Official Shiny Things thread—Part III

[tonythedog93]

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.

I have none. I would like to apply here in SG because the SCB in Taiwan does not provide online trading services and also follow Joshua's advice. If possible, I would like to create an account completely remotely.

 

[Shiny Things]

Hi,

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

Right here. You're in the right thread.

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?

That's basically it, yeah. The trick is not so much "sell it when the price gets higher", it's "hold onto it until you need the money, and let time and compounding take care of you between now and then". Your time to retirement is going to be something like forty years, and that's plenty of time to let compounding work for you.

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

I really don't like property as an asset class. It has low returns, high fees, it's illiquid, it has irrational buyers... none of those are good things.

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

1) Use ETFs. Unit trusts tend to have higher fees and worse performance than ETFs.
2) Yes, that is the ETF we recommend for Singaporean bonds.

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?

OK, you definitely shouldn't be following my advice letter-for-letter. You can use it as a starting point, but:
1) I'm going to assume you aren't planning to retire in Singapore, so it doesn't make sense for you to have exposure to Singaporean stocks or SGD bonds.

2) You don't need Stanchart Singapore, because you're not going to buy Singaporean stocks or Singapore-listed ETFs. You just need IBKR, and a good Taiwanese broker for local stocks and bonds. Unfortunately I don't know a lot about the Taiwanese retail market, or the Taiwanese ETF landscape - all I'd say is stay away from investing through the life insurance companies, those guys are absolute lunatics.

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

Sort of. I think it's best to think of rebalancing as helping you stick to your target percentages.

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.

Yes, you'll still rebalance even if everything's down.

A good example is right now. Generally, people's portfolios (mine included) are lower; but bonds are flat, or a little bit down, while stocks are down by a lot. You'd still sell your bonds and buy stocks; because bonds have held their value, while stocks have dropped by a lot. So buying stocks now means you're buying things while they're cheap; even if the pandemic selloff takes a couple of years to recover, that's still fine, because your horizon is decades long and you can wait it out.

 

[BBCWatcher]

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.

“Up to 20%” is not equal to 20%. If you’re happy with a lower number, that’s fine with me.

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.

I don’t suggest that swap. That’s unnecessary cost, complexity, and doesn’t add value versus the global stock fund alternative.

I really don't like property as an asset class. It has low returns, high fees, it's illiquid, it has irrational buyers... none of those are good things.

However, for those who disagree, I don’t know too many people who are suffering from a lack of real estate exposure in Singapore. Your own home is insanely expensive already, and ES3/G3B are already chock full of real estate. At the rate the Straits Times Index is going it’ll be a REIT index before long.

Moreover, the government is telling you loudly and clearly that your upside will be strictly capped via its potent policy levers and real estate market interventions. The government is just not interested in housing that’s even less affordable than today’s. If you want to fight this government‘s market interventions you can try, but I don’t like your odds.

On top of all that, you can just buy a REIT index fund if you insist on overweighting real estate. Those are available in tiny increments, the REITs use and maintain leverage (so any hypothesis about gains from leverage is honored), and you don’t have several of the downsides of direct real estate purchases.

The one unambiguously nice thing I can say about direct real estate buying is that for some reason some people find it easier to save consistently when there’s a mortgage lender sending a repayment demand under the threat of foreclosure. If you lack the discipline to save in the absence of monthly threats, OK, maybe that’s the best you can do. Bear in mind I say basically the same thing about high cost “investment” products that insurance companies sell.

You just need IBKR, and a good Taiwanese broker for local stocks and bonds.

The latter may not be necessary. Interactive Brokers may allow residents of Taiwan to invest in Taiwanese securities.

 

[cassowary18]

I have none. I would like to apply here in SG because the SCB in Taiwan does not provide online trading services and also follow Joshua's advice. If possible, I would like to create an account completely remotely.

Ah, no. Unfortunately the only way to create a SCB trading account remotely is to use singpass, which is an online account all citizens and permenant residents (and temporary residents too I believe?) get. Otherwise you have to physically come down to a SCB branch in Singapore to open.

But I question why you'll need a Singapore SCB trading account in the first place, as Shiny Things mentioned. Aren't there local brokers in Taiwan, or couldn't you use IBKR?

 

[w1rbelw1nd]

Not that I disagree with you, but for other forummers' consideration:

1. Do have a think if you really want to decrease equity exposure when you grow older. If you have a more sizable portfolio, and have other goals such as giving to charity when you pass on, or to leave something more behind for your loved ones, you can stick to a more risky portfolio. I intend to do 80:20 till death

2. Again, SGX, which is the exchange which STI chooses it 30 stocks from, is getting smaller its share of market capitalisation relative to global public equities market cap. We are looking at a sickly, deteriorating exchange and its corresponding index and there are no signs of reversal
. There is no need to pledge loyalty to such an exchange or an index - what if temsaek delist another 3-4 index components (SPH, Sembcorp, Keppel, SIA seems like prime targets) and the index components get even dicier? My recommendation is, keep your eyes wide open on any SGX exposure throughout your wealth accumulation phase.

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?

 

[ranchfarm]

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?

Hi Bro,
1. Read Shiny Thing's "Rich by Retirement" book on Amazon. It's super easy and tells you how to get started.
2. Open an account on Interactive Brokers and FSMOne.
3. Come here and hang around and ask questions.

 

[Chuu89]

So you want to buy STI ETF, which is already quite concentrated in Singapore, and then you want to buy another Singaporean blue chip stock? And zero global allocation? Probably not the best idea.

For bond, ST suggests MBH.

The local/global equities split seems to be the point where most people disagree with my standard recommendation—and I'll be honest, I'm fine with that, though I appreciate people disagreeing with me: it makes me ask "is this actually the right answer, do I need to rethink this point". I'll take this away and have a think about it.
Tt
(Secretly, I'm quite glad that people are advocating for more global exposure. Home-country bias is one of the biggest, most consistent mistakes that new investors make, and I'm kinda glad I've done my bit to eliminate it.)



Uh no. With a few exceptions (notably some of the emergency policies that the US Federal Reserve introduced), you can't pledge business loans to the central bank.

And with very rare exceptions, anything you can pledge to the central bank will require a haircut, so you can't just take on infinite leverage like that.



Chris is trying to start fights—I notice that he does this over in EDMW as well, and he seems to think the same behavior is acceptable here. Just report his posts and ignore him; don't respond.



Yep this is good so far.



It's better to buy global stock ETFs like IWDA, than doubling up on local stocks. By buying ES3, you already own a stake in the big three banks, as well as other big Singaporean companies like Singtel, Capland, etc etc. So, because ES3 already owns those stocks, if you bought more Singaporean stocks, you'd be adding extra risk if one of them were to go bankrupt. (And ES3 already pays hefty dividends—somewhere around 3.5%!)

MBH.



No, there's no difference. Use whichever one is cheapest.



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.



Oooh. If you're looking at asset management and becoming a PM, the answer's going to depend on which asset class you're interested in. Are you thinking bonds; equities; vol...?

Thanks both. Also i will like to understand, if i do not do the auto saving in FSMOne and will manually buy it every start of the month does do i do rebalancing to pull it back to the percentage or just buy based on the default percentage?

 

[cassowary18]

Thanks both. Also i will like to understand, if i do not do the auto saving in FSMOne and will manually buy it every start of the month does do i do rebalancing to pull it back to the percentage or just buy based on the default percentage?

Are you sure you don't want to use the RSP? Because the cost savings can be quite significant...

You don't have to rebalance every month. Just rebalance twice a year, November and May. (which reminds me to do my semi-annual rebalancing soon)

 

[FrostWurm]

Do have a think if you really want to decrease equity exposure when you grow older. If you have a more sizable portfolio, and have other goals such as giving to charity when you pass on, or to leave something more behind for your loved ones, you can stick to a more risky portfolio. I intend to do 80:20 till death

The consideration here is two-pronged:
1) Living standards at the point or retirement.
2) How much wealth they have relative to their living standards.

ST and BBCW's approach is to reduce exposure to the inherently risky nature of equities when approaching old age. This is because when people are old, retired, and not earning active income, they are drawing down from their portfolio.

If there is a sudden downswing in the stock market (eg. 40%), those guys may have to adjust their standard of living in an uncomfortable way.

But all this is, of course, relative to how much wealth you have in the first place. If you already have $10m accumulated, an 80-20 split should be no problem at all. Even if you only have $1m accumulated, you can still do 80-20 if you live modestly and are willing to stomach a bit of possible uncertainty in your lifestyle.

But if you only have $400k, then you have to play your cards carefully. Doing an 80-20 can leave you vulnerable if there is a prolonged bear market (not that there will definitely be one).

Heck, if one chooses to live very austerely, it is likely that he can even just survive off CPF payouts. And invest everything else.

Everything is relative.

 

[Chuu89]

Are you sure you don't want to use the RSP? Because the cost savings can be quite significant...

You don't have to rebalance every month. Just rebalance twice a year, November and May. (which reminds me to do my semi-annual rebalancing soon)

Oh that i didnt know thanks for highlighting. So we can choose which ETF to buy at a default every month with the RSP right?

When u do rebalancing twice away do we sell and buy and pull it back to the ratio?

For bond MBH we are referring to NIKKOAM SGD right? But is it advisable to buy now since stock is low and bond is now high buying price at the moment.

Also based on the suggestion is to use SCB to buy USA ETF right? So for this do they have auto pay every month or we manually do it?

 

[BBCWatcher]

ST and BBCW's approach is to reduce exposure to the inherently risky nature of equities when approaching old age. This is because when people are old, retired, and not earning active income, they are drawing down from their portfolio.

Suggested model portfolio allocations are generalized. Yes, if you have a relatively high net worth (or higher) you might do something different. In that event you might converge on a 60-40 bonds-stocks split by age 65, or a 50-50 split, or whatever.

This situation is another reason I'm not a big fan of the "110 minus age" formula. I tend to prefer the "hold steady at 20-80 until age 55, then see where you're at" approach.

 

[cassowary18]

Oh that i didnt know thanks for highlighting. So we can choose which ETF to buy at a default every month with the RSP right?

Yes. That will be your ES3 and MBH, and you can set a default amount to invest in these every month.

When u do rebalancing twice away do we sell and buy and pull it back to the ratio?

In principle, yes. If the difference is small you can just change your allocation for that month so your holdings reaches your desired asset allocation after that month.

For bond MBH we are referring to NIKKOAM SGD right? But is it advisable to buy now since stock is low and bond is now high buying price at the moment.

Shiny Things recommends MBH as your bond ETF but you could use A35 as well. You still want to buy bonds now because you don't know if stocks will drop any further (it very well could) and bonds provide that ballast for you if stocks drop.

Also based on the suggestion is to use SCB to buy USA ETF right? So for this do they have auto pay every month or we manually do it?

If by USA ETF you mean your global allocation to IWDA/VWRA then yes. If you use SCB, you'll have to save up your allocation for a few months before purchasing on SCB to save on your commissions. Alternatively, you could use Interactive Brokers. Do the math and see which one makes more sense.

 

[tonythedog93]

OK, you definitely shouldn't be following my advice letter-for-letter. You can use it as a starting point, but:
1) I'm going to assume you aren't planning to retire in Singapore, so it doesn't make sense for you to have exposure to Singaporean stocks or SGD bonds.

2) You don't need Stanchart Singapore, because you're not going to buy Singaporean stocks or Singapore-listed ETFs. You just need IBKR, and a good Taiwanese broker for local stocks and bonds. Unfortunately I don't know a lot about the Taiwanese retail market, or the Taiwanese ETF landscape - all I'd say is stay away from investing through the life insurance companies, those guys are absolute lunatics.

I am actually a newbie investor (26 years old) and am picking up investing knowledge here.
In Taiwan there isn't a lot of open source information related to investing, and most of them tend to be scammers. I prefer Bogleheads' guidance.

The reason for me to not use IB is that it requires account maintenance fees.
I found out that SCB Singapore seem to have the lowest cost to get exposure to global ETFs such as IWDA.

Account Maintenance Fees Up to USD 10 based on activity
Will be equal to zero if:
Greater than USD 100,000 in average equity for a calendar month or
USD 10 in commissions generated in a calendar month.

I wouldn't mind accumulating my wealth in SGD and buying SG stocks and bonds. Exchanging currency back and forth shouldn't be that much of a hassle if I just buy and hold and have limited transactions?

 

[FrostWurm]

I wouldn't mind accumulating my wealth in SGD and buying SG stocks and bonds. Exchanging currency back and forth shouldn't be that much of a hassle if I just buy and hold and have limited transactions?

No, this is just pointless.

As a Taiwanese, you have absolutely no reason to be accumulating in SGD or have exposure to SG stocks and bonds (unless for some reason you see yourself settling down here). Doing this induces extra risks and costs into your investment plan for no reason at all.

I'm sure there are some low-cost brokers around in Taiwan. In any case, you will probably face problems opening an SCB Singapore trading account when you don't have any connection to Singapore at all.

 

[cassowary18]

I am actually a newbie investor (26 years old) and am picking up investing knowledge here.
In Taiwan there isn't a lot of open source information related to investing, and most of them tend to be scammers. I prefer Bogleheads' guidance.

The reason for me to not use IB is that it requires account maintenance fees.
I found out that SCB Singapore seem to have the lowest cost to get exposure to global ETFs such as IWDA.

Account Maintenance Fees Up to USD 10 based on activity
Will be equal to zero if:
Greater than USD 100,000 in average equity for a calendar month or
USD 10 in commissions generated in a calendar month.

I wouldn't mind accumulating my wealth in SGD and buying SG stocks and bonds. Exchanging currency back and forth shouldn't be that much of a hassle if I just buy and hold and have limited transactions?

There's no reason why you should be following a Singaporean style Bogleheads 3 fund portfolio if you're not planning to retire in Singapore. Couldn't you buy your own domestic stock index ETF and domestic bond ETF in addition to IWDA to form your own Bogleheads 3 fund portfolio?

And if Interactive Brokers allows you to trade Taiwan stock exchange ETFs, you'll pay less than using local brokers even with the monthly minimum, because any commissions generated offsets the monthly minimum.

 

[sleepingcat]

I have some savings from the the past few years working... is it recommended that i dump a lumpsum into a ETF/stock or should I just throw in a few hundred monthly into a ETF/stock?

I believe ETF is safer than normal stocks??

I read through some of the pages and saw that MBH is the recommended ETF...

I have opened a SGX CDP account and also applied to open a trading account with POEMS, can I buy MBH through POEMS?

 

[makav31i]

I have some savings from the the past few years working... is it recommended that i dump a lumpsum into a ETF/stock or should I just throw in a few hundred monthly into a ETF/stock?

I believe ETF is safer than normal stocks??

I read through some of the pages and saw that MBH is the recommended ETF...

I have opened a SGX CDP account and also applied to open a trading account with POEMS, can I buy MBH through POEMS?

The recommended option is if you intend to purchase monthly, FSM RSP should be the option if you intend to invest above $200 per month on MBH...If not, POSB Invest Saver is the cheaper option if you intend to invest $100 or $200...

MBH or even A35 are just the bonds portion...If you want to invest in local stocks ETF, it should either be ES3 or G3B...

Of course you can buy MBH with POEMS or any of the local brokers as it is listed in SGX...But why do you want to pay more in fees to POEMS when there are cheaper options to buy SGX or even LSE shares?

 

[tonythedog93]

And if Interactive Brokers allows you to trade Taiwan stock exchange ETFs, you'll pay less than using local brokers even with the monthly minimum, because any commissions generated offsets the monthly minimum.

I agree that I can buy local stocks and bond ETFs in TWD such as the famous 0050 in Taiwan to build my own 3 fund portfolio. However, to trade IWDA, the best broker for someone in Taiwan would be IB, but the minimum commission will be a pain for someone that does not trade frequently and just buy and hold.

This is why I consider opening an account in SCB SG and see if a foreigner is eligible to do so, even if I have to fly there personally. My father is living in SG so perhaps after coronavirus ends I might visit.

 

[micgoh]

Hi I am new to investing. I chance upon this thread and really appreciate its existence.

Im looking to buy into IWDA etf say $150-200/month.

I have signed up with SCB online trading platform but am also open to any others, as long as it has the lowest charges + fees .

Any recommended platform?

 

[BBCWatcher]

I agree that I can buy local stocks and bond ETFs in TWD such as the famous 0050 in Taiwan to build my own 3 fund portfolio. However, to trade IWDA, the best broker for someone in Taiwan would be IB, but the minimum commission will be a pain for someone that does not trade frequently and just buy and hold.

This is why I consider opening an account in SCB SG and see if a foreigner is eligible to do so, even if I have to fly there personally. My father is living in SG so perhaps after coronavirus ends I might visit.

No, that won’t be possible. It’ll also be horribly expensive since you’re starting from a Taiwanese dollar income, presumably. Just forget about it — this path (Standard Chartered Singapore) is not for you.