Official Shiny Things thread—Part III

[MichealScott]

I find BBCW and w1r1belwind’s arguments for capping STI’s allocation (to, say, not more than 20%) a lot more persuasive than Shiny’s.

To me, Shiny’s argument is an argument for simplicity, especially targeted at new investors, but it seems to trivialize or inadequately address the very valid complexities and scenarios BBCW and w1r brought up.

I actually agree with and learnt a lot from >90% of the advice he has shared in this forum (thanks, Shiny!) but whenever it comes to the topic of why such a high allocation to the STI for Singaporeans, his arguments are always puzzlingly weak compared to his other straight-shooting, insightful perspectives.

I suppose it doesn’t help that Shiny has written a chargeable book advocating his recommendation of 50:50 global:local split. He is therefore obliged in some ways to stand by his recommendation publicly. To address individual needs and investment complexities faced by non-newbies, he then offers chargeable consulting. I think this puts him in a rather awkward spot.

Full disclosure: I’m 90:10 global:local stock allocation.

I agree..I am a huge fan of Shiny and his book guided to make my first step into investing and learnt a lot of things from him as well. Like many have said, Shiny's book is a great way to get people into finance and investing but it is not meant to be a bible and followed strictly.

I think Shiny is in a tough spot regarding this. Simplicity is a weak argument to justify for the 50-50 allocation. I myself have more weight into global index than STI index as well. We don't know what's going to happen in the future so to each of his own. Just invest with a margin of safety

 

[BBCWatcher]

I find such formulas too complicated, so I tend to prefer this:

1. Until age 55:
20% in bonds (MBH)
up to 20% in ES3 or G3B
rest in VWRA or IWDA or LCWD

2. From age 55 to 65:
Shift the 80% in stocks to a 15%-15% local-global split. That's 50% of the total portfolio shifting over 10 years, so 5 percentage points per year or about 1.25 percentage points per quarter. In practice this'll be mostly or entirely shifting the global stocks to bonds. Here's where you apply a "formula," but you only need to calculate the formula once, at age 55, when you sketch out this ~10 year glidepath. Age 55 works really well because it's also your "CPF year" (Retirement Account is formed), so it's easy to remember. For example, if you rebalance twice per year and are starting with 15% in ES3 or G3B already, then you'd be moving from a 20-15-65 split to 70-15-15. That'd mean shifting 50 percentage points from global stocks into bonds over 10 years, or 2.5 percentage points every 6 months. That'd be your semiannual rebalancing, basically. Easy!

3. From age 65 onward, hold steady at the 70-15-15 bonds-local stocks-global stocks split.

All quite simple, right?

 

[rikukoh]

SC Jumpstart

Hi Shiny,

Can I ask for your opinion on the StanChart Jumpstart account that provides 2.0% P.A. for savings up to first 20k for age 18-26 (im 22).

Does it help if I treat my savings in this account as a bond portion because last I checked, MBH paid out 2.02% in dividend yield, and hence if I chose the Jumpstart account, although I would be theoretically losing out on the 0.02%, I would be saving on the transaction fees?

Secondly, not sure if this question has been asked already but I don't get how does MBH pay out dividend, is it monthly or quarterly and to which account does it credit into, your brokerage account or bank account?

Thanks,
Riku

 

[5408854088]

Edit: ah, I see you clarified this a little. Yeah, the issue is that Berky is basically like owning a "US large-cap value" equity ETF, because that's what it owns. You're effectively betting on Chuck and Wozza as fund managers—the problem is, they're betting on the value factor (which kind of relies on stocks being under-appreciated) in the single most heavily covered equity market sector in the world, large-cap US equities.

I think large-cap US value-factor is dead and buried. Other factors still "work" (notably momentum). Value doesn't any more; it just ends up with you owning a truckload of banks.

got it

 

[cassowary18]

Hi Shiny,

Can I ask for your opinion on the StanChart Jumpstart account that provides 2.0% P.A. for savings up to first 20k for age 18-26 (im 22).

Does it help if I treat my savings in this account as a bond portion because last I checked, MBH paid out 2.02% in dividend yield, and hence if I chose the Jumpstart account, although I would be theoretically losing out on the 0.02%, I would be saving on the transaction fees?

Secondly, not sure if this question has been asked already but I don't get how does MBH pay out dividend, is it monthly or quarterly and to which account does it credit into, your brokerage account or bank account?

Thanks,
Riku

You should really only be using your bank account for emergency savings because Stanchart can cut interest rates any time they like with only one month's notice.

Dividends are credited into your CDP linked account via Direct Crediting Service if your ETF is held there. If not it will be credited to your trading account if you have a custodian account.

 

[rikukoh]

You should really only be using your bank account for emergency savings because Stanchart can cut interest rates any time they like with only one month's notice.

Dividends are credited into your CDP linked account via Direct Crediting Service if your ETF is held there. If not it will be credited to your trading account if you have a custodian account.

I see. Thank you!

Cheers,
Riku

 

[rikukoh]

I would also like to ask on Rebalancing as I do not quite get the whole idea behind it.

Say initially you are in 40-40-20 (age 30), Local Global Bonds in Jan. In Feb, stocks did well and you are in 44-44-11. So because it is not time to rebalance (May/Nov), you would purchase Bonds in this case to up the percentage allocation back to the initial 40-40-20.

So for next few months, you are just topping up whatever is behind until May, whereby allocation hits maybe 45-45-10. Do you 1) Sell your extra 10% in stocks and use it to purchase bonds? or 2) Continue to top up bonds as per usual?

I am not saying stocks will be doing very well/consistently well. Above is just an example. Please help out thanks! Sorry if my initial understanding of this entire rebalancing/topping up concept is entirely wrong in the first place!

Cheers,'
Riku

 

[flowerpalms]

Number 1. Sell stocks buy bond

Rebalancing you buy and sell
In other months you top up only

I would also like to ask on Rebalancing as I do not quite get the whole idea behind it.

Say initially you are in 40-40-20 (age 30), Local Global Bonds in Jan. In Feb, stocks did well and you are in 44-44-11. So because it is not time to rebalance (May/Nov), you would purchase Bonds in this case to up the percentage allocation back to the initial 40-40-20.

So for next few months, you are just topping up whatever is behind until May, whereby allocation hits maybe 45-45-10. Do you 1) Sell your extra 10% in stocks and use it to purchase bonds? or 2) Continue to top up bonds as per usual?

I am not saying stocks will be doing very well/consistently well. Above is just an example. Please help out thanks! Sorry if my initial understanding of this entire rebalancing/topping up concept is entirely wrong in the first place!

Cheers,'
Riku

 

[5408854088]

I find such formulas too complicated, so I tend to prefer this:

1. Until age 55:
20% in bonds (MBH)
up to 20% in ES3 or G3B
rest in VWRA or IWDA or LCWD

2. From age 55 to 65:
Shift the 80% in stocks to a 15%-15% local-global split. That's 50% of the total portfolio shifting over 10 years, so 5 percentage points per year or about 1.25 percentage points per quarter. In practice this'll be mostly or entirely shifting the global stocks to bonds. Here's where you apply a "formula," but you only need to calculate the formula once, at age 55, when you sketch out this ~10 year glidepath. Age 55 works really well because it's also your "CPF year" (Retirement Account is formed), so it's easy to remember. For example, if you rebalance twice per year and are starting with 15% in ES3 or G3B already, then you'd be moving from a 20-15-65 split to 70-15-15. That'd mean shifting 50 percentage points from global stocks into bonds over 10 years, or 2.5 percentage points every 6 months. That'd be your semiannual rebalancing, basically. Easy!

3. From age 65 onward, hold steady at the 70-15-15 bonds-local stocks-global stocks split.

All quite simple, right?

good one

 

[rikukoh]

Number 1. Sell stocks buy bond

Rebalancing you buy and sell
In other months you top up only

I see. In other words, is it correct to view rebalancing as something like redirecting your profits like twice a year?

And one more thing, what if during rebalancing, your total portfolio is at a loss eg. Economy downturn or whatever reason, should you still rebalance assuming bond and stocks fall at the same time? Or top up since prices are low and rebalance at the next cycle.

Cheers,
Riku

 

[makav31i]

I see. In other words, is it correct to view rebalancing as something like redirecting your profits like twice a year?

And one more thing, what if during rebalancing, your total portfolio is at a loss eg. Economy downturn or whatever reason, should you still rebalance assuming bond and stocks fall at the same time? Or top up since prices are low and rebalance at the next cycle.

Cheers,
Riku

If you still doing monthly contribution, just reallocate your fund to purchase more bonds or stocks to rebalance your portfolio...This is to save on selling fees and buying fees...If your portfolio is not large enough, rebalancing by selling and buying back will be very expensive...

 

[rikukoh]

I see. Thanks for the wonderful insights people!

Cheers,
Riku

 

[lingalong]

Do the monthly $10 - commission from trades fee show up anywhere on the profile? Or is there any way to generate this?

 

[tonythedog93]

Hi guys,
I am a reader of the book Rich by Retirement. However, I am not a Singaporean citizen nor a PR. I currently hold a Taiwanese citizenship.

If so, would I be able to apply for a SCB online trading account in SG as a foreigner without going there?

 

[CarlJung]

I find such formulas too complicated, so I tend to prefer this:

1. Until age 55:
20% in bonds (MBH)

I am trying to built a portfolio stock/bond, either using UT or ETF.
But I am quite confuse on the bond part. Short term bond, long term bond? UT? Better ETF?
The MBH you're suggesting is the NIKKOAM SGD IGBOND ETF?

Thanks

 

[Thomasmanager]

Hi, what is your take in investing in property currently? Thinking of taking a 700k loan to get a condo as a way to diversify portfolio

 

[celtosaxon]

I find such formulas too complicated, so I tend to prefer this:

1. Until age 55:
20% in bonds (MBH)
up to 20% in ES3 or G3B
rest in VWRA or IWDA or LCWD

2. From age 55 to 65:
Shift the 80% in stocks to a 15%-15% local-global split. That's 50% of the total portfolio shifting over 10 years, so 5 percentage points per year or about 1.25 percentage points per quarter. In practice this'll be mostly or entirely shifting the global stocks to bonds. Here's where you apply a "formula," but you only need to calculate the formula once, at age 55, when you sketch out this ~10 year glidepath. Age 55 works really well because it's also your "CPF year" (Retirement Account is formed), so it's easy to remember. For example, if you rebalance twice per year and are starting with 15% in ES3 or G3B already, then you'd be moving from a 20-15-65 split to 70-15-15. That'd mean shifting 50 percentage points from global stocks into bonds over 10 years, or 2.5 percentage points every 6 months. That'd be your semiannual rebalancing, basically. Easy!

3. From age 65 onward, hold steady at the 70-15-15 bonds-local stocks-global stocks split.

All quite simple, right?

Start off with a 25/75 local/global equity split and move to 50/50 in the 10 years leading up to retirement?

That is a lot of home country bias, especially considering how tiny Singapore is as a % of world stock market capitalization. The overweight quantum is jaw dropping.

I’d suggest cutting the local weighting by at least half that... or at least swap some of the local exposure for emerging Asia, along the lines of IDFF, if so inclined.

 

[kram62]

Do the monthly $10 - commission from trades fee show up anywhere on the profile? Or is there any way to generate this?

Assuming you refer to IBKR's monthly minimum commission fee, yes you can see it by downloading your monthly activity report. It will be clearly indicated in the fees table. Usually deducted at beginning of the month, between 3rd and 6th from my experience.

 

[cassowary18]

Hi guys,
I am a reader of the book Rich by Retirement. However, I am not a Singaporean citizen nor a PR. I currently hold a Taiwanese citizenship.

If so, would I be able to apply for a SCB online trading account in SG as a foreigner without going there?

Do you have a employment pass to work here or something? Anyway, since you're Taiwanese you can probably open IB and trade SGX there.

 

[sleepingcat]

Hi,

I am 25 years old and I am looking to start my long-term investing journey... where can I learn more?

How do you make money from investment? Do I just pump some money into a stock monthly and then sell them when the price gets higher?