Official Shiny Things thread—Part III

[celtosaxon]

It depends how you ended up with your war chest. Holding back on DCA over the years has a higher chance of putting a drag on investor performance than boosting it in the long-term.

Of course, if you happen to have a war chest, you now have an opportunity to get in at 2017/18 price levels, which may or may not be any real benefit versus having had the amount included in your regular DCA.

Shiny himself has talked about time to bring out the warchest.
Assuming people know what they are doing, it seems perfectly reasonable to continue your regular DCA, while having a price plan for your warchest.

Shiny needs to emphasise the warchest bit in his next edition so that his fans get the message.

 

[Okenba]

It depends how you ended up with your war chest. Holding back on DCA over the years has a higher chance of putting a drag on investor performance than boosting it in the long-term.

Of course, if you happen to have a war chest, you now have an opportunity to get in at 2017/18 price levels, which may or may not be any real benefit versus having had the amount included in your regular DCA.

Sure, but we are not talking about saving up now.

We are talking about how to deploy whatever you already have. In that context, it sounds fine to me to have a plan for falling prices to complement regular DCA.

 

[celtosaxon]

Sure, but we are not talking about saving up now.

We are talking about how to deploy whatever you already have. In that context, it sounds fine to me to have a plan for falling prices to complement regular DCA.

Essentially you are suggesting we should be more aggressive now — and I certainly agree, double down if you can!

But there are some people who for the past 5 years kept thinking the market is too high, hesitated or held back, and have been on the sidelines saving up a war chest, waiting for the next crisis. Such a strategy almost always results in lower returns in the long-term compared to a disciplined investor who ignores whether the market is high or low and faithfully keeps investing through ups and downs.

 

[NubbyCat]

Hi friends, can anyone help me out here? Am trying to buy CSPX from SCB. How did the Total fees accumulate to 81.62USD ah? Sorry, first time using SCB

Stock Name / Code (Market) ISHARES VII PLC ISHRS CORE S&P 500 UCITS ETF USD (ACC) / CSPX (LSE)

Order Quantity 37

Buy/Sell Price 274.880

Valid For (Until) Day

Order Type Limit

Settle Ccy USD

Order Value (Ccy) 10,170.56 (USD)

Total Fees 81.62 (USD)

 

[psyfy]

Exactly! You dca once a month, not by price.

And if thats additional investment to you ,you may have messed up ur portfolio. Very good.

Hopefully those who rush in to buy now, iwda dont go lower price.

I shall stick to my regular monthly dca end of this month. Not going to buy now.

Yes, Warren Buffet says be greedy when others are fearful. But what the heck, this not apply to DCA

I don't think there's a one size fits all. There are always differing views in how to approach an investment.

On top of your regular DCA, when such a "sale" happens, there is no harm spending more from a warchest(if you have one) to increase your positions and lower your average cost. What's the harm if you invest for the long term anyway?

Just like when you do groceries every month and buy 2 cans of sardines and suddenly this month they have a purchase on purchase promo when you can buy additional 2 cans for the price of 1. Why wouldn't you right?

There are exceptions obviously but in general it's a sound idea to supplement your DCA in times like this.

 

[pai000000]

WQDV is domiciled in Ireland and traded in LSE. The fund manager pays for any taxes, and the distribution is net of (after) tax for Singapore residents.

But, I want to ask, do you prefer:

• an ETF that pays higher dividend but lower growth, or
• an ETF that pays lower dividend but higher growth?

Maybe you want to look at total return instead. WQDV tracks MSCI World High Dividend Yield Index which is a subset of MSCI World. The index document says its return is lower than that of MSCI World in the last 3, 5, and 10 years, but higher since 1995. I don't know if you can say one is better than the other in the long run.

If you like collecting dividend, maybe you can consider VWRD. It has a lower TER (0.22% vs 0.38%), a higher AUM (4.7B vs 100M) - more stable & less likely to be delisted, and is more diversified (3000+ vs 300+ holdings). Dividend yield is lower but total return might be similar (ie. VWRD will increase more in price).

Hmm, iShares finally replied to my email about WQDV, and what they said was that the distribution posted on their website is BEFORE tax. So seems like need to deduct 15% to get the amount we are getting

 

[flowerpalms]

How much warchest did you unload?

I don't think there's a one size fits all. There are always differing views in how to approach an investment.

On top of your regular DCA, when such a "sale" happens, there is no harm spending more from a warchest(if you have one) to increase your positions and lower your average cost. What's the harm if you invest for the long term anyway?

Just like when you do groceries every month and buy 2 cans of sardines and suddenly this month they have a purchase on purchase promo when you can buy additional 2 cans for the price of 1. Why wouldn't you right?

There are exceptions obviously but in general it's a sound idea to supplement your DCA in times like this.

 

[barfie]

I need help in converting SGD to USD in IBKR.

I used to convert through the IBKR app. But recently i realized the USD option is not available.
Which means i can convert SGD to HKD/CNH/JPY. But can't choose USD. why ?

I had this exact same problem! I could convert through TWS but not through the app. Fortunately it's back to normal now on my app, you probably just need to give it a while.

 

[completenovice]

IBKR Stock Yield Enhancement Program

Apologies for repeating my question and thank you to those who responded. I still have a few unanswered questions ........

A Question for Shiny Things.

Many thanks for all of your help to date - your advice to me has proved to be right for several years now.

Deeply appreciated!

Regarding the IBKR stock yield enhancement program, can't see a good reason not to enroll;
- stocks loaned are covered 102% by cash by IBKR so seems like no exposure to borrower?
- tax implications seem to be negligible for retail investors like me?
- all other risks seem to be between broker and IBKR?

Looks like small but easy money! Are there any risks that I have not understood please?

Completenovice

 

[barfie]

Noob question... If IB charges a monthly fee of USD 10, should we buy on the way down instead of just DCA once a month? I'm looking at my lump sum and wondering if I should 'DCA down' if that makes sense.

Sent from Samsung SM-G975F using GAGT

I was wondering the same question too, just a bit differently.

Assuming that
1) I don't mind making a trade every week
2) Each trade on IB costs ~2USD
3) IB charges monthly minimum activity fee of 10USD anyway

Would it actually make sense to split my monthly DCA of say $1000 into a weekly DCA of $250?

The fees would end up being the same, roughly USD 10 a month ($2 for FX conversion once a month, $2 for each trade per week).

The only problem I see is that $250 is too little to fully spend on counters like IWDA (can only buy 4.7 units, can't buy a full 5 shares). But theoretically, could this be beneficial?

 

[Maeda_Toshiie]

DCA vs take-out-proton-cannon-and-shoot-your-warchest

DCA method pro:
No need to think. No need for special skills or luck. Just do it. It's efficient on your personal time.

DCA method con:
Not the most efficient return maximizing method.

Proton-cannon method pro:
You can get better returns than DCA. The "better" returns can range from 0.01 to a much larger amount.

Proton-cannon method con:
You need a special sauce to decide when to fire your cannon, what rate to fire, etc. Can you overcome human psychology of bottom fishing and buyer's remorse? Can you do that while holding a day job*?



* I noticed that doctors, dentists, tuition teachers, and civil servants are avid stock pickers and avid online stock discussion participants, so maybe they have the time to try to time the market. I belong to none of these categories myself, so I don't need to make things more difficult for myself.

 

[tangent314]

Hi friends, can anyone help me out here? Am trying to buy CSPX from SCB. How did the Total fees accumulate to 81.62USD ah? Sorry, first time using SCB

I believe they include the price for stamp duty although you won't be charged for it.
No worries, once they actually deduct from your settlement account it would be without the stamp duty.

 

[flowerpalms]

High 5!! You dont buy just because iwda price dip and everyone is doing it

DCA vs take-out-proton-cannon-and-shoot-your-warchest

DCA method pro:
No need to think. No need for special skills or luck. Just do it. It's efficient on your personal time.

DCA method con:
Not the most efficient return maximizing method.

Proton-cannon method pro:
You can get better returns than DCA. The "better" returns can range from 0.01 to a much larger amount.

Proton-cannon method con:
You need a special sauce to decide when to fire your cannon, what rate to fire, etc. Can you overcome human psychology of bottom fishing and buyer's remorse? Can you do that while holding a day job*?



* I noticed that doctors, dentists, tuition teachers, and civil servants are avid stock pickers and avid online stock discussion participants, so maybe they have the time to try to time the market. I belong to none of these categories myself, so I don't need to make things more difficult for myself.

 

[boroangel]

1) CSPX is fine if you really must overweight the US.

2) If you want the dividends paid out, VUSD works.

3) I find them by manually hunting through the iShares UK and Vanguard UK lists of ETFs.



Yep.

Ok so this is where I am getting confused. I suppose you have to change USD to GBP in order to buy CSPX or other ETFS listed in LSE.

Trying to avoid that and buy Sp 500 ETFS that are denominated in USD

 

[SpeedingBullet]

DCA vs take-out-proton-cannon-and-shoot-your-warchest

DCA method pro:
No need to think. No need for special skills or luck. Just do it. It's efficient on your personal time.

DCA method con:
Not the most efficient return maximizing method.

Proton-cannon method pro:
You can get better returns than DCA. The "better" returns can range from 0.01 to a much larger amount.

Proton-cannon method con:
You need a special sauce to decide when to fire your cannon, what rate to fire, etc. Can you overcome human psychology of bottom fishing and buyer's remorse? Can you do that while holding a day job*?



* I noticed that doctors, dentists, tuition teachers, and civil servants are avid stock pickers and avid online stock discussion participants, so maybe they have the time to try to time the market. I belong to none of these categories myself, so I don't need to make things more difficult for myself.

Interestingly enough, many in the finance industry arent avid stock pickers nor online stock discussion participants

 

[BBCWatcher]

I suppose you have to change USD to GBP in order to buy CSPX or other ETFS listed in LSE.

Nope. CSPX is domiciled in Ireland, listed and traded on the London Stock Exchange, and quoted/denominated in U.S. dollars. If you want the British pound quoted/denominated version you'd use CSP1, also listed and traded on the London Stock Exchange.

 

[boroangel]

Nope. CSPX is domiciled in Ireland, listed and traded on the London Stock Exchange, and quoted/denominated in U.S. dollars. If you want the British pound quoted/denominated version you'd use CSP1, also listed and traded on the London Stock Exchange.

That will work for me, thanks!

 

[boroangel]

Nope. CSPX is domiciled in Ireland, listed and traded on the London Stock Exchange, and quoted/denominated in U.S. dollars. If you want the British pound quoted/denominated version you'd use CSP1, also listed and traded on the London Stock Exchange.

Hi BBCWatcher, is there any real material difference between CSPX and VUSD. I suppose VUSD is also denominated in USD, and it seems the expense ratio is.....0?

 

[BBCWatcher]

Hi BBCWatcher, is there any real material difference between CSPX and VUSD. I suppose VUSD is also denominated in USD, and it seems the expense ratio is.....0?

They're pretty similar, but CSPX is an accumulating fund and VUSD is a distributing fund. The direct competitor to CSPX is VUAA, which is the accumulating version of VUSD.

"Accumulating" means that the fund manager takes the immediate after-tax dividends and automatically reinvests them, buying additional shares of stock within the fund. Consequently each share of the fund holds progressively more shares of stock over time (and becomes more valuable, other things being equal). "Distributing" means the fund manager distributes the immediate after-tax dividends to fund shareholders who then can do basically two things: spend the dividends (on iPhones, apples, lottery tickets, beer, or whatever), or reinvest the dividends. "Accumulating" is generally the wise choice for long-term investors because it's automatic and could help cut down on broker commissions associated with reinvesting. Either way there's absolutely no problem buying goods and services when it comes time to do that: just sell some shares, remit the proceeds, and buy your spaghetti (or whatever).

 

[hwckhs]

Hmm, iShares finally replied to my email about WQDV, and what they said was that the distribution posted on their website is BEFORE tax. So seems like need to deduct 15% to get the amount we are getting

No, if you are a Singapore resident who is not a resident of any other country, then there is no WHT for dividends of WQDV.

I have never been charged any tax for dividends of my VWRD, as you can see below. It says "Exempt From Withholding".

Taxation is a complex subject, especially when the asset is global, and domiciled in a country you are not a resident of. There are multiple layers of taxes. The fund manager may need to pay for WHT for US stocks (the 15%) and to other countries as well. Once the dividend land on your hands, it may be subject to further taxes depending on your residency. If you are a Singapore resident, then no tax on your dividend as I have shown above. I think the iShares rep misunderstood you as someone who resides in Ireland or Europe etc, where dividend or capital gain tax may apply.

Annual Report 2019 - https://www.ishares.com/uk/individu...port/ishares-ii-plc-2019-en-annual-report.pdf

Check page 64. iShares MSCI World Quality Dividend UCITS ETF (WQDV) had an income (I assume mostly dividends) of $1.654m, and fund manager paid taxes of $201k. That's about 12% of dividends they received. This ETF has about 54% of holdings in US stocks. Fund manager will pay 15% to US IRA, and similar/other taxes to other countries which may have higher, lower or no tax. iShares declares dividend after deducting this tax expenses. That's why I say the dividend is net of WHT.

Let's check a pure US ETF, shall we? Check page 63 - iShares MSCI USA Quality Dividend UCITS ETF (QDIV). Tax of $1.862m on $13.145m income = 14.17% which is very close to the 15% WHT payable to US IRA. I see that iShares participates in securities lending. That is probably the reason some of the income may not be taxable, and why we don't see a perfect 15% here.

If you want to better understand taxation matters, I refer you to iShares Prospectus - https://www.ishares.com/uk/individual/en/literature/prospectus/ishare-ii-plc-en-emea-prospectus.pdf page 134-145. That will clear up a lot of confusions.