Official Shiny Things thread—Part III

[BBCWatcher]

He did. Because he told me he sold all his equity ETFs before the peak in the US stock markets happened.

Yes, I got that part, but did he repurchase? In other words, we only know the short-run outcome. If his lifetime gain ends up being +11% (I'll pick the midpoint there) total...well, that's not so impressive, is it? A Singapore Savings Bond beats that and takes only a few years to do it.

Periodically I sell some ESPP shares, and occasionally I happen to get lucky in terms of timing, sometimes not. That doesn't mean much at all, though. Most people live longer financial lives than fireflies do.

 

[flowerpalms]

1k per month should be using IB, not SCB

Hi guys. I'm currently using SCB to buy VWRA on a monthly basis. I'm putting around 1k SGD a month and I'm far from 100k.

Is it recommended to move over to IB even tho i would have to pay a monthly fee? The exchange rate in SCB kinda sucks.. and i believe that IB one is better.

Thank you!

 

[makav31i]

1k per month should be using IB, not SCB

Can you please show calculation why IB and not SCB and on what basis is the amount $1k/month and not any other amount? Don't give the answer that it is based on a book which you just follow blindly and cannot apply your own thinking...

What if someone got Priority Banking with SCB and decided to invest $1k/month with SCB? Still stick to template answer because it is in a book and that is the only solution?

The first question you should be asking people is their reason for buying using SCB and not regurgitate like a robot that if this than that...

 

[LyzeOfKiel]

Can you please show calculation why IB and not SCB and on what basis is the amount $1k/month and not any other amount? Don't give the answer that it is based on a book which you just follow blindly and cannot apply your own thinking...

What if someone got Priority Banking with SCB and decided to invest $1k/month with SCB? Still stick to template answer because it is in a book and that is the only solution?

The first question you should be asking people is their reason for buying using SCB and not regurgitate like a robot that if this than that...

I suggest you to read Shiny Thing Part 2 thread before asking further

 

[tesarise]

I suggest you to read Shiny Thing Part 2 thread before asking further

I think you are missing the point

Can you please show calculation why IB and not SCB and on what basis is the amount $1k/month and not any other amount? Don't give the answer that it is based on a book which you just follow blindly and cannot apply your own thinking...

What if someone got Priority Banking with SCB and decided to invest $1k/month with SCB? Still stick to template answer because it is in a book and that is the only solution?

The first question you should be asking people is their reason for buying using SCB and not regurgitate like a robot that if this than that...

No point waste breathe. Just ignore and move on

 

[yellownova]

Hi guys. I'm currently using SCB to buy VWRA on a monthly basis. I'm putting around 1k SGD a month and I'm far from 100k.

Is it recommended to move over to IB even tho i would have to pay a monthly fee? The exchange rate in SCB kinda sucks.. and i believe that IB one is better.

Thank you!

I'm just paying it forward.

Previously, cfleee kindly explained about the cross-over amount. You may want to take a look at his Google Sheets to calculate.

My amount was more than 1K per month, so you got to do some calculations.

Here are the links to the posts:

https://forums.hardwarezone.com.sg/124305998-post8133.html

https://forums.hardwarezone.com.sg/122414527-post6601.html

Sent from Samsung SM-G975F using GAGT

 

[makav31i]

I suggest you to read Shiny Thing Part 2 thread before asking further

Are you another robot that just keep regurgitating same old stuff? Did you even read what I just posted? Where did that magical $1k number come from and based on what? So if someone have Priority Banking with SCB should also buy using IB just because of what?

 

[LyzeOfKiel]

Are you another robot that just keep regurgitating same old stuff? Did you even read what I just posted? Where did that magical $1k number come from and based on what? So if someone have Priority Banking with SCB should also buy using IB just because of what?

Some question have been asked multiple time and a simple google search will help you get your answer.

There is no need to insult other here, everyone is here to learn~

 

[Thoreldan]

Parrot A: kakakka kakakka
Parrot B: kakakka kakakka

 

[makav31i]

Some question have been asked multiple time and a simple google search will help you get your answer.

There is no need to insult other here, everyone is here to learn~

Different people different scenario, it is not a one size fit all situation and scenario...A questions can be asked a million times and what that is applicable to one person may not be applicable to another due to difference in situation...

By you answering by posting someone else post, you are ignoring the question and just giving an answer which may or may not be applicable to a person...That is why I said people keep regurgitating answers here regardless of the scenario...So the question to ask is the person to explain his rationale and scenario and we can all learn if someone else give an answer that is specific to a person's situation...

Not just give a template answer which may or may not apply to a person's situation or worst keep repeating outdated information which may no longer be relevant...

 

[dullthings]

here’s an excellent summary by cflee, for those who need it https://github.com/cflee/shinythings/blob/master/README.md

 

[psyfy]

The idea behind the 3 fund portfolio

Interesting article about the 3 fund method that ST talks about. Excerpts :

...Larimore shares a table that shows the average annual return and the worst single-year return of various allocations from 1926 to 2015:

“Unlike mutual funds, individual stocks can plunge to zero. On the 50th birthday of the S&P 500 Index, only 86 of the original 500 companies still remained, showing it is possible to turn a large fortune into a small fortune with individual stocks. On the other hand, it is unheard of for a registered mutual fund to go to zero.”

=========================================================

Larimore cites six academic studies that all show that index funds(ETFs) nearly always beat their managed funds counterparts. My favorite study he shared was by Allan Roth, who summarized the probability of a managed fund with an expense ratio of 2.0 outperforming an index fund with an expense ratio of 0.23:

One managed fund had a 42% chance of beating an all-index fund over a 1-year period. As you add more managed funds to the mix and extend your time horizon, the probability of outperforming drops significantly. The probability that a basket of ten active funds will outperform an all-index fund over a 25-year period is only 1%.

=========================================================

“The Lehman Brothers bankruptcy in 2008 is an example of the need for diversification. Lehman Brother was founded in 1850, and in 2000 it was the fourth largest investment bank in the United States. In the 2008 Bear Market, Lehman Brothers went bankrupt, causing thousands of their employees and individual investors who owned Lehman Brothers shares to lose all, or part, of their retirement benefits and life savings.

Vanguard Total Stock Market Index Fund investors also owned Lehman Brothers shares in their fund, but because their fund was diversified with thousands of other stocks, Total Stock Market fund shareholders were little affected by the bankruptcy. This is another advantage for total market index funds: Because all your stocks and bonds are wrapped into one fund, you don’t see the carnage that unnerves other investors, causing them to worry and sell at exactly the wrong time (i.e., during Bear Markets).

Diversification, with its lower risk, is the hallmark of the Three-Fund Portfolio. It protects us from allowing our brain – wired to sometimes flee out of fear – to become our own worst enemy.”

=========================================================

Stay the Course

Once you have implemented your plan, you simply need to stay the course. Larimore has suggestions for how to stay the course in both bull and bear markets:

“Bull Markets: When stocks are in a Bull Market, there will be a great temptation to increase your stock allocation. A small deviation from your asset allocation plan is permissible, but you should rebalance any time your stock allocation exceeds 10% (some would say 5%) of its desired allocation. If you are in the accumulation phase of investing, you can do this by putting all new contributions into your bond fund or by selling stocks. If you are in the withdrawal phase of investing, you should take withdrawals from your stock funds or exchange stocks for additional bonds in your tax-advantaged account(s).”

“Bear Markets: When stocks are in a Bear Market (U.S., International, or both), you will be strongly tempted to sell at least a portion of your stock funds. DON’T DO IT. This is the time when stocks are on sale at lower prices. Sticking with your allocation means you likely will be buying low and selling higher when you rebalance – the oppositre direction of the herd. Rebalance by adding to your stock funds until you have again met your desired asset allocation. This is the most difficult (but most important) thing you can do in a Bear Market.”

========================================================

One more article to share shortly on other types of portfolios and their returns....what a fascinating world we live in.

 

[psyfy]

18 Different types of portfolios and how they've performed since 1970

Very interesting article about some popular portfolios including our favourite 3 fund portfolio.

The 18 Portfolios – Asset Allocation

First, here are the 18 different portfolios along with their asset allocation.

The 18 Portfolios – Performance

Next, here is how each portfolio has performed since 1970:

Three types of portfolios :

1) High Volatility, High Return Portfolios
The total stock market portfolio is simply in a league of its own. It has high returns and high volatility.

2) Medium Volatility, Medium Return Portfolios
Of the portfolios with medium volatility and medium returns, the Pinwheel portfolio seems to be the clear winner:

Since 1970 it has experienced 7.0% annual returns and a standard deviation of 10.8%, which means it has delivered higher returns and lower volatility than the following portfolios:

• Ricki Ferri Core Four Portfolio
• No-Brainer Portfolio
• Swensen Portfolio
• Ideal Index Portfolio

3) Low Volatility, Low Returns
Among the portfolios with low volatility and low returns, the Golden Butterfly seems to be the clear winner:

Since 1970 it has experienced 6.0% annual returns and a standard deviation of 7.8%, which means it has delivered higher returns and lower volatility than the Three-Fund and the Classic 60-40 portfolio.


Simple vs. Complex Portfolios
When it comes to investing, expected risk and return is important, but sometimes simplicity is important too.

For example, The Merriman Ultimate portfolio has historically provided higher returns than the Three-Fund portfolio and the Classic 60-40 portfolio and done so with less volatility, but it requires an investor to invest in 12 unique asset classes. By contrast, the Three-Fund portfolio only requires three asset classes and the Classic 60-40 only requires two.

For some investors, they’re willing to trade a little bit of performance for simplicity. The Three-Fund and Classic 60-40 portfolios are dead simple to manage, which is why they’re so appealing.

======================================================

I'm in with ST's 3 fund portfolio setup but certainly I am keen to explore the Golden Butterfly portfolio as I near retirement.

 

[streetfighter]

Sold most of my ETFs at >50% profit yesterday. S&P plunges 3% today!

Yes, I got that part, but did he repurchase? In other words, we only know the short-run outcome. If his lifetime gain ends up being +11% (I'll pick the midpoint there) total...well, that's not so impressive, is it? A Singapore Savings Bond beats that and takes only a few years to do it.

Periodically I sell some ESPP shares, and occasionally I happen to get lucky in terms of timing, sometimes not. That doesn't mean much at all, though. Most people live longer financial lives than fireflies do.

 

[isaacsayshi]

Referring to psyfy post.

All stock market includes small, and value stocks, and large cap stocks.

That may explain the higher returns and volatility that come along with it.

There is well documented that small caps has to potential to become big sized company hence the potential higher return but large caps being already large cap, has limited growth compared to small cap stock.

Yet the difference is only a decimal points returns if annualised over a long term period. It can yield good long term return in mixed caps allocation. Hence total stocks might be a better potential return.

William Bernstein on his "portfolio allocation" books does a thorough research on this matter. Can look if you have the time.

Cheers

 

[moolala]

Hi all, I'm trying to change my cash to margin account with ibkr
However, on the website, it says these:

Who can access the Account Type screen?
You can change your account type on this page if you are a:

Individual, Joint, Trust or IRA Account User
Small Business Account User
Friends and Family Group Master or Client (master user cannot change the Account Type of the master account)
Advisor Client
Proprietary Trading Group Master User
Broker Master User (can also change the Account Type of Non-Disclosed client accounts)
Broker Fully Disclosed Client
Fund

My question is if i declare the above, will my status be changed from "non professional" to professional and therefore, charged more fees?

If not, how do I do it correctly??

*Im little confused by the first line...is it "individual user" or "indivdual IRA account user"?

 

[makav31i]

Interesting article about the 3 fund method that ST talks about. Excerpts :

...Larimore shares a table that shows the average annual return and the worst single-year return of various allocations from 1926 to 2015:

“Unlike mutual funds, individual stocks can plunge to zero. On the 50th birthday of the S&P 500 Index, only 86 of the original 500 companies still remained, showing it is possible to turn a large fortune into a small fortune with individual stocks. On the other hand, it is unheard of for a registered mutual fund to go to zero.”

=========================================================

Larimore cites six academic studies that all show that index funds(ETFs) nearly always beat their managed funds counterparts. My favorite study he shared was by Allan Roth, who summarized the probability of a managed fund with an expense ratio of 2.0 outperforming an index fund with an expense ratio of 0.23:

One managed fund had a 42% chance of beating an all-index fund over a 1-year period. As you add more managed funds to the mix and extend your time horizon, the probability of outperforming drops significantly. The probability that a basket of ten active funds will outperform an all-index fund over a 25-year period is only 1%.

=========================================================

“The Lehman Brothers bankruptcy in 2008 is an example of the need for diversification. Lehman Brother was founded in 1850, and in 2000 it was the fourth largest investment bank in the United States. In the 2008 Bear Market, Lehman Brothers went bankrupt, causing thousands of their employees and individual investors who owned Lehman Brothers shares to lose all, or part, of their retirement benefits and life savings.

Vanguard Total Stock Market Index Fund investors also owned Lehman Brothers shares in their fund, but because their fund was diversified with thousands of other stocks, Total Stock Market fund shareholders were little affected by the bankruptcy. This is another advantage for total market index funds: Because all your stocks and bonds are wrapped into one fund, you don’t see the carnage that unnerves other investors, causing them to worry and sell at exactly the wrong time (i.e., during Bear Markets).

Diversification, with its lower risk, is the hallmark of the Three-Fund Portfolio. It protects us from allowing our brain – wired to sometimes flee out of fear – to become our own worst enemy.”

=========================================================

Stay the Course

Once you have implemented your plan, you simply need to stay the course. Larimore has suggestions for how to stay the course in both bull and bear markets:

“Bull Markets: When stocks are in a Bull Market, there will be a great temptation to increase your stock allocation. A small deviation from your asset allocation plan is permissible, but you should rebalance any time your stock allocation exceeds 10% (some would say 5%) of its desired allocation. If you are in the accumulation phase of investing, you can do this by putting all new contributions into your bond fund or by selling stocks. If you are in the withdrawal phase of investing, you should take withdrawals from your stock funds or exchange stocks for additional bonds in your tax-advantaged account(s).”

“Bear Markets: When stocks are in a Bear Market (U.S., International, or both), you will be strongly tempted to sell at least a portion of your stock funds. DON’T DO IT. This is the time when stocks are on sale at lower prices. Sticking with your allocation means you likely will be buying low and selling higher when you rebalance – the oppositre direction of the herd. Rebalance by adding to your stock funds until you have again met your desired asset allocation. This is the most difficult (but most important) thing you can do in a Bear Market.”

========================================================

One more article to share shortly on other types of portfolios and their returns....what a fascinating world we live in.

What applies to the USA does not necessarily apply to local Investors especially if your portfolio plan is to concentrate more on the SGX or domestic investment...

 

[makav31i]

Very interesting article about some popular portfolios including our favourite 3 fund portfolio.

The 18 Portfolios – Asset Allocation

First, here are the 18 different portfolios along with their asset allocation.

The 18 Portfolios – Performance

Next, here is how each portfolio has performed since 1970:

Three types of portfolios :

1) High Volatility, High Return Portfolios
The total stock market portfolio is simply in a league of its own. It has high returns and high volatility.

2) Medium Volatility, Medium Return Portfolios
Of the portfolios with medium volatility and medium returns, the Pinwheel portfolio seems to be the clear winner:

Since 1970 it has experienced 7.0% annual returns and a standard deviation of 10.8%, which means it has delivered higher returns and lower volatility than the following portfolios:

• Ricki Ferri Core Four Portfolio
• No-Brainer Portfolio
• Swensen Portfolio
• Ideal Index Portfolio

3) Low Volatility, Low Returns
Among the portfolios with low volatility and low returns, the Golden Butterfly seems to be the clear winner:

Since 1970 it has experienced 6.0% annual returns and a standard deviation of 7.8%, which means it has delivered higher returns and lower volatility than the Three-Fund and the Classic 60-40 portfolio.


Simple vs. Complex Portfolios
When it comes to investing, expected risk and return is important, but sometimes simplicity is important too.

For example, The Merriman Ultimate portfolio has historically provided higher returns than the Three-Fund portfolio and the Classic 60-40 portfolio and done so with less volatility, but it requires an investor to invest in 12 unique asset classes. By contrast, the Three-Fund portfolio only requires three asset classes and the Classic 60-40 only requires two.

For some investors, they’re willing to trade a little bit of performance for simplicity. The Three-Fund and Classic 60-40 portfolios are dead simple to manage, which is why they’re so appealing.

======================================================

I'm in with ST's 3 fund portfolio setup but certainly I am keen to explore the Golden Butterfly portfolio as I near retirement.

Why don't you do your own calculation on the domestic stocks and international stocks and share it with us whether the above charts are applicable to someone in Singapore?

 

[psyfy]

What applies to the USA does not necessarily apply to local Investors especially if your portfolio plan is to concentrate more on the SGX or domestic investment...

Wasn't my intention to portray this as US centric.

The thrust of the article and my post is the efficacy of the 3 funds portfolio, why we shouldn't be buying unit trusts and individual stocks and the potential returns of different mix of the 3 funds portfolio. This is relevant no matter what market you are in.

The concept of the 3 funds portfolio was championed by Tarylor Larrimore. This is the basis of the 3 fund portfolio ST is also recommending. It helps to understand the rationale behind this portfolio. There's nothing much to it other than reading material.

 

[psyfy]

Why don't you do your own calculation on the domestic stocks and international stocks and share it with us whether the above charts are applicable to someone in Singapore?

One can surmise that it wouldn't deviate much. There are many bloggers and articles in Singapore that have covered the 3 funds portfolio and you can extrapolate the performances there if you are interested.

I think you are again missing the purpose of me sharing this article. It is to show that there are more than 1 type of porfolio out there(especially relevant for someone that is trying out such asset based portfolio like me). And that different portfolio with different characteristics when measured qualitatively over a long period shows interesting results.

Point being, there is no one portfolio that fits everyone. The charts shows different portfolio characteristics for different risk levels and different volatilities. Take it whatever way you want but I for one am evaluating the Golden Butterfly portfolio as a retriement portfolio when the time comes.