Official Shiny Things thread—Part III

[hellvolhardzelinsky]

What's the current best platform for me to invest 1k/month into IWDA?

 

[crystalnox]

I'm eager to know what happens to existing IBKR accounts of Singaporeans held at Interactive Brokers LLC (the US entity). Do they transfer existing accounts to Singapore? I have not received any notification from IBKR on this (am an existing client).

I think the holding entity is important, as there are implications. Estate tax, and to some people, SIPC.

They will gradually shift over, just like how they did when they opened in Australia.

https://ibkr.info/node/2928

 

[hwckhs]

They will gradually shift over, just like how they did when they opened in Australia.

https://ibkr.info/node/2928

Nice. Looking forward to it.

 

[crystalnox]

Nice. Looking forward to it.

Why? We will have no more SIPC coverage after the move..

 

[BBCWatcher]

Do you see any other non-investment-grade issuers in MBH?

Yes. I did a little spot checking (not by any means exhaustive), and I found ISIN SGXZ39048822, a bond issued by CDL Properties Ltd. On Bondsupermart that bond is listed as unrated. SGXZ39048822 represented 0.45% of MBH's total value as of July 7, 2020. I also see ISIN SGXF63876639, issued by Shangri-La Hotel Ltd., that Bondsupermart thinks is unrated. SGXF63876639 represented 1.03% of MBH's value.

What do you think about that Shangri-La bond? The market consensus appears to be that it's pretty junky now. I don't know why it hasn't been kicked to the curb.

 

[hwckhs]

Why? We will have no more SIPC coverage after the move..

I don't like US estate tax, which applies to cash above US$60k and US equities (which I don't have). I use VWRD which generates cash dividends. I have been thinking (probably too much, I know) that if I am incapacitated for an extended period (years) - think dementia and such, the cash portion may accumulate to a point where it becomes estate taxable. I know the chance is small, but I just don't like it. We are not US residents. It is silly to subject our assets to US taxes.

Additionally, having a local entity will likely mean estate procedures can be done locally. Easier for my family to take over.

The new local custodian will be ring-fenced, although not fool-proof and not 100% asset guaranteed. I know SIPC is an explicit insurance which is better, but the custodian is good enough for me.

 

[Sarp0li]

https://www.interactivebrokers.com.sg/en/index.php?f=1590&p=stocks2

$2.5 min, 0.08% for SGD denominated counters.

Do you think it's likely they'll implement FAST/Paynow transfer like some of the roboadvisors we have now? Although the depositing process is already quite fast. lol

 

[Thoreldan]

Do you think it's likely they'll implement FAST/Paynow transfer like some of the roboadvisors we have now? Although the depositing process is already quite fast. lol

depositing to IB is already via FAST, via the assigned Citibank Virtual account.

 

[highsulphur]

Wouldn*********t having SSB also accomplish the same criteria where the coupons r paid into your multiplier ? Just do that 500 bucks deposit Each month over 6 months to make that happen.

DBS is just too expensive unless u r like
Cdp so much

Cash up front is 0.12%

The ladder doesn't work anymore as div doesn't count as investment

 

[BBCWatcher]

I don't like US estate tax, which applies to cash above US$60k and US equities (which I don't have). I use VWRD which generates cash dividends. I have been thinking (probably too much, I know) that if I am incapacitated for an extended period (years) - think dementia and such, the cash portion may accumulate to a point where it becomes estate taxable. I know the chance is small, but I just don't like it. We are not US residents. It is silly to subject our assets to US taxes.

That's quite farfetched! However, there's an easy solution: switch to VWRA.

I'm still researching whether this change has any impact on U.S. estate taxes with respect to the cash at the broker. I simply don't know yet. However, I know SIPC coverage will be lost and GST will apply.

 

[BBCWatcher]

Let me spend a few words about U.S. estate taxes with respect to cash, in any currencies, held at a broker by a non-U.S. person.

Quite clearly if the broker is a U.S. broker, as Interactive Brokers LLC certainly is, then the cash is "U.S. situs." It's treated as a U.S. estate taxable asset, and there is no exclusion in the U.S. tax code as there is for U.S. bank deposits.

So what happens when the U.S. broker creates a foreign (non-U.S.) subsidiary, still owned by the U.S. broker? And the answer is...I cannot hazard a guess yet. It's not clear or obvious to me yet. What concerns me is that the U.S. tax code carves out an explicit estate tax exception for exactly this scenario when the financial institution is acting as a bank. But Interactive Brokers LLC (U.S.) and Interactive Brokers Singapore Pte. Ltd. (subsidiary of Interactive Brokers LLC) are not banks, so...I don't know yet.

Before anyone gets excited about hoarding loads of cash (at 0% interest, with no SIPC coverage) in an Interactive Brokers Singapore Pte. Ltd. account, "stay tuned." Further research required.

 

[beefjerky]

Yes. You're selling at a negative price so you're paying a debit to the other side of the trade.



-7.00 to -3.90 is a very large bid-ask spread; a mid-price order is unlikely to be filled. If you want to get rid of the spread before expiry, you'll just have to accept a less favorable price.

Next time, trade more liquid options instead. Although it might be better for you simply to avoid trading assets that you're obviously unfamiliar with (ie, options).

Also, I'm not sure we're talking about the same GSX. GSX closed at around US$69 yesterday, and you're currently holding onto a 25/30 call credit spread..?

HI at the time of purchase of the bear call spread, the price was around 30. I will try to close it at a higher price. Thanks!

 

[Armwrestler]

hey all , anyone know es3 next dividend is what month and date?

 

[hwckhs]

hey all , anyone know es3 next dividend is what month and date?

It's not yet announced. Based on past distributions, it should be early August or late July.

 

[MrLepak]

Queries on Whole Life Insurance with Early Critical Illness Policy

Hi @Shiny Things,

I am currently faced with tough decisions on buying insurances for my family.

The financial planner we engaged is offering a whole life insurance that is meant to cover for early critical illness. Adding an argument that all term life plans have very expensive early critical illness coverage (as expensive as whole life and not worth spending that for nothing).

I understand that whole life insurance is typically not worth spending on, but there is neither specific argument discussed online nor in the Rich by Retirement book that tackles whole life insurance on early critical illness basis.
I tried to do some calculation with total potential amount spend over 25 years for the whole life insurance (75kSGD) and compound with 7% return annually. It still does not match with the coverage whole life can provide till age 70.
Hence, I am stuck with no strong basis to reject the whole life insurance offer.

Therefore, I will like to seek your advise for questions below.

Is there a real need to cover for early critical illness? If I don't get the offered insurance, does that mean there will be a gap in my coverage?

is there any other arguments / statistics to actually proof that whole life policy for early critical illness coverage is not worth it?

Any point of view that I may have not seen yet?

 

[limster]

Is there a real need to cover for early critical illness? If I don't get the offered insurance, does that mean there will be a gap in my coverage?

Early CI makes no sense to me for the price you are paying over regular CI.

Insurance should be for serious illness. If the early CI becomes more serious and turns into CI, you can claim for regular CI.

If the early CI is minor and doesn't turn into full CI and you are cured quickly. your hospitalisation insurance will pay for hospital stay, then you go back to work.

I also wouldn't go overboard with regular CI coverage.

 

[fuddlebox]

Let me spend a few words about U.S. estate taxes with respect to cash, in any currencies, held at a broker by a non-U.S. person.

Quite clearly if the broker is a U.S. broker, as Interactive Brokers LLC certainly is, then the cash is "U.S. situs." It's treated as a U.S. estate taxable asset, and there is no exclusion in the U.S. tax code as there is for U.S. bank deposits.

So what happens when the U.S. broker creates a foreign (non-U.S.) subsidiary, still owned by the U.S. broker? And the answer is...I cannot hazard a guess yet. It's not clear or obvious to me yet. What concerns me is that the U.S. tax code carves out an explicit estate tax exception for exactly this scenario when the financial institution is acting as a bank. But Interactive Brokers LLC (U.S.) and Interactive Brokers Singapore Pte. Ltd. (subsidiary of Interactive Brokers LLC) are not banks, so...I don't know yet.

Before anyone gets excited about hoarding loads of cash (at 0% interest, with no SIPC coverage) in an Interactive Brokers Singapore Pte. Ltd. account, "stay tuned." Further research required.

Hi BBC

Was wondering if gst would be applicable to foreign stock purchases if IB Singapore does happen? So like now we don’t pay gst to buy IWDA, but will this change in future? Or is it only applicable to SGX stocks?

 

[Shiny Things]

IBKR opens SG office!

Would this be the recommended broker now?

So this is excellent news. For anyone who missed it: Interactive Brokers has announced that they've launched a Singapore office, and possibly (it's not clear yet) that they might be lifting their self-imposed ban on Singaporean residents buying Singaporean stocks.

If they do the latter, then IBKR would absolutely become my broker of choice. We don't know for sure yet, and I'm waiting for someone to confirm or deny it.

Anyone who was saying "oh I don't want to use IBKR, I want to have a local office that I can show up to and yell at people"... time to put your money where your mouth is!

I cannot say enough good things about The FT on this occasion. They started reporting on Wirecard’s frauds in 2015, and they kept coming back to it. From all indications it’s a terrific accomplishment in enterprise investigatory journalism. Congratulations to the reporters, researchers, forensic accountants, and others who brought these frauds to light, despite BaFin’s vigorous efforts to bury them.

Yeah, the FT has always been very good at this sort of thing, especially since they launched Alphaville back in '07 or '08. And the Alphaville and FT diaspora is doing some superb work too; keep an eye on them.

I need some help closing out of an option position. I bought a bear call spread on GSX, sold the 25 Call and bought the 30 Call and had a credit of 3.26

However when I am trying to close out the position now, by selling the bear call spread, they are showing me a credit of -7.00 to -3.9 on IB. I tried inputting a price in the middle but it doesn't get filled.

My two questions are, why is it a credit? Is this just the way it is reflected but actually a debit? Second is, if I am unable to close out the position, should I exercise the option then sell the stock?

1) The price of the call spread is negative (you'd receive if you bought it). Because you're selling the spread, you'll end up paying, yes.

2) I think you posted this in the middle of the night US time—were you entering these orders during a time when the markets were closed?

Anyway, yeah, given where the underlying is: if this is a short-dated trade I doubt you're going to get out of this for anything less than the full five dollars. You might as well just run it to expiry and hope that GSX abruptly gets cut in half so you get bailed out.

What's tech etf do you guys buy into?

If you must: IUIT LN, surely. But yeah, the people upthread saying "just buy an MSCI World ETF!" aren't wrong.

Hi @Shiny Things,
[.]
I understand that whole life insurance is typically not worth spending on, but there is neither specific argument discussed online nor in the Rich by Retirement book that tackles whole life insurance on early critical illness basis.
[...]Is there a real need to cover for early critical illness? If I don't get the offered insurance, does that mean there will be a gap in my coverage?

It's still bad—in fact it's worse.

To your first question, there's no real need to pay an insurance company for coverage for early-CI. Hospital coverage will pay for your healthcare costs; and having a good emergency fund will keep you covered if you have to take some leave without pay from your job.

Early CI coverage is entirely unnecessary, but insurance companies love it, because they can charge a huge markup over their actual costs (and the actual risk of them having to pay out).

 

[Kaypohji]

With ECI insurance it will be better isn’t it? So don’t need to touch on the emergency funds... can leave it for non illness related emergency... and the eci sum assured can be used for early treatments too while ur emergency funds cover ur daily expenses

 

[Shiny Things]

With ECI insurance it will be better isn’t it?

It isn't. You pay more for critical illness coverage, and even more for the "early" part. The insurance company loves to rip you off on these; they charge too much.