Official Shiny Things thread—Part III

[crystalnox]

Anyone participate in the IB Stock Yield Enhancement Program ? Roughly what’s the income like ? Are the ETFs on LSE eligible ?

What are the key risks to highlight ?

https://ibkr.info/node/1838/
It's unlikely anyone wants to borrow an index ETF though. I've enabled it for a few months already, nothing has ever been lent out.

 

[Listopad]

https://ibkr.info/node/1838/
It's unlikely anyone wants to borrow an index ETF though. I've enabled it for a few months already, nothing has ever been lent out.

Thanks for speedy reply !

 

[ftpofmpo]

how will a deeper and longer trade/cold war between us and china affect interest rates and us dollar strength?

 

[Shiny Things]

Thanks ST for your answer. I have a silly follow-up question. In order to move to a 3 fund portfolio as suggested, I would need to sell my REITs and single name equities. However, is it wise to hold onto my single name equities considering I'm facing a paper loss now? Or should I just bite the bullet and take the loss?

Yep; learning to take a loss is an important part of investing.

And because Singapore doesn’t have any concept of tax on capital gains/losses for individual investors, there’s no benefit to holding on to your losing positions and hoping they come good. You can go ahead and sell them and free up the cash for better investments.

Anyone participate in the IB Stock Yield Enhancement Program ? Roughly what’s the income like ? Are the ETFs on LSE eligible ?

What are the key risks to highlight ?

1) Yep, I use it.
2 & 3) Depends entirely on what you hold—whether it’s a popular stock for short-sellers to borrow or not. Heavily shorted stocks get borrowed more often, and have a higher yield when they get borrowed... but heavily shorted stocks tend to be heavily shorted for a reason.
4) I think they are. IB definitely includes European ETFs, and I think that includes UK ETFs.
5) There is very little risk of any sort. The borrower has to give you cold, hard, cash as collateral—102-105% of the value of the shares they borrow from you, and that amount gets tweaked every day as the value of the shares goes up and down. So if the borrower flakes on the loan, you get to keep the cash.

Hi ST, thanks for your reply.

I'm assuming you meant to use IBKR to trade after converting SGD to USD instead of using IBKR just for FX conversion & transferring the USD back to SCB for trading?

In the case where I prefer to keep all my holdings in SCB, the USD landing fee back in SCB more or less wipe out the 15 bucks saving a month based on my rough calculations. Am I missing anything?

Ah, yeah, you’re right. This would mean you’re effectively paying a decent amount for the privilege of keeping your holdings at Stanchart, though?

how will a deeper and longer trade/cold war between us and china affect interest rates and us dollar strength?

Huh, this is a good question. My reflex, and I’d be open to debate about this, is that those would be two different things.

Most of China’s trade surplus gets recycled into investing in US treasuries. So if there’s less trade because of a “trade war”, there’s less demand for US treasuries; that means incrementally higher interest rates in the USA. (The front end would probably stay lower because the Fed would cut, so I guess that means the trade would be steepeners.)

In the event of a new Cold War... that seems like a risk-off kind of thing, which probably means more demand for treasuries and US dollars (i.e. lower interest rates).

 

[Meowtiko]

Hello everyone, I think you guys hear this a lot but, I am a total newbie that wants to start learning about investments and invest in something, instead of letting my money rot in the bank with low interest rates..

I am mid 20s with a low income, but I have saved up a bit of money and I have about 10-20k to invest in, looking to see how it will turn out in 10 years time or maybe longer

I have read a few threads and some dollarsense websites and I found out a little about SSB, STI ETF and REITs mainly, I don't think I am a day trader kind of person so I think I'll invest a lump sum and hold, I can also put in about $500 monthly for investments in addition to the lump sum.

What is everyone's thoughts and where should I begin with? I really appreciated any help given.. please let me know if I should bring this to PMs if this does not belong here.. much thanks!

 

[cassowary18]

Hello everyone, I think you guys hear this a lot but, I am a total newbie that wants to start learning about investments and invest in something, instead of letting my money rot in the bank with low interest rates..

I am mid 20s with a low income, but I have saved up a bit of money and I have about 10-20k to invest in, looking to see how it will turn out in 10 years time or maybe longer

I have read a few threads and some dollarsense websites and I found out a little about SSB, STI ETF and REITs mainly, I don't think I am a day trader kind of person so I think I'll invest a lump sum and hold, I can also put in about $500 monthly for investments in addition to the lump sum.

What is everyone's thoughts and where should I begin with? I really appreciated any help given.. please let me know if I should bring this to PMs if this does not belong here.. much thanks!

Welcome aboard!

First things first, do you have your existing needs settled? That means paying off any high interest debts, having 6 months of expenses in an emergency fund (stored in a high interest savings account or SSB), and getting the right insurance coverage (at minimum, hospitalization coverage, disability income insurance, and if you have dependents, term life insurance).

Afterwards you can start looking into investing in ETFs. Here we suggest a mix of local stock ETF (STI ETF, either ES3 or G3B), global stock ETF (IWDA or VWRA), and local bond ETF (MBH or A35).

For more information you can read Shiny Things ebook, Rich By Retirement.

All the best!

 

[Meowtiko]

Welcome aboard!

First things first, do you have your existing needs settled? That means paying off any high interest debts, having 6 months of expenses in an emergency fund (stored in a high interest savings account or SSB), and getting the right insurance coverage (at minimum, hospitalization coverage, disability income insurance, and if you have dependents, term life insurance).

Afterwards you can start looking into investing in ETFs. Here we suggest a mix of local stock ETF (STI ETF, either ES3 or G3B), global stock ETF (IWDA or VWRA), and local bond ETF (MBH or A35).

For more information you can read Shiny Things ebook, Rich By Retirement.

All the best!

Yes I have set aside emergency funds in a savings account, and currently have no debts to repay.

I have also read up a little about STI ETF, but not much about global ETF or local bonds yet, I was suggested to invest in some STI ETF and skip on SSB for now due to low int rates, I plan to diversify my portfolio in the near future but have no idea how to go about doing that right now.

I will read up on the the ebook, thanks for the advices!

 

[doody_]

Ah, yeah, you’re right. This would mean you’re effectively paying a decent amount for the privilege of keeping your holdings at Stanchart, though?

It could be a break even if consolidating at SCB gives you priority status and hence no min commission. Else, most brokers will charge a min of $18 per trade. No way to trade SG stocks on IB for SG citizens.

 

[darklighter]

(*) CPF "Special Account shielding" could potentially involve shielding OA dollars, too, if you plan a cash top up into your RA.

i've seen shielding being mentioned here and there in the many pages over at CPF thread. Could i trouble you to explain what it entails?

Really curious

 

[BBCWatcher]

No way to trade SG stocks on IB for SG citizens.

IB’s policy has nothing to do with citizenship. It’s based on residence.

i've seen shielding being mentioned here and there in the many pages over at CPF thread. Could i trouble you to explain what it entails?

Sure, it’s a maneuver which involves placing the maximum possible Special Account dollars into a conservative CPF Investment Scheme (SA) investment just prior to one’s 55th birthday via a zero fee platform. The CPF Board then creates the member’s Retirement Account and then funds it primarily from Ordinary Account dollars instead of primarily or exclusively from SA dollars. The member then optionally withdraws any desired OA dollars (and/or transfers some to RA), and finally the member releases the CPF Investment Scheme (SA) dollars — the “shielded” dollars — back to SA. This maneuver means that more dollars are kept in the higher yielding SA. There is a cost of at least one month of lost SA interest to do this.

The member could also raise two shields: one for SA, and another for OA. “Double shielding” members are the ones who make significant cash top ups when their Retirement Accounts are formed. They do this when they feel that 2.5% interest earning OA is also attractive.

 

[Thoreldan]

regarding min 6 mths of emergency fund...

does it include the amount meant for monthly dca investment?

e.g.
my monthly expenses is 3.5k, i dca 2k per month
so my 6 months of emergency fund should be
a) 6 x 3.5 =21k or
b) 6 x 5.5 =33k ?

 

[flowerpalms]

regarding min 6 mths of emergency fund...

does it include the amount meant for monthly dca investment?

e.g.
my monthly expenses is 3.5k, i dca 2k per month
so my 6 months of emergency fund should be
a) 6 x 3.5 =21k or
b) 6 x 5.5 =33k ?

Answer is A

Sent from Samsung SM-G973F using GAGT

 

[BBCWatcher]

regarding min 6 mths of emergency fund...
does it include the amount meant for monthly dca investment?

Answer is A

Meaning monthly, dollar cost averaged savings are not included, agreed. However, there's nobody who will stop you from including savings if you wish. Then, per your example, if you have an emergency reserve fund of $33K you'd be able to support either 9 months of household expenses without any savings flow or 6 months with your current savings flow -- or something in between such as 8 months, which includes the first 2 months maintaining your current savings flow followed by 6 months without any savings flow.

It's really up to you. I rather like the "2+X" construction, actually, which means sizing an emergency reserve fund so that it includes 2 months of household expenses with your regular savings flow (since it can be mechanically tough to shut off that savings flow immediately anyway) followed by whatever number of additional months you feel comfortable having as a buffer.

 

[razoreigns]

Thanks ST for your answer. I have a silly follow-up question. In order to move to a 3 fund portfolio as suggested, I would need to sell my REITs and single name equities. However, is it wise to hold onto my single name equities considering I'm facing a paper loss now? Or should I just bite the bullet and take the loss?

A paper loss is a real loss. It's best to look at the stock that you are holding on to - do you have confidence that it will recover? Otherwise, by holding, you are still holding on to a loser and consider the opportunity cost of not switching investment.

 

[razoreigns]

regarding min 6 mths of emergency fund...

does it include the amount meant for monthly dca investment?

e.g.
my monthly expenses is 3.5k, i dca 2k per month
so my 6 months of emergency fund should be
a) 6 x 3.5 =21k or
b) 6 x 5.5 =33k ?

Think about this - when you suddenly get retrenched/ some other significant emergency, without any level of certainty for the future, would you be thinking about DCA? You might, but at the back of your mind, you know that every amount that you put into DCA could help tide you over for an additional X period. I know physiologically I would try to preserve cash until the crisis is over before continuing with DCA. So, even if I catered for an additional 2 months worth of DCA, the cash will probably turn into emergency funds for additional X months of living expense, when the crisis hits. But if you already have a very conservative amount as emergency (someone I know had 3 years worth), then its another story.

 

[deltawing445]

A paper loss is a real loss. It's best to look at the stock that you are holding on to - do you have confidence that it will recover? Otherwise, by holding, you are still holding on to a loser and consider the opportunity cost of not switching investment.

Yea my reits are doing well but my 2 other equities are terrible and are likely not to improve or at least take a long time to recover, so I guess I'll need to bite the bullet on and take the loss.

 

[thisislife]

just pump into ETF sua

 

[polar27]

Stocks:Bonds ratio

Read Shiny things book, which is nicely written BTW.... Wondering if the allocation to bonds 80% stocks 20% bonds for a beginner, 30 y old investor still holds true given bond yields have dwindled currently? Might it be better to go for complete stocks now and rebalance portfolio with addition of bonds when bond yields pick up? Appreciate any feedback. Thanks!

 

[Thoreldan]

Read Shiny things book, which is nicely written BTW.... Wondering if the allocation to bonds 80% stocks 20% for a beginner, 30 y old investor still holds true given bond yields have dwindled currently? Might it be better to go for complete stocks now and rebalance portfolio with addition of bonds when bond yields pick up? Appreciate any feedback. Thanks!

i guess u meant to say 80% stock - 20% bond at age 30?

 

[polar27]

Sorry, yes meant if the 80% stocks 20% bonds for 30y old still hold true now? Don't have a portfolio, so have nothing to rebalance currently Thanks for the advice.