Official Shiny Things thread—Part III

[Mr Grey]

Thank you for your response. Just a thought on my mind that using IBKR actually is risky as they have monthly maintenance fees and if you happen to lose your job or income got cut and unable to continue DCA every month, you are in a pretty bad position. Any thoughts on this?

What's risky is not having an emergency fund of at least 6-months living expenses precisely for uncertain times like these.

Worrying about IBKR's USD10 monthly maintenance fee would be pretty low on my list of financial concerns if I didn't have an emergency fund in place.

 

[MichealScott]

What's risky is not having an emergency fund of at least 6-months living expenses precisely for uncertain times like these.

Worrying about IBKR's USD10 monthly maintenance fee would be pretty low on my list of financial concerns if I didn't have an emergency fund in place.

But those emergency fund are meant for your living expenses isn't it? You might not have the cap to continue DCA-ing into IBKR with your emergency fund. In that case, your holdings might have to slowly liquidate to pay for the 10USD monthly fees.

I just feel that choosing IBKR is a long term commitment and if your job is not stable, IBKR might not be for you considering the fact that $1k a month is the cut off for using IBKR and it is not a small sum for most fresh grads or people with family commitment. Just my 2 cents.

 

[BBCWatcher]

Just a thought on my mind that using IBKR actually is risky as they have monthly maintenance fees and if you happen to lose your job or income got cut and unable to continue DCA every month, you are in a pretty bad position.

What's risky is not having an emergency fund of at least 6-months living expenses precisely for uncertain times like these.

Worrying about IBKR's USD10 monthly maintenance fee would be pretty low on my list of financial concerns if I didn't have an emergency fund in place.

It's not a "monthly maintenance fee." It's a monthly minimum commission, what IB calls a minimum monthly activity fee. At IB you're charged the minimum activity fee or actual commissions every month, whichever is higher. Never both. There is no minimum activity fee if your total account value is US$100,000 or more.

But those emergency fund are meant for your living expenses isn't it? You might not have the cap to continue DCA-ing into IBKR with your emergency fund. In that case, your holdings might have to slowly liquidate to pay for the 10USD monthly fees.

I just feel that choosing IBKR is a long term commitment and if your job is not stable, IBKR might not be for you considering the fact that $1k a month is the cut off for using IBKR and it is not a small sum for most fresh grads or people with family commitment. Just my 2 cents.

OK, so what better alternative do you recommend? Consider your answer carefully, because those alternatives guarantee you'll pay higher costs every month, and those higher costs will surely make you poorer. So as you enter this hypothetical crisis, you're poorer at the beginning. Is that a better idea?

The simple solution here is, when you calculate your emergency reserve needs -- let's suppose they're 12 months -- then include IB's minimum monthly commission if you wish. That'll be US$120. Park US$120 (or base currency equivalent) at IB, don't change your emergency reserve outside IB, and you've solved your hypothetical problem. Right? Once your IB account has reached a total value of US$100,000 you don't even need to do that. (At a S$1,000/month pace, even if you don't boost your monthly inflow -- you should! -- that should happen within a decade on average.) Also, make sure it's really a genuine crisis that would cause you to stop or to reduce paying yourself (and your long-term interests) first. Consider the US$10/month as a very little gentle nudge to keep you on the right track.

Poor value "investment products" that insurance companies sell sometimes end up working decently well for some people because of the power of premium bills (versus a terrible surrender value). Those people usually still figure out a way to pay, even if it involves a loan from the Bank of Sisters and Brothers ("BSB"). Dogged, determined, long-term savings definitely works...but it works even better when the costs are minimized and the value is higher.

 

[culepico]

But those emergency fund are meant for your living expenses isn't it? You might not have the cap to continue DCA-ing into IBKR with your emergency fund. In that case, your holdings might have to slowly liquidate to pay for the 10USD monthly fees.

I just feel that choosing IBKR is a long term commitment and if your job is not stable, IBKR might not be for you considering the fact that $1k a month is the cut off for using IBKR and it is not a small sum for most fresh grads or people with family commitment. Just my 2 cents.

If you worry about paying 10USD of monthly activity fees to invest, and that such a small sum could get into your thoughts, then you probably are in deep trouble anyways with or without investing.

I will recommend to cut 10USD worth of monthly expenses instead which is not that hard to achieve.

 

[MichealScott]

It's not a "monthly maintenance fee." It's a monthly minimum commission, what IB calls a minimum monthly activity fee. At IB you're charged the minimum activity fee or actual commissions every month, whichever is higher. Never both. There is no minimum activity fee if your total account value is US$100,000 or more.


OK, so what better alternative do you recommend? Consider your answer carefully, because those alternatives guarantee you'll pay higher costs every month, and those higher costs will surely make you poorer. So as you enter this hypothetical crisis, you're poorer at the beginning. Is that a better idea?

The simple solution here is, when you calculate your emergency reserve needs -- let's suppose they're 12 months -- then include IB's minimum monthly commission if you wish. That'll be US$120. Park US$120 (or base currency equivalent) at IB, don't change your emergency reserve outside IB, and you've solved your hypothetical problem. Right? Once your IB account has reached a total value of US$100,000 you don't even need to do that. (At a S$1,000/month pace, even if you don't boost your monthly inflow -- you should! -- that should happen within a decade on average.) Also, make sure it's really a genuine crisis that would cause you to stop or to reduce paying yourself (and your long-term interests) first. Consider the US$10/month as a very little gentle nudge to keep you on the right track.

Poor value "investment products" that insurance companies sell sometimes end up working decently well for some people because of the power of premium bills (versus a terrible surrender value). Those people usually still figure out a way to pay, even if it involves a loan from the Bank of Sisters and Brothers ("BSB"). Dogged, determined, long-term savings definitely works...but it works even better when the costs are minimized and the value is higher.

Thanks BBCW for your insights.

Yes I understand what is the monthly fee of IBKR about. I guess the alternative I trying to portray is SCB? Which does not have min. monthly fee and yes I understand the forex spread and all is a killer. But batching it up every 3 months is not that bad.

It just seems to me that in the event of me not being to continue DCA-ing in the future, and spending 10USD a month for nothing just doesn't feel right for me. I have a stable job so I am not really worried about it. Just a thought when my friend asked me on IBKR and this concern popped out in my head.

I am simply putting it up for discussion whether this should be a consideration when people are choosing between IBKR and SCB. Cheers.

 

[kram62]

If you are not ready to be convinced otherwise, that's fine and fully your right. You can go with SCB if it gives you peace of mind. After all SCB is not that bad, even pretty good compared to the other Singapore brokers for overseas stock.

I actually opened a scb account before fully understanding why ibkr was better for my case:
I chose to see the 10 usd min activity of IBKR as a monthly reminder to invest regularly.
Prior to that I was only trying to do market timing and buying in big batches at a dip, and was bad at it.

 

[MichealScott]

If you are not ready to be convinced otherwise, that's fine and fully your right. You can go with SCB if it gives you peace of mind. After all SCB is not that bad, even pretty good compared to the other Singapore brokers for overseas stock.

I actually opened a scb account before fully understanding why ibkr was better for my case:
I chose to see the 10 usd min activity of IBKR as a monthly reminder to invest regularly.
Prior to that I was only trying to do market timing and buying in big batches at a dip, and was bad at it.

I am already a IBKR user for about half a year now and am happy with it. I have no prob paying the $10 min fee monthly. Just a discussion to see what people here have to say regarding my concern

Sent from Stamford Bridge using GAGT

 

[CircleRain]

Hi all,

I'm looking to buy some MBH. It has been hovering around $1.02 of late, but I note that its 52 week range is between $1.006-$1.055. Does it make sense to wait till the price falls further before buying? Assuming it pays a certain dividend once a year, buying at a lower price would mean the yield is higher, so does it make sense to wait for a lower price?

Also, if equity markets recover, there is a chance that bond prices would fall, so I also wonder if it makes sense to wait a bit.

Lastly, I understand that MBH pays out its dividend in 1Q each year, so is there any value to waiting a bit and investing a bit closer to the dividend payout date?

Thanks!

 

[flowerpalms]

Time in the market, dont time the market

Hi all,

I'm looking to buy some MBH. It has been hovering around $1.02 of late, but I note that its 52 week range is between $1.006-$1.055. Does it make sense to wait till the price falls further before buying? Assuming it pays a certain dividend once a year, buying at a lower price would mean the yield is higher, so does it make sense to wait for a lower price?

Also, if equity markets recover, there is a chance that bond prices would fall, so I also wonder if it makes sense to wait a bit.

Lastly, I understand that MBH pays out its dividend in 1Q each year, so is there any value to waiting a bit and investing a bit closer to the dividend payout date?

Thanks!

 

[13luetooth]

I noticed that my SCB is not charging a minimum fee of $10 and I don't think they are running any promotions now. I am certainly not in the priority banking.

Could this be a bug but they charges me $10 at the backend?

 

[confusedsuitguy]

Yes. This is actually the recommended way to convert currency now. Much easier and faster than going through TWS, and it goes through FXCONV.

Thank you very much! Is it also the recommended means of making trades?

 

[kram62]

Thank you very much! Is it also the recommended means of making trades?

Yes, the app is very good overall.

 

[tangent314]

Thank you very much! Is it also the recommended means of making trades?

Really depends on which one you are more comfortable with.

I prefer to do the actual trade on a desktop where it is easier to do the workflow of checking the live price, and calculating the price I should set and the number of units.

 

[Shiny Things]

It just seems to me that in the event of me not being to continue DCA-ing in the future, and spending 10USD a month for nothing just doesn't feel right for me. I have a stable job so I am not really worried about it. Just a thought when my friend asked me on IBKR and this concern popped out in my head.

I am simply putting it up for discussion whether this should be a consideration when people are choosing between IBKR and SCB. Cheers.

I agree with BBCW, I don't think you need to worry about this. For larger investment sizes, the benefits of IBKR make it absolutely worth the $10 a month.

Hi all,

I'm looking to buy some MBH. It has been hovering around $1.02 of late, but I note that its 52 week range is between $1.006-$1.055. Does it make sense to wait till the price falls further before buying? Assuming it pays a certain dividend once a year, buying at a lower price would mean the yield is higher, so does it make sense to wait for a lower price?

Also, if equity markets recover, there is a chance that bond prices would fall, so I also wonder if it makes sense to wait a bit.

Lastly, I understand that MBH pays out its dividend in 1Q each year, so is there any value to waiting a bit and investing a bit closer to the dividend payout date?

Thanks!

Has anyone tried the IKBR Android app? It has such a quick and easy currency converter. Does anyone know if it's more expensive than using the Trader Workstation? Because if not, I'm definitely going to use it instead.

Yeah, the currency conversion in the mobile apps is absolutely the way to go. It's a pretty recent feature, but it's quicker and easier than doing it yourself.

Hi ST,

I am receiving margin and liquidation warnings on my account but if my trades are all paid up in full I needn't worry right?

Many thanks!

That's correct. IBKR is a bit weird like that: even if you have a cash-only account, its margining system will still occasionally freak out and say "you're close to your margin limit, you're going to get liquidated!". Ignore it.

 

[BBCWatcher]

Yes I understand what is the monthly fee of IBKR about. I guess the alternative I trying to portray is SCB? Which does not have min. monthly fee and yes I understand the forex spread and all is a killer. But batching it up every 3 months is not that bad.

Standard Chartered is chock full of costs at every step that matter a lot when you’re investing above a certain threshold. The foreign currency conversion costs much more, you must drag more cash at low or zero interest, the commission is higher, and time out of market has a cost (quarterly versus monthly for example) since markets on average go up, or at least that’s a reasonable forecast. Two and one month delays on bedding down your savings result in costs, too. And all that’s just on the front side. You’re focused on emergencies. OK, what if? What if there’s a grave emergency and you must (unfortunately) liquidate and liberate at least some of your long-term investments? You’d then take another trip through Standard Chartered’s higher cost structure.

And all that for what? Because you’re worried about a US$10 monthly minimum commission for the first decade or less of your multi-decade investing life? That’s it? That ten bucks might turn slightly less favorable for a short period of time? I don’t think that makes sense. That strikes me as irrational (tiny) loss aversion, not cost and total return maximization. And if that’s your thinking, then you’re likely going to struggle with the markets themselves when a -5% swing is just another normal day.

I don’t think anybody has a problem with using Standard Chartered at 3 digit sort of monthly savings flows. Then it does make sense to “batch up” and buy with them. Much above that, don’t worry about it. IB works great.

 

[ignesia]

Stop regurgitating outdated info. You're misleading poor newbies who come in here and get confused all the time.

13luetooth, feel free to PM me and I can tell you why the strategy of splitting your investment into your local and overseas components, and using FSMOne RSP to buy your local component and IBKR to buy your overseas component is a superior and more cost effective method.

Hi, I have been RSPing via Fsm1 for ES3 and am now intending to buy a ucits etf thru LSE.

For trades thru LSE, an initial lump ~sgd10000 and DCA ~sgd500 monthly, which brokerage would be ideal for my scenario? I see that it's mentioned if <100k invested, should go for SCB/Saxo than IBKR?

 

[limster]

If you are trading, then definitely SCB is not suitable.

SCB forex is 0.4%. If you are buying and holding for 20-30 years and collecting 3% dividend a year for the next 20-30 years, is a one time 0.4% forex charge a deal breaker? DYODD and decide, instead of letting others tell you that 0.4% is terrible

All my US$ purchases, I am using my SCB High Account Debit Mastercard (For PB account holders), because 0.4% forex premium and 2% cashback is better than any other credit card I have. (which credit card got better than exchange rate than 0.4% over spot?)

I use both IBKR and SCB (and also FSMOne - their RSP plan is really good!).

 

[tangent314]

Hi, I have been RSPing via Fsm1 for ES3 and am now intending to buy a ucits etf thru LSE.

For trades thru LSE, an initial lump ~sgd10000 and DCA ~sgd500 monthly, which brokerage would be ideal for my scenario? I see that it's mentioned if <100k invested, should go for SCB/Saxo than IBKR?

You are not going to remain <$100k forever, right?
As long as you are able to reach US$100k within a reasonable time frame of say, 8 years, you should go with IBKR.

 

[Laachino]

Hi people!

Would like to just seek some opinions with regards to investing in IBKR. After reading through IBKR's pricing structure for students/young adults aged 25 and below, they only charge USD3 for its monthly activity fees.

If say, I can only commit to SGD200-300 per month into IWDA/VWRA, would it be a feasible option?

Or should I batch up and buy every 3-4 months in SCB and pay the $10 min commission instead + the forex spread?

 

[TimothyLee1998]

Calculating portfolio performance

Hi everyone in this thread, I just want to ask when calculating the performance or the weightage of each holding in the portfolio. Does the exchange rate from SGD to USD be factored into the calculation?

My goal is to create a portfolio tracker that tracks and determines the past returns of VWRA, G3B and MBH collectively but I'm having issues with VWRA now.