Official Shiny Things thread—Part III

[MrHighlander]

Small fund size

Any other ETFs ? UCITS is a plus

sxle 10char

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[hahaman111]

CPF can be consider bonds component or not?

1 more question:

if IWDA's current pe is 18.64, does it mean that we will get 5.36% return annually in the long run for any investment make today?

 

[kram62]

1 more question:

if IWDA's current pe is 18.64, does it mean that we will get 5.36% return annually in the long run for any investment make today?

Why do you think that and how did you come with these numbers?

(no one can predict the future, and pe and expected returns are not directly linked as far as I know)

 

[hahaman111]

Why do you think that and how did you come with these numbers?

(no one can predict the future, and pe and expected returns are not directly linked as far as I know)

based on earning yield. 1 divided by 18.64.

 

[RuiQi_91]

Hello everyone, I was wondering if there is a recommended bank to keep my 6-months emergency funds or if it doesn't matter. I am currently using the POSB IS to purchase both the G3B and A35 and so I was wondering if the POSB multiplier account would be a good choice since it'll let me reap the invest-saver cashback and multiplier bonuses.

I am aware that the multiplier only recognizes the invest-saver for the first 12 months and that the cashback is only applicable up till the 31st of June. I will put the minimum into the invest-saver and the remaining into FSMOne after the 31st of June.

POSB IS Cashback https://www.posb.com.sg/personal/promotion/invest-saver
POSB Multiplier https://www.posb.com.sg/personal/deposits/bank-earn/multiplier

 

[tesarise]

Hello everyone, I was wondering if there is a recommended bank to keep my 6-months emergency funds or if it doesn't matter. I am currently using the POSB IS to purchase both the G3B and A35 and so I was wondering if the POSB multiplier account would be a good choice since it'll let me reap the invest-saver cashback and multiplier bonuses.

I am aware that the multiplier only recognizes the invest-saver for the first 12 months and that the cashback is only applicable up till the 31st of June. I will put the minimum into the invest-saver and the remaining into FSMOne after the 31st of June.

POSB IS Cashback https://www.posb.com.sg/personal/promotion/invest-saver
POSB Multiplier https://www.posb.com.sg/personal/deposits/bank-earn/multiplier

it depends on how much you have and what other criteria of high interest accounts you can hit.
can use this calculator as a base. but if its in the low 5 digits, 0.5% difference between the accounts don't really make a big difference

https://seedly.sg/tools/savings-account-calculator

 

[ftpofmpo]

Hello everyone, I was wondering if there is a recommended bank to keep my 6-months emergency funds or if it doesn't matter. I am currently using the POSB IS to purchase both the G3B and A35 and so I was wondering if the POSB multiplier account would be a good choice since it'll let me reap the invest-saver cashback and multiplier bonuses.

I am aware that the multiplier only recognizes the invest-saver for the first 12 months and that the cashback is only applicable up till the 31st of June. I will put the minimum into the invest-saver and the remaining into FSMOne after the 31st of June.

POSB IS Cashback https://www.posb.com.sg/personal/promotion/invest-saver
POSB Multiplier https://www.posb.com.sg/personal/deposits/bank-earn/multiplier

i think you can separate accounts used for posb IS and emergency reserves, cimb currently offers 3 month fixed at 1.7% as of last month, slightly higher than ssb

 

[BBCWatcher]

i think you can separate accounts used for posb IS and emergency reserves, cimb currently offers 3 month fixed at 1.7% as of last month, slightly higher than ssb

No, CIMB dropped their fixed interest rates.

ICBC’s “Step Up” 12 month fixed deposit is a decent choice since it allows premature withdrawal without too much loss of interest, but in the current interest rate environment I would give serious consideration to this month’s Singapore Savings Bond (to be issued on April 1, 2020). The key difference with SSBs is a 10 year set of interest rate guarantees.

 

[cassowary18]

Hello everyone, I was wondering if there is a recommended bank to keep my 6-months emergency funds or if it doesn't matter. I am currently using the POSB IS to purchase both the G3B and A35 and so I was wondering if the POSB multiplier account would be a good choice since it'll let me reap the invest-saver cashback and multiplier bonuses.

I am aware that the multiplier only recognizes the invest-saver for the first 12 months and that the cashback is only applicable up till the 31st of June. I will put the minimum into the invest-saver and the remaining into FSMOne after the 31st of June.

POSB IS Cashback https://www.posb.com.sg/personal/promotion/invest-saver
POSB Multiplier https://www.posb.com.sg/personal/deposits/bank-earn/multiplier

Do take note that the POSB IS RSP must be started after you've opened the Multiplier account for it to be counted for bonus interest. Since you're currently on POSB IS, you'll need to start a new RSP (possibly on MBH?) or terminate the RSP, wait 6 months and restart.

Nonetheless I think the DBS Multiplier is the best account for me now because I don't spend much on my credit cards to qualify for the other banks' high interest savings account. You might be different.

 

[cfleee]

here’s an excellent summary by cflee, for those who need it https://github.com/cflee/shinythings/blob/master/README.md

I've stopped updating it -- got really boring and repetitive. Now I can just occasionally catch up on the thread for entertainment

I've considered actually writing summaries, but the more interesting questions have their own situational nuances, and His Shininess' book already does all the broad hand-waving type of advice, so not sure what I could add other than just being a digest for occasional readers like me.

In general, other than currency differences, what's the main considerations in terms of profit (to SG investor) to take into account for same stock on different exchange?

For eg. IWDA is listed in both AEB and LSE

Liquidity/spread, costs of making the trade, availability of the exchange through your favourite broker (though I guess this is typically a cost thing)...

Fund size isn't an issue since it's the same fund, but sometimes funds will delist (is that the right term?) from exchanges where there's not much interest.

assuming there are 2 funds each in ireland and luxembourg, with the same aum and liquidity, should there be a preference for ireland domiciled funds?

The usual reason for preferring Irish-domiciled ETFs is the lower 15% withholding tax rate on US securities' dividends for them, but not for the Luxembourg-domiciled ETFs that are still at 30%.

The other thing that often comes up is some of the larger Luxembourg-domiciled ETFs are synthetic, so have to look carefully.

 

[BBCWatcher]

The usual reason for preferring Irish-domiciled ETFs is the lower 15% withholding tax rate on US securities' dividends for them, but not for the Luxembourg-domiciled ETFs that are still at 30%.

Luxembourg is also at 15%.

 

[ftpofmpo]

The usual reason for preferring Irish-domiciled ETFs is the lower 15% withholding tax rate on US securities' dividends for them, but not for the Luxembourg-domiciled ETFs that are still at 30%.

The other thing that often comes up is some of the larger Luxembourg-domiciled ETFs are synthetic, so have to look carefully.

according to https://www.bogleheads.org/wiki/Nonresident_alien's_ETF_domicile_decision_table

luxembourg also 15%

 

[tangent314]

The usual reason for preferring Irish-domiciled ETFs is the lower 15% withholding tax rate on US securities' dividends for them, but not for the Luxembourg-domiciled ETFs that are still at 30%.

Luxembourg is also 15%
https://www.irs.gov/pub/irs-utl/Tax_Treaty_Table_1_2019_Feb.pdf

EDIT: (oops, I'm slow)

 

[RuiQi_91]

Do take note that the POSB IS RSP must be started after you've opened the Multiplier account for it to be counted for bonus interest. Since you're currently on POSB IS, you'll need to start a new RSP (possibly on MBH?) or terminate the RSP, wait 6 months and restart.

Nonetheless I think the DBS Multiplier is the best account for me now because I don't spend much on my credit cards to qualify for the other banks' high interest savings account. You might be different.

I started the RSP on Feb 20 and opened the multiplier account on March 1 so I have not made any payments yet. Have I done it wrongly? Should I just go directly to the bank to get help? Sorry I am extremely inexperienced at this.

Also, why do I need to wait 6 months if I already have an RSP but need to start a new one? Why can't I just cancel and re-initiate immediately? Or does the system require u to wait 6 months before resuming the RSP or before signing up for a new one?

 

[cassowary18]

I started the RSP on Feb 20 and opened the multiplier account on March 1 so I have not made any payments yet. Have I done it wrongly? Should I just go directly to the bank to get help? Sorry I am extremely inexperienced at this.

Idk if it's possible. Might have to go and ask.

Also, why do I need to wait 6 months if I already have an RSP but need to start a new one? Why can't I just cancel and re-initiate immediately? Or does the system require u to wait 6 months before resuming the RSP or before signing up for a new one?

Multiplier account rules. Don't understand the logic but that's how it is. Take note that you not only have to cancel the RSP, you have to sell your holdings and wait 6 months.

 

[RuiQi_91]

Idk if it's possible. Might have to go and ask.



Multiplier account rules. Don't understand the logic but that's how it is. Take note that you not only have to cancel the RSP, you have to sell your holdings and wait 6 months.

Will do and thank you for letting me know! I thought that it would be fine as long as the first payment is made after the multiplier account is created.

 

[cfleee]

The most effective way of getting an answer on the internet is not to post a question, but to post a wrong answer

A related question: do synthetic ETFs have the same 'drag' from withholding taxes as physical ETFs?

according to https://www.bogleheads.org/wiki/Nonresident_alien's_ETF_domicile_decision_table

luxembourg also 15%

The table on that page is for investors domiciled in Luxembourg.

In the subsequent "Recommendations explained" section, there is this line:

"ETFs domiciled in Ireland can take advantage of the US/Ireland treaty rate of 15%, but because of a less favourable US treaty ETFs domiciled in Luxembourg suffer 30% tax withholding on dividends from US stocks.[4][5]"

The first reference to a 2019 KPMG document on WHT for Luxembourg investment funds ("UCITS SICAVs and FCPs"): page 13 doesn't list the US, page 22-23 lists US dividends as 30% general WHT rate and no reduced rate, and this is repeated on page 148.

The second reference to a 2017 EY document notes that a US "DTT exists but does not apply to UCIs, on the basis of..." some MOU apparently? I can't seem to find the actual document.

Luxembourg is also 15%
https://www.irs.gov/pub/irs-utl/Tax_Treaty_Table_1_2019_Feb.pdf

EDIT: (oops, I'm slow)

Yeah, this one does suggest 15%, which is really confusing. A plain reading of Article 10 of the 1996 treaty doesn't show any special ETF exclusion as well; I don't think I can accurately interpret whether Article 24 includes or excludes ETFs.

Separately, there is a 2018 blog post that states "Lyxor has confirmed to us that dividends on its US equity fund are paid after 30% withholding tax."

 

[BBCWatcher]

Well, if you're concerned about it, stick with an Irish domiciled fund.

 

[hwckhs]

Well, if you're concerned about it, stick with an Irish domiciled fund.

If one is really interested, he/she can check the annual report of 2 similar funds (one docimiled in Ireland and the other in Luxembourg), to find out the exact tax paid.

 

[smoothtalker]

Can I ask our gurus and Shiny about hedging with warrants.. I.e to reduce downside on long DBS shares. How do I know the amount of warrants to purchase? The implied volatility or effective gearing seem to affect the hedging. Not sure should I buy as per 15 warrants per share.

Is it generally ok to assume hedging with put warrant is a low cost insurance to downside? It appears that some upside is enough to cover the drop in put value over a short time when selling. Or is there a better way to reduce downside when I trade shares? Thankss