Official Shiny Things thread—Part III

[makav31i]

Hi all, has anyone used FSMOne ETF RSP to purchase ES3, MBH? Which one is better for trading SG etfs, FSMone, DBS vickets cash upfront or Standard charted? Given that I invest for long term and rarely sold?

Oh yah, forgot to add one very important thing, can add this troll to ignore list and ignore whatever nonsense he spout without any thing to substantiate whatever crap he is spouting...

Depends on what is your monthly investment.

Less than 1k: use POSB RSP and SCB
1k and above: use SCB and IB

 

[chrisloh65]

Why you didn't mention need to keep war-chest like you?
My understanding is war-chest is to market-time right?

DCA every month, dont time the market

 

[Purplestars]

Purplestars, stop it. You came in here years ago arguing that high-interest bank accounts were better than bonds. You were wrong, and people in here pointed that out to you over and over again.

Please take a look at what is currently happening at the bond market.
Please take a look at what the people are asking you and telling you, over and over again. Just look back at the last page, which you'd just brush aside.

Guys like Revhappy and many others have bought into MBH and are now kicking themselves. And the best advice you have to offer is "Oh you are only down 2% when I promised you bonds are supposed to me negatively correlated to the stock market. It's doing it's job!" How can anyone think you are right there?

Do you think I am proven wrong when all bonds are tanking currently? Or is it time for you to take a step back and reconsider your position?

I engaged with you, and I actually found your arguments kind of persuasive; you persuaded me that high-interest accounts were a pretty good option for people's emergency funds, and I said as much at the time. I wasn't persuaded that high-interest accounts were a good alternative to bonds; I gave you good reasons, and I also said that at the time.

At that point, a normal person would say to themselves "OK, I wasn't able to persuade this person completely, I'll leave it alone. Maybe I'll start my own thread". But you started calling me names, and you kept coming in here over and over again to start the same fight.

You're trying to restart a fight from three years ago. Get over it.

Once again, nobody is interested to start a fight with you. The main interest is to educate the newbies from making this mistake and many people in here can speak out for it. They are just too afraid to and shellshocked at what's happening and desperately hoping you are right. The lack of past posters advocating holding these bond funds should be a big clue for you.

No, Purplestars, you get infracted because you do nothing but start fights, and the board has a explicit rule against fighting. If you stopped being so obnoxious and argumentative you wouldn't get infracted so much. How have you not figured this out?

People are get infracted because you have created a crazed fanatic like Flowerpalms who is now just reporting everybody who disagrees with him. See how dangerous your bad advice can be? He is now so delusional that nobody gets what's going on with him. On the surface he seems to be advocating your methods, then he claims to have war chests and applying other methods not in sync with you.

It hurts me to see people like that, and I wish I can prevent it from happening again.

The two major things I feel that should be paid special attention to:

1) The 110-age rule. You are literally encouraging a newbie 30 year old to put 80% of his assets into the stock market. It might be a good idea to do so now, but all the people who followed this advice to the letter in the past few years are probably in shock now and are in too much pain to appear in this thread. An education on personal risk tolerance needs to take place before getting people to jump into the deep end.

80% is a huge commitment and once they do so they will commited to see your plan work out due to cognitive dissonance. But we have already seen people here melting down and selling their MBH to buy into stock. But you conveniently ignored them of course, and these guys are probably stopped reading this thread out of shame.

2) Putting the rest of your net worth into bond funds.
The risk and drawbacks here are definitely not highlighted by you and we have seen many posters suffering from it now. But of course you aren't going to address why it happened and think of alternative solutions.

 

[chrisloh65]

Or may be he (Shiny Thing) was the one reporting many people who disagrees with him so that they get infracted/banned?

Anyway, back to serious topic, looks like IWDA ETF will continue to drop as USA and global stock markets continue to drop as Corona-virus epidermic continue unabated?

Once again, nobody is interested to start a fight with you. The main interest is to educate the newbies from making this mistake and many people in here can speak out for it. They are just too afraid to and shellshocked at what's happening and desperately hoping you are right. The lack of past posters advocating holding these bond funds should be a big clue for you.

People are get infracted because you have created a crazed fanatic like Flowerpalms who is now just reporting everybody who disagrees with him. See how dangerous your bad advice can be? He is now so delusional that nobody gets what's going on with him. On the surface he seems to be advocating your methods, then he claims to have war chests and applying other methods not in sync with you.

 

[chrisloh65]

https://singaporemanofleisure.blogspot.com/2020/04/indexing-versus-individual-stocks.html

Index ETFs vs Individual Stocks?
This blog post says it well!
This is why you need a war-chest!

Why you didn't mention need to keep war-chest like you?
My understanding is war-chest is to market-time right?

 

[d9_lives]

Purplestars was so loud in q4 2018 and q1 2020

 

[cassowary18]

Even for ETF (ABF) under Dbs InvestSaver there's custody charges?

DBS Invest Saver has no custody charge.

Vickers has no custody charge for local counters. (For local counters, it's all CDP - even the cash upfront account). But it has custody charge for overseas counters (which was what you were asking - IWDA and VWRD are overseas counters).

Depends on what is your monthly investment.

Less than 1k: use POSB RSP and SCB
1k and above: use SCB and IB

Can we honestly stop rehashing this advice. Seriously. FSMOne has a much better cost structure for RSP. Even better than SCB, since SCB is min $10 and 0.08% but FSMOne is min $1 and 0.08%.

This is only speculation at the moment. Nobody knows if and when IBKR is going to open a Singapore office; and even if they do open a Singapore office, nobody knows whether they will allow Singaporean residents to trade SGX stocks.

Let's wait and see. Someone on the IB thread mentioned that they've started to reach out to Singapore investors already, and SGX trades will be allowed.

 

[Shiny Things]

I'm trying to build towards 100k on ib.. What would be a good bond etf for starters? Any on lse and Irish domiciled that will benefit from tax treaty for withholding taxes if any?

Cash counts toward the $100k mark. You don’t need to pile into stuff that’s just going to turn into a giant pile of currency risk; SGD cash counts if you’re looking for a $100k balance.

Index ETFs vs Individual Stocks?
This blog post says it well!
This is why you need a war-chest!

This blog post’s entire thesis is that people should buy penny stocks because “you won’t get a 10-bagger from the STI ETF”.

Chris, that’s the entire point of this thread. Nobody in this thread is looking for the 10-bagger. That sort of speculation is fine—over in SSI. Take it over there instead, and you might find a more welcoming crowd.

 

[investo]

Hi all, has anyone used FSMOne ETF RSP to purchase ES3, MBH? Which one is better for trading SG etfs, FSMone, DBS vickets cash upfront or Standard charted? Given that I invest for long term and rarely sold?

I have been using FSM for RSP of SGX traded ETFs. Based on my calculations, I found them cheaper (provided they keep charges same) compared to rest in local market.

They don’t charge any dividend handling fee for SGX traded ETF.

I suspect POSB or OCBC will start reducing their multiplier/360 interest rate to cope with COVID stress. That used to be one of the factors, ppl choosing these banks for DCA over FSM.

 

[wutawa]

Can we honestly stop rehashing this advice. Seriously. FSMOne has a much better cost structure for RSP. Even better than SCB, since SCB is min $10 and 0.08% but FSMOne is min $1 and 0.08%.

How to get scb 0.08%?

 

[Shiny Things]

Depends on what is your monthly investment.

Less than 1k: use POSB RSP and SCB
1k and above: use SCB and IB

This was the advice in 2015-2017 and 2019 (ex a brief, shining period in 2019 when Maybank Kim Eng had a very good RSP and then shut it down, I like to think because we brought them too much attention); however, these days the FSMOne RSP is cheaper than the POSB RSP.

As someone pointed out upthread, FSMOne is either the same price as, or cheaper than, both Stanchart and POSB (I don’t think there’s any size where FSMOne isn’t the cheapest, and I think this may have been a deliberate pricing decision by FSMOne).

FSMOne is not the best for stocks outside Singapore; but for ES3 and MBH, it’s absolutely the right choice.

 

[tangent314]

As someone pointed out upthread, FSMOne is either the same price as, or cheaper than, both Stanchart and POSB (I don’t think there’s any size where FSMOne isn’t the cheapest, and I think this may have been a deliberate pricing decision by FSMOne).

For exactly $100/month, POSB is cheaper ($0.82 vs $1.00). At every other price point, FSMOne wins

 

[makav31i]

This was the advice in 2015-2017 and 2019 (ex a brief, shining period in 2019 when Maybank Kim Eng had a very good RSP and then shut it down, I like to think because we brought them too much attention); however, these days the FSMOne RSP is cheaper than the POSB RSP.

As someone pointed out upthread, FSMOne is either the same price as, or cheaper than, both Stanchart and POSB (I don’t think there’s any size where FSMOne isn’t the cheapest, and I think this may have been a deliberate pricing decision by FSMOne).

FSMOne is not the best for stocks outside Singapore; but for ES3 and MBH, it’s absolutely the right choice.

Just one thing to add, POSB Invest Saver fees of 0.82% only apply to G3B and CFA...For A35 and MBH, the fees is 0.5%...

So for STI ETF, if you can only invest $100 per month, POSB Invest Saver is cheaper at 0.82%...If you can only invest between $50 to $99.99, your only option is FSM...Anything from $100.01, FSM is either the only option or cheaper than POSB...

For A35 or MBH, it is cheaper with POSB Invest Saver if you can invest $100 or $200 a month... Anything above $200 or below $100, your option is FSM...

Some other things to take note of, POSB IS only offering G3B...FSM RSP offer both ES3 and G3B...Both A35 and MBH is available on both POSB IS and FSM RSP...

POSB Invest Saver investment is in multiples of $100, FSM is any amount from $50...

POSB Invest Saver charges $0 when you want to sell...FSM charges 0.08% and minimum $10 when selling...

 

[beefjerky]

Ok chris and purplestars, can we seriously stop this constant snide remarks? It's getting really tiring. I think majority of us hear your point of view about war chest and how bonds may not be a good stabilizer for your portfolio. But majority of us can judge and decide what is best for ourselves. War chest, personally I don't have cause I don't know how to predict when is the bottom and I didn't win a lottery to get a lump sum payment.

I hear the advantages of savings account over bonds but the companies constantly change their rates and have new exclusions. I don't want that. I just want 1 simple item so I don't have to shift and move my money around. Can't we just agree to disagree and you guys start your own thread?

 

[Newbyib]

Bonds do have 3 types risks : credit risk, inflation(interest rate) risks and liquidity risks. During crisis, credit and liquidity risks come into play. There are still a lot of homework and you need to assess the macro environment to protect your bond investment. You have to also decide on the maturity as well as Long dated bonds are very volatile as well even though it’s not as volatile as stocks. Despite all the finance literature that says bond is a safe haven, during financial crisis, the correlation between equity and bond is close to one although the standard deviation is less. As an example Bridgewater Associates promotes the idea of risk parity portfolio which is essentially leverage play on bonds to generate theoretical good sharpe ratio, ran into trouble. In general, you need to be aware of the credit rating in your bond portfolio or bond funds you are holding and identify the risk factor that arise in a crisis especially when credit crisis occurs. If possible learn how to interpret assess the financial health using score cards like alt z score as well as the risks involved (I am referring more to IG bonds).

 

[BBCWatcher]

Bonds do have 3 types risks : credit risk, inflation risks and liquidity risks.

It depends on the bond.

Lots of high quality governments issue real return bonds (a.k.a. inflation indexed bonds), and for that matter there are some annuities structured that way. They have no inflation risk, because their outcome is pegged to the inflation rate. Buy a basket of these and you’d even be very well defended against Singapore dollar inflation.

U.S. Treasuries don’t have any meaningful liquidity risk, nor do Singapore Savings Bonds for that matter. True, SSBs are redeemable per monthly cycles, but they are partially or fully redeemable every month.

A high quality sovereign bond really doesn’t have meaningful credit risk. (Yes, that’s tautological.)

Despite all the finance literature that says bond is a safe haven, during financial crisis, the correlation between equity and bond is close to one although the standard deviation is less.

Oh really? What about Japanese government bonds when that country’s stock market crashed? U.S. Treasuries haven’t seen price spikes in crises? German government bonds?

 

[Newbyib]

It depends on the bond.

Duration matters and macro environment matters: look at 30 year Treasury good yield - not when interest rate starts going up. You will get hit with an immediate loss if you bought. It is factored into the bond pricing.
Likewise for any Long maturity dated bond even those like HDB and LTA.
For IG bond, look at the spread for LQD or VCLT. That’s the liquidity risk that was experienced last few weeks. If it’s bad for bond etf, it’s worse for wholesale. Or check out the credit spread indicator on stlouisfed - Fred.
For credit risks, look at the dive in VCLT (Investment Grade) last few weeks. The increase in correlation in assets especially bond and equity since GFC(2007)is well documented in finance literature. Having said that the volatility is still less than equity however it is very correlated during crisis with the exception of Government Bonds. But I did mention I refer to IG bonds or bond funds that have a component of corporate IG bonds. I did not even mention those that have some high yield bonds composition.

 

[BBCWatcher]

Duration matters and macro environment matters: look at 30 year Treasury good yield - not when interest rate starts going up. You will get hit with an immediate loss if you bought. It is factored into the bond pricing.

How is a particular market price that you don't like equivalent to credit, inflation, or liquidity risk? The only material risk for a standard 30 year U.S. Treasury bond is inflation risk. It's highly liquid -- it's the longest bond available in the world's largest (by far) secondary sovereign debt market -- and it's the world's safest vehicle for parking U.S. dollars for a long term. If you don't like the inflation risk then just buy the 30 year U.S. TIPS.

Moreover, if you don't want to buy a 30 year U.S. Treasury on the secondary market (which has slightly under 30 years to run), no problem, you haven't got long to wait. The U.S. Treasury is issuing new 30 year bonds very frequently. Just go buy one at the initial auction. As I write this, there's a 29 year 10 month issue, CUSIP 912810SL3, that's a reopened auction scheduled for Wednesday, April 8, 2020. You haven't got long to wait. The TIPS are issued a little less often, but there's a new 5 year TIPS that'll be issued later this month.

Likewise for any Long maturity dated bond even those like HDB and LTA. For IG bond, look at the spread for LQD or VCLT. That’s the liquidity risk that was experienced last few weeks.

As Shiny Things has pointed out, that's liquidity of the underlying individual corporate bonds. The fund is highly liquid.

If it’s bad for bond etf, it’s worse for wholesale. Or check out the credit spread indicator on stlouisfed - Fred.

I guess you could argue there's a minor implicit added cost in fund trading if you want instant liquidity amidst rare circumstances, but is that factor something to worry about? (How does it compare to your house when you're trying to sell it within the next 5 seconds?)

For credit risks, look at the dive in VCLT (Investment Grade) last few weeks. The increase in correlation in assets especially bond and equity since GFC(2007)is well documented in finance literature.

Sure, but if you want the lowest credit risk instruments in particular currencies they are readily available. U.S. Treasuries for U.S. dollars, for example.

Having said that the volatility is still less than equity however it is very correlated during crisis with the exception of Government Bonds. But I did mention I refer to IG bonds or bond funds that have a component of corporate IG bonds. I did not even mention those that have some high yield bonds composition.

No, you referred to "bonds" in the post I replied to and didn't exclude government bonds broadly. I'm just responding to what you wrote.

 

[cassowary18]

How to get scb 0.08%?

Ooh yeah...my bad.

In that case FSMOne is cheaper than SCB at all price points.

Just one thing to add, POSB Invest Saver fees of 0.82% only apply to G3B and CFA...For A35 and MBH, the fees is 0.5%...

So for STI ETF, if you can only invest $100 per month, POSB Invest Saver is cheaper at 0.82%...If you can only invest between $50 to $99.99, your only option is FSM...Anything from $100.01, FSM is either the only option or cheaper than POSB...

For A35 or MBH, it is cheaper with POSB Invest Saver if you can invest $100 or $200 a month... Anything above $200 or below $100, your option is FSM...

Some other things to take note of, POSB IS only offering G3B...FSM RSP offer both ES3 and G3B...Both A35 and MBH is available on both POSB IS and FSM RSP...

POSB Invest Saver investment is in multiples of $100, FSM is any amount from $50...

POSB Invest Saver charges $0 when you want to sell...FSM charges 0.08% and minimum $10 when selling...

Another thing to remember is that POSB Invest Saver counts for bonus interest if you have a Multiplier account (which I do, hence I'm sticking with them).

 

[celtosaxon]

I really appreciate the feedback on my bond ETF conceptions. I may be a little off on some aspects, but if you compare holding a bond ETF versus holding an individual bond to maturity, the individual bond can be compared to a fixed deposit, but with a higher risk of default, hence, higher yield to compensate. Provided no default, with an individual bond the principle can be redeemed in full at maturity, even if the market price moves out of your favor. In my mind, that is a major advantage over a bond ETF which cannot be held to maturity, and when things move out of your favor, you are subject to continuous duration inherent in the bond fund, which may not always be desired.

Am i making too much of the differences? Would a person doing a bond ladder and a person in bond ETFs achieve the exact same outcome?