SCB for our local stocks.

Is there any concern with having all our assets consolidated with just 1 broker?

 

[chrisloh65]

https://www.marketwatch.com/story/vanguard-comes-to-defense-of-the-6040-portfolio-as-it-forecasts-stock-market-returns-for-the-next-decade-2020-07-23

Vanguard is forecasting average annual U.S. stock-market returns between 4% and 6% over the next decade, which isn’t dissimilar from a recent projection from Goldman Sachs. Vanguard says global stocks, to U.S. investors, will return between 7% and 9% a year. But despite Vanguard’s low return outlook for bonds — 0% to 2% for both U.S. and non-U.S. bonds — Davis says globally diversified fixed income will continue to play the important role of a risk diversifier in a multiasset portfolio.

Vanguard forecast is useful in that we know that global stocks (ex-US) will provide much higher returns in next decade. What this also means is that US is now terribly over-priced and hence future returns will be much lower.

 

[Kaypohji]

Global stock? Meaning? Which one? Like iwda? It’s still 60% USA ?

https://www.marketwatch.com/story/vanguard-comes-to-defense-of-the-6040-portfolio-as-it-forecasts-stock-market-returns-for-the-next-decade-2020-07-23

Vanguard is forecasting average annual U.S. stock-market returns between 4% and 6% over the next decade, which isn’t dissimilar from a recent projection from Goldman Sachs. Vanguard says global stocks, to U.S. investors, will return between 7% and 9% a year. But despite Vanguard’s low return outlook for bonds — 0% to 2% for both U.S. and non-U.S. bonds — Davis says globally diversified fixed income will continue to play the important role of a risk diversifier in a multiasset portfolio.

Vanguard forecast is useful in that we know that global stocks (ex-US) will provide much higher returns in next decade. What this also means is that US is now terribly over-priced and hence future returns will be much lower.

 

[newjersey]

It certainly could be. Growing a pile of Singapore dollars isn’t hard. A bank will help you do that at 0.05% per year, at least. But if you’re not generating even average net levels of growth (based on portfolios with comparable risk profiles), I’d say that’s a failure. If Temasek is below average, then I don’t think we should be happy about it.

Regardless, you’re really not a smart investor if you think “Oh, Temasek holds a piece, so it must be good.” Temasek can still afford to take gigantic investment risks compared to you, and it often does. If Temasek holds a piece that could be a terrific indicator you should run away, especially if you’re a conservative investor.

nope, i never equate that what temasek holds = a best buy, must buy.
that said, their china-focused investments have been great.
i am not sure if u are aware of those?

i read your tabulation on temasek's past records... it's a shock that they performed less than S&P500.

so i concede defeat.

 

[chrisloh65]

Obviously not IWDA because it contains >65% of USA stocks!

I had warned people here about collapse of USD in future, and now IMF official has issued a warning on USD as well:

https://www.scmp.com/print/economy/china-economy/article/3094416/us-dollar-risk-sudden-collapse-ex-imf-official-warns-blow

US dollar at risk of sudden collapse? Ex-IMF official warns ‘blow-up event’ could sink currency as debt mounts
A fresh stimulus package worth at least US$1 trillion could spell relief for millions of Americans in pandemic, but could raise financial stability risks
US Federal Reserve’s aggressiveness in easing financial conditions has succeeded in halting a further decline in the US economy, but that could change if major companies start going bankrupt

As usual, only US residents and Ang Mo will keep talking up USD and US stocks!

Global stock? Meaning? Which one? Like iwda? It’s still 60% USA ?

 

[Kaypohji]

Then what do u propose to hold ?

China ?
Europe ?

Obviously not IWDA because it contains >65% of USA stocks!

I had warned people here about collapse of USD in future, and now IMF official has issued a warning on USD as well:

https://www.scmp.com/print/economy/china-economy/article/3094416/us-dollar-risk-sudden-collapse-ex-imf-official-warns-blow

US dollar at risk of sudden collapse? Ex-IMF official warns ‘blow-up event’ could sink currency as debt mounts
A fresh stimulus package worth at least US$1 trillion could spell relief for millions of Americans in pandemic, but could raise financial stability risks
US Federal Reserve’s aggressiveness in easing financial conditions has succeeded in halting a further decline in the US economy, but that could change if major companies start going bankrupt

As usual, only US residents and Ang Mo will keep talking up USD and US stocks!

 

[joshua182]

With gold and silver surging towards new heights, it slowly dawns on the hwz investing community that the path to riches was in a user’s name all along... Hidden in plain sight. And that name, is Shiny Things.

 

[peipei1]

Hi Shiny Things and everyone else! I have successfully made a transfer of my entire portfolio from IBKR to a new IB-SG account. I will document the steps to be taken here so that those who wants to transfer asap can have easier reference.

Step 1: Submit a ticket inquiry through Account Management requesting for transfer of portfolio. You will need to state which account number you are transferring from (Original Account) to (New IB-SG Account).
Step 2: The client officer will send you back a response through the ticket inquiry where you will be told if your request is being processed and to expect a verification call.
Step 3: A client officer will call you on your phone number to do quite a number of verification tests which involves your answer to your security questions that you personally selected when creating the account.
Step 4: The client officer will then email you a transfer form for you to sign and attach back via the ticket inquiry. In addition, a signed NRIC/Passport is to be scanned and forwarded to them.
Step 5: You will then receive a successful notification if all documents are in order.

In addition, I have asked quite a number of questions from my personal side so I will list down the answers that I got that you might have in mind as well!

Q1: Is it true that there will be a migration of all existing IB accounts over to the new IB-SG account?
Ans1: Yes. There will be a migration of all current IB accounts over to IB-SG accounts, tentative date is by the end of this year but to be confirmed again.

Q2: Can i not migrate over to a new IB-SG account if i prefer to have the SIPC protection instead?
Ans2: No. All existing accounts will eventually be moved over to the IB-SG account. Moving forward, Singaporeans will only be able to create accounts at interactivebrokers.sg

Q3: Is there any third party protection provided for IB-SG accounts?
Ans3: There will not be any 3rd party protection like the SIPC for IB-SG.
Our positions will be held in custodian account "ABN AMRO Singapore Branch"

Q4: How will GST affect the transaction price/commissions?
Ans4: Currently, GST will not be included at all for the purchase of SGD/USD denominated products. As such, the fee will be 0.08% for SGD denominated products. However, this might change moving forward.

I originally didn't want to move my portfolio over to this new IB-SG account since i have already managed to hit US100k mark in my original account. However, I was told that all accounts will be eventually transferred over so I might as well settle it now since I am at it. If you are planning to purchase SGD equities/bonds using IB-SG, then it is definitely a good idea to do the transfer asap!
Anyway I hope that these information will be useful for you all!

I saw Q3 and ask myself oh dear why would you want to transfer to IB-SG so fast and voluntarily?

 

[ngsngn]

Hi all, I know i'm late to the market, missed the boat. With a lump sum of usd100k using IBKR SG, how long should I DCA, given the current market volatility, want to reduce the 10usd/month cost also as well. Already invested 7k/10k sgd for this month. Thanks.

 

[swan02]

ok this is my opinion:

1. studies suggests ASAP lump sum no more than 12 months. the earlier the better on avg.

2. Many will still find it hard to dca even over 12 months when amount is large. Studies shows everything should be invested immediately even if u start with all bonds such as mbh, and then u slowly buy up your equities over whatever months u r comfortable with. A 100 percent mbh immediately is still very likely to beat someone who dca 100 percent equity over 24 months. it’s all because money is earning peanuts.

3. Another way is buy equities together with gold at half the amount of equities and rest is mbh immediately. While overtime increase your equities.

4. U can also choose any strategy or mix and match and dca over 12 months or less.

5. u need to remember mbh has a diversification of equity risk and bond risk. Which means it’s ok to have 100 percent mbh portfolio to start with. On the other hand, A35 is mainly bond risk hence u need a small allocation to equity such as a 10/90 allocation. Or even a 5/95.

Hi all, I know i'm late to the market, missed the boat. With a lump sum of usd100k using IBKR SG, how long should I DCA, given the current market volatility, want to reduce the 10usd/month cost also as well. Already invested 7k/10k sgd for this month. Thanks.

 

[ngsngn]

ok this is my opinion:

1. studies suggests ASAP lump sum no more than 12 months. the earlier the better on avg.

2. Many will still find it hard to dca even over 12 months when amount is large. Studies shows everything should be invested immediately even if u start with all bonds such as mbh, and then u slowly buy up your equities over whatever months u r comfortable with. A 100 percent mbh immediately is still very likely to beat someone who dca 100 percent equity over 24 months. it’s all because money is earning peanuts.

3. Another way is buy equities together with gold at half the amount of equities and rest is mbh immediately. While overtime increase your equities.

4. U can also choose any strategy or mix and match and dca over 12 months or less.

5. u need to remember mbh has a diversification of equity risk and bond risk. Which means it’s ok to have 100 percent mbh portfolio to start with. On the other hand, A35 is mainly bond risk hence u need a small allocation to equity such as a 10/90 allocation. Or even a 5/95.

Thank you. Wasn't investment savvy when young and thus hope to accumulate and time the market, so silly of me. Only started using robo ($100/week) and POSB Invest Saver ($200/month) back in Nov19 as a start and wasn't interested in equities until banks decided to cut their rates. E.g. CIMB Fast/Star Savers.

This makes me start reading up on and off on which brokers to use, what stocks to buy, etc. Currently I'm splitting into CSPX [SP500] (40%), IWDA (40%), EIMI (20%) and was planning to split into 14 months (10ksgd) per month, but decided to seek forum advise if is a good number generally.

After reading Shiny threads for quite a few pages behind, consensus was IWDA, MBH bonds and STI-ETF holdings.

My queries for some of your opinion:

1: From what i read online, lump sum works better when market is bull. i.e. March to present July. However, last few days, seems like tech stocks which is currently propping up SP500 and IWDA is dropping and thus causes the index prices to drop. I actually bought it at this week highest before it drop 1% Hence I'm not sure if still going to be a bull market. Still new to investing here. Seems like it may be going of a W line instead of V when all those robinhood traders decide to cash out, hence decided not to lump sum as i think i won't be able to sleep well if it drops, as now i realize time in market > timing the market for most of us beginner investor.

2/3/4/5:If let say 100% bonds now, are you referring DCA my equities (IWDA, STI ETF) over the next 20yrs if i'm looking at 20yrs horizon? Regarding gold, are you referring to physical gold or gold etf? where to buy either? I'm not sure about gold price, but i think now is also high? which is weird? given what i read is gold rise when market falls, but seems like both are high now. what a world we live in right now...

 

[swan02]

I meant if u r hesitating and unsure over how long to dca over. U simply buy mbh using all your available funds keeping zero cash other than emergency.

1. Then u buy your pure equities let say 5k monthly by selling 5k mbh every month until u reach your desired asset allocation.

2. Your equity allocation is similar to mine. Don’t fret over it. sti or not. But the idea is really a majority into foreign iwda or cspx with small asian.

3. by now u should realise the stress and the difficulty in timing the market. don’t do it.

4. s&p 500 May look expensive. But there are **** loads value stocks still very cheap. Even if tech corrects, then why can’t those value stocks do well ? Rotation do occur, that’s the beauty of diversification.

5. Is gold expensive ? How do u know ? gold is dangerous only if not bought with equity and bonds. all weather portfolio have very low variance. they hardly lose money every year.

when fed tightens monetary or fiscal supply leading to expected USD rise..gold drops because gold is mainly a Currency. It diversifies the USD and other currencies in case they weaken.
And fed will only tighten when USA equity is expected to do well. Can u see the magic of diversification in play?

6. however too much gold will hinder your long term returns as your equity allocation isn’t too high. Even if u started immediately in a “permanent portfolio (Which only has 25 percent in stocks)” and over time increase your equity while reducing or maintaining your gold and bonds exposure, u will still end up with a smooth ride up. U might end up eventually to a 60 equity 20 gold 20bonds or 70 equity 30 gold or mix and match. Igln or gldm for gold etf.

7. Bottom line of the message is simply to be fully invested ASAP in the safest allocation rather than keeping so much cash on the sides while u dca over 14 months.

8. I suggest 100 percent mbh and zero cash to start immediately. Then decide...

.

 

[swan02]

What moves gold...

1. Sentiment....like all other asset class. It is not a reliable hedge of inflation or a safe haven class.

2. if fed and world prints money. Gold strengthens.

3. Print money may lead to higher stock prices, hence u see both stocks and gold up.

4. When fed tightens, usd strengthens and gold drops. Sgd may also drop hence u may find sometimes when usd goes up, gold and SGD still the same hence as a SGD investor, gold drop in usd does not affect u.

But your s&p 500 is expected to go up (since fed tightens), hence u benefit from higher s&p 500 prices and usd strength. But even without s&p 500 going up, u benefit from usd strength.

5. In nutshell. Gold tends to move up with s&p 500 in a normal rising environment. That’s what we r seeing.

6. Gold will drop when s&p500 is expected to rally.

7. Gold can also move up or down with bonds.

8. Unexpected hyperinflation, gold do well. until fed raises interest rates to curb inflation, hence gold drops as its expected that hyper inflation will be tame. But if it doesn’t, gold may still remain high.

If it’s an expected future inflation rise, gold will not rise N likely to drop significantly because it is expected interest rate will rise. Interest rate rise causes usd to rise hence weakens gold.

...

 

[bybosslee]

Hope it is not too late to start

hi currently trying to build up a portfolio
I have a question regarding US ETF, reading the Millionaire Teacher. In 1 of the chapters it was sharing that Singaporeans should not be getting US ETF due to the taxes. If this is the case what are the alternatives that you are using cover for international exposure? is it to use those Ireland-Domiciled eTF?

Currently planning to do the following
STI ETF for local
Treating CPF as Bond allocation
iShares Core S&P 500 UCITS ETF (Acc) - for international exposure

erh, I turning 40 soon
just hoping is not too late, and thinking that it will be better than just saving in bank
Plan to dca at $1500 per month across the 3

Like to hear some thoughts
Thank you

 

[swan02]

1. yes Ireland domiciled.

2. 1500 a month ? u have zero savings after putting aside emergency ?

3. If there r savings, fully invest them within a month into 100 percent mbh and then 1500 monthly into equity only which I assume is your monthly savings.Thus this reduces opportunity cost of cash.

4. Never too late. just that u need to make more money if u can. I’ve seen many families expenses due to the nature of my work. It’s shocking how they spend and argue their expenses are necessary. I don’t see tuition, dancing etc necessary, neither is a car and unnecessary insurances necessary. CUT CUT CUT. Just ten years sacrifice.

hi currently trying to build up a portfolio
I have a question regarding US ETF, reading the Millionaire Teacher. In 1 of the chapters it was sharing that Singaporeans should not be getting US ETF due to the taxes. If this is the case what are the alternatives that you are using cover for international exposure? is it to use those Ireland-Domiciled eTF?

Currently planning to do the following
STI ETF for local
Treating CPF as Bond allocation
iShares Core S&P 500 UCITS ETF (Acc) - for international exposure

erh, I turning 40 soon
just hoping is not too late, and thinking that it will be better than just saving in bank
Plan to dca at $1500 per month across the 3

Like to hear some thoughts
Thank you

 

[bybosslee]

yeah thanks for the reply
do have some saving, like to ask
considering MBH, how about having it in SA account. Will be generate better interest?

thanks

 

[hellvolhardzelinsky]

1. yes Ireland domiciled.

2. 1500 a month ? u have zero savings after putting aside emergency ?

3. If there r savings, fully invest them within a month into 100 percent mbh and then 1500 monthly into equity only which I assume is your monthly savings.Thus this reduces opportunity cost of cash.

4. Never too late. just that u need to make more money if u can. I’ve seen many families expenses due to the nature of my work. It’s shocking how they spend and argue their expenses are necessary. I don’t see tuition, dancing etc necessary, neither is a car and unnecessary insurances necessary. CUT CUT CUT. Just ten years sacrifice.

I don't think spending money on a hobby is unnecessary. It's unnecessary if you force their child into it. There's more to life than money and more money. You just have to learn about budgeting your expenses. Just my opinion

Regard point 3, is it better to put my money in MBH than butting in 1.6% interest bank?

 

[cfleee]

I've expanded my comparison spreadsheet to:

• factor in IBKR SG's SGX support and add GST to everything
• add SC Priority Banking since it has been mentioned a few times recently
• similarly display IBKR's cost without minimum commission as it's in the ballpark of qualifying for SC Priority
• add a comparison of some common combos, like SC + FSMOne ETF RSP vs all-IBKR SG

As this is quite a large change, and quite possibly still has a lot of errors in it, it's a different v2 link for now:

https://docs.google.com/spreadsheets/d/1T0SnPLJxdzhi5kLIK2zxbWLGkX6ILfFLsIlhzG8o534/view

Question for those more familiar with or using IBKR SG: Does anyone have details about IBKR SG's GST treatment on their commissions and minimum activity fee, and LSE exchange fees? I only see IBKR SG's pricing page has SGX exchange fees now include GST. For now I will assume that everything has GST added and that the minimum is now USD 10.70/mth.

Given a hypothetical 40/40/20 allocation,

• if you're ok to batch up your intl equity quarterly using SC, probably still cheaper to use SC/FSMOne ETF RSP until around above $2100/month or $3400/month (depending on whether you believe that there's any opportunity cost is having your intl equity cash sitting around uninvested)
• if you'd like to DCA monthly for everything, you should be using IBKR for your intl equity anyway, in which case you might as well use IBKR for the local ETFs also since it's covered by the monthly minimums

Given a 80/0/20 allocation (no local equity ETF, as some here prefer), the threshold to choose between quarterly SC + FSMOne ETF RSP, vs monthly all-IBKR, is above $1300/month or $2200/month. It's lower since the gap in the commission rate is larger, and more money sitting around waiting for the quarter.

YMMV. There are many other factors and reasons to choose one or the other, apart from cost -- perhaps you think IBKR is very difficult to use, perhaps you want a "single pane of glass" to view all your investments, perhaps you value CDP support, perhaps you have other reasons to gun for SC Priority, perhaps you like the automation of a recurring bank transfer plus auto-scheduled FSMOne ETF RSP... great, please do your own due diligence and make your own decisions! This is just a tool to assist your decisions with some data.

 

[swan02]

yeah thanks

thanks

Surely SA gives u higher interest but the
argument I’m saying is not about comparing bonds vs SA.

It’s about being fully invested ASAP rather than having cash sitting on the sidelines. You do need equities to provide a higher expected return over the long term, how r u gonna get the money to buy equities if it is stuck in SA ?

With all money into MBH In year 0, u will be selling your mbh to buy your equities overtime and u do need a lot more equities if u are not financially well off. And if u r young n working till 65,

u really need a much higher equity allocation to be bought let say over 12-18months and left as it is till time to reduce your equity exposure before retirement. Remember it’s an at least 20 years time frame.

On avg expect 8 percent annualized return by end of year 20. Don’t expect to retire with 4-5 percent from SA if u don’t have a large amount to begin with. The problem is... can u stick to a 20 year time frame and not fidget with your assets ?

........ thus it isn’t a bad idea to beef up your SA at least to the amount entitling u to the increase 1 percent or 2 percent when pass 55 if I’m not mistaken.

Some people simply allocate some to SA, and rest in equity every month. This can be ideal as long no cash sitting dormant.

If cash dormant, just use all buy up mbh and think about how much equity risk u wish to undertake. Even that decision can take a long time unless u wish to take up shinys algorithm 110-age which helps to direct u.

Ultimately start investing and stop procrastinating. Upping your risk starting from lowest can be done later while you contemplate and read up to give ya confidence. a 100 percent mbh to start with is a good idea IMO. Your $1500 plus selling mbh every few months to buy equity should reach your target allocation of let say 70/30 in 12 months or 24?

 

[swan02]

I’ve heard a plethora of reasons not to cut and the usual money is not everything refute when I dealt with my clients who argue they are broke and find no other way out of their predicament.

I told them just sacrifice 5 years and try another 5 years... out of so many, only one took it well and wrote all of it down. This one 12 years later is doing very well.

If one can budget well, u won’t be poor anyways. even low income earners can do well being a Scrooge just 10 years. All I’m saying is keep a balance Unless broke. U earn more spend more, but not make little but spend a lot.

1.6 percent in cash is fast becoming lower and lower. In a few weeks we will have the banks reporting. Good luck.

Cash should only exist as an emergency or in an all weather portfolio or to meet short term needs ie less than 2 years. I always see my portfolio as a whole when it deviates up or down. All four components of equity,
Cash, bonds and gold can be titrated to meet your risk profile. I dont think anyone should take risk less than 100 percent mbh as it’s already very conservative.

Let see how mbh performed during the crisis.
From beginning to peak to bottom, it lost approx 2.2 percent. And that 2.2 percent lose is a result of the equity risk it contains as well as the financial crisis that took over this exposing its bond risk. Really it isn’t too bad. It has a duration of about 5 years and can expect approx 2 percent YTM.

A35 lost zero even after the financial crisis took over. It isn’t bad to also have A35 if u add a smithereens of equity. But mbh is just much more easy. little equity + a35 can give u also approx 2 percent long term return too.

However, buying large sums in a single day or over a week is difficult. So for those facing liquidity problems in mbh and A35 should consider a mixture of A35 + minute equity combine with mbh. This way u sort of solve the lousy spread existent in both etfs.

I don't