Official Shiny Things thread—Part III

[revhappy]

..
6. There really isn't any advantage to early retirement...

I really appreciate you being so honest and opening up. Thanks. I think this is a state of mind thing. We are not always in the same state of mind. Maybe few days later, some positive things happen and brightens up your day and you wont feel the same. Even when we are working it is the same. Sometimes, work is like hell and we want to quit and give it up. But after sometime you get used to it and it becomes a bit relaxed and then you feel, it is not that bad after all.

I am pretty sure you will figure what is best. Cheers!

 

[JQ2019]

Thank you ShinyThings for your reply.

Based on their fact sheets, their AUMs are IWDA US$25,878 (net assets of fund) US$25,068m (net assets of share class), SWRD US$272m, VHVE US$36m (share class assets) US$740m (total assets), LCWD US$693m.

Using US$100m as the benchmark for a large ETF, all of them satisfy this.

I thought spreads would only impact my P&L and not affect the share price we see on the exchange? I am trying to understand the impact of the TER on the NAV.

Unless, the impact will only be seen over a longer period of time? So, in the long run, say over 10 years, the other ETFs with the lower TER will perform better?

Thanks once again.

I am also wondering:
IWDA 0.20%, $25B AUM, yearly expense $50M
SWRD 0.12%, $300M, yearly expense $0.36M

Why can't a fund with a much bigger size drop their expense?? No competition??

 

[iceblendedchoc]

Yes with two very young kids.

and.... seeing them all the time actually made me a very angry grumpy person considering now that I’m their teacher and disciplinarian. It’s frustrating teaching kids.

now I’m expecting no less from them in academics and because of that turned my wife against me !

now I know why couple fight more during covid. Except this time it’s a 5 years “covid”. Fortunately married a meek wife. Don’t think women can tolerate my once arrogant self assured persona.

sound like my cousin.

 

[ycyc78]

Instead of keeping cash in ibkr, is there any Low risk money market fund or unit trust that you recommend?

You might be jumping to conclusions here. A low TER is important, but the reason I prefer IWDA over those other options is that it's much bigger (has a larger assets under management) and a lot more liquid (so the spread is tighter, and it's easier to trade in and out).

And IWDA's TER is pretty low already (0.2%); chopping an extra 0.05% or 0.08% off that isn't a huge incremental difference, and it can be outweighed by a narrower spread.



Yep, cash counts.

 

[ftpofmpo]

articles online r saying how it might be a lost decade for us stocks; stocks may not rise every year, such as after great depression or japan lost decades

anyone here wary of the snp500?

 

[Kayeesha]

You need to do some calculations, in order to visualize the potential saving.

Let's compare 2 ETFs, X and Y, with a TER of 0.20% and 0.12% respectively.

Saving per year: 0.08%
Saving after X years: 100% - (100%-0.08%)^number-of-year

Saving due to TER at end of:
Year 1: 0.08%
Year 5: 0.40%
Year 10: 0.80%
Year 15: 1.19%
Year 20: 1.59%
Year 30: 2.37%

Make your own judgement whether the above saving is worthwhile.

Bear in mind these figures are the best case scenarios. As ST and other ppl pointed out, smaller ETFs may have a wider spread, which may reduce the saving. I do not know where to find the average historical spread of those ETFs (may need professional tools?), but if you can find them, you can revise the "Saving after X years" formula above to see if it still makes sense. Some even say tracking error matters.

An annual saving of 0.8% would be substantial (when compounded), but that of 0.08% would be small. It depends on your priorities and preferences.

Thanks hwckhs.

I just realised that I seem to be insinuating, though not intentionally, that the TERs may not be genuine. As mentioned in my opening post, the fund with the lower TER should see better share price performance i.e. SWRD, VHVE and LCWD should perform better than IWDA. However, based on their share price since end last year, the funds seem to have the same performance.

In fact, between 23 Mar and 2 Sep this year, IWDA’s share price recorded the highest price increase, marginally edging LCWD. Maybe there are some other teething costs that is eating into the 0.08% p.a. savings. Having said that, LCWD is more than 2 years old and SWRD 1.5 years whilst VHVE is just over a year old. So, I am still wondering why the expected effect of the different TERs are not reflected in the share price of these funds?

Anyway, I think 0.08% p.a. savings on a US$100k investment amount is not a small amount, about US$80 a year, US$1,200 compounded over 10 years.

Also, hopefully the wide spread will not persist but narrow down as the fund size and daily volume continue to grow due to investors shifting funds over for the lower expense ratio?

 

[swan02]

Late 30s

You must have retired very early then. Early 40s?

I'm not worried as long USD remains a reserve currency hence the printing press

articles online r saying how it might be a lost decade for us stocks; stocks may not rise every year, such as after great depression or japan lost decades

anyone here wary of the snp500?

Awesome reminder of my marketing 101. Looks like its clear cut I needed the top two to feel a sense of completion and purpose in life.

Sounds like you've realized money doesn't buy happiness. Sometimes people post the financial freedom pyramid. Since you've already peaked that pyramid, have a look at this pyramid.

https://www.simplypsychology.org/maslow-hierachy-of-needs-min.jpg

It sounds like what you're feeling is missing is meaningful human connection and meaningful work.

 

[highsulphur]

Late 30s

I'm not worried as long USD remains a reserve currency hence the printing press

Awesome reminder of my marketing 101. Looks like its clear cut I needed the top two to feel a sense of completion and purpose in life.

Wow.. Well done

Why not just come back and work on something that would make you happy?

 

[Kayeesha]

I am also wondering:
IWDA 0.20%, $25B AUM, yearly expense $50M
SWRD 0.12%, $300M, yearly expense $0.36M

Why can't a fund with a much bigger size drop their expense?? No competition??

Hi JQ2019, thanks for your interest.

I think IWDA has a first-mover advantage and many are flocking to it because compared to the other funds, their spread is much narrower and is much easier for the investors to get their orders completed or filled.

 

[cassowary18]

articles online r saying how it might be a lost decade for us stocks; stocks may not rise every year, such as after great depression or japan lost decades

anyone here wary of the snp500?

That's the beauty of buying an all-world index fund like VWRA. You get exposure to other markets that experience growth even if US stagnates.

 

[celtosaxon]

Why not just come back and work on something that would make you happy?

I second that... really swan02, consider exploring some kind of employment or side gig, etc... if you read about the FIRE movement you’ll find lots of articles about how early retirement can be a real downer. Famed CNBC financial planner Suze Orman said it even more bluntly - don’t do it.

I was totally pro-FIRE until I read about all these things. I’m even more convinced now after COVID and seeing what it’s like to work from home. Now my plan is to either keep working full time, or at least part time until 60, unless I can find some really engaging hobby to occupy my time.

 

[hwckhs]

I just realised that I seem to be insinuating, though not intentionally, that the TERs may not be genuine. As mentioned in my opening post, the fund with the lower TER should see better share price performance i.e. SWRD, VHVE and LCWD should perform better than IWDA. However, based on their share price since end last year, the funds seem to have the same performance.

IWDA, SWRD and LCWD track the same index - MSCI World, but VHVE tracks a different index - FTSE Developed World. There are subtle differences between the 2 indices, eg. included countries (S.Korea, Poland) and the number of companies (85% vs 90% of the universe). You should not compare the price/performance of VHVE directly with that of the other 3 ETFs, as they will definitely be a bit different.

In fact, between 23 Mar and 2 Sep this year, IWDA’s share price recorded the highest price increase, marginally edging LCWD. Maybe there are some other teething costs that is eating into the 0.08% p.a. savings. Having said that, LCWD is more than 2 years old and SWRD 1.5 years whilst VHVE is just over a year old. So, I am still wondering why the expected effect of the different TERs are not reflected in the share price of these funds?

I think the price difference is mostly attributed to the low volume of SWRD and LCWD.

The chart below compares IWDA, SWRD, LCWD for the last 2 weeks, in hourly interval.

If you see a flat line, it means there was no trade volume for those hours. LCWD has very low volume, sometimes not a single trade in a day. SWRD is better, but you can still see stretches of a few hours without any volume. IWDA has the highest volume, and price moves up and down frequently.

The LSE closes at 4:30pm UK time. When you look at the closing price of these ETFs, the last done price might occur at different times of the day. For example, IWDA at 4:30pm, SWRD at 3:30pm, and LCWD at 1:00pm. The index can move a lot within a single day. So, the price/performance difference you are seeing is likely due to the previous trade (of the start day) and last trade (of the end day) occurring at different times. 0.08% is too small to be reflected in the price, compared to the movements of the index. It is not meaningful to compare the performance of the 3 ETFs for the last 1 year. More meaningful to compare performance of 10 years and above, as the expected TER saving is more significant.

You may want to take some hints from SPY/VOO/IVV:
https://towardsdatascience.com/spy-vs-voo-is-there-any-difference-437defc2c3f3
https://stockanalysis.com/what-is-the-best-sp500-etf/

Do note that all 3 SPY/VOO/IVV are much larger than IWDA. They probably don't have an issue with spread. Ideally, the spread of SWRD and LCWD should be quantified in order to know whether you really save money.

Anyway, the money you lose due to spread only occurs when you buy and sell, but the saving on TER occurs every year. My guess is, if you hold for a very long time (eg. 10, 20yr), you will save. However, if you hold for only a few years, then maybe the saving from TER is negated by the spread. Just my guess.

 

[frugal living]

International bonds

Hello,

May I know what is the latest recommended international bond etf?

I have seen a few options pop up; CORP LN, LQDA. What about VAGU by vanguard? Any thoughts?

Thank you all!

 

[revhappy]

Wow.. Well done

Why not just come back and work on something that would make you happy?

That is a bit of an utopia. For 90% of the population, this is a not choice to do what you like. Lots of stars need to be aligned for you to find your passion, be good at it, then get paid for it also.

Even the most successful and ambitious people, who seem to be really liking what they do, often dont. It is just that they are addicted to the rat race and want to reach the top. For that they willing to pay with their blood and soul.

But that is what life is all about. There is no easy way out. If you look at animals, a lion has to go out and hunt and find food for its survival. Would it be happy to stay in a zoo and be fed well and dont have to do anything? I dont think that is that is the purpose of the lion's life. Its purpose is to go and hunt and find food, even if it is a struggle.

 

[swan02]

Exactly right !

1. Since I've done several professions, I took the opportunity to obtain a small sample. It is enough that approximately 50 percent hate their jobs. But because these jobs are "highly" desired e.g. a doctor, lawyer or an investment banker, management consultants.. they lan lan stayed on it with a common typical sigh "I can't do anything else". Many thought of of an ivy league MBA, and I've always tried to hint to them, don't jump from one cesspit to another.

2. There are enough doctors, lawyers, investment bankers I know who quit their jobs to become yoga instructors, bakers/cooks, hawker (one was good at it and even enjoyed it, but could not adapt to the "shame of being one"-he actually preferred his friends not visit him-, hence returned to his high powered job"). Some remained unemployed for years. One thing in common however, they either come from rich families or just already rich from work.

3. It appears the most satisfied fellas are usually business owners-as long the biz does well. This is one such area that I'm thinking of seriously. 100k put aside, to meet a prediction by a famous deceased astrologer who prewarned me many years back to never to work for others, you will fail he said.

Lets see whether this hocus pocus prescient being is right or very wrong. You will definitely hear from me when things do go well.

4. Mean while I believe in the idea of keep trying out new professions. A long while back, I used to criticize golf as a fun sport, laughing at those who do, what a bore I thought until I tried it and got hooked. What appears to be bad to you may not be, vice versa.

5. To pass the time, I have taken up classical guitar and should be a maestro in 10-15 years time-there a you tube sensation, also aim is to busk in orchard while also singing (another love for it), a retirement plan.

6. Might start a blog after I'm done with this tech lessons. Now I know why these FIRE individuals like setting up blogs, it is just fun as long as its not a job.

7. Might take up grad certs in computing with NUS once I affirm I like computing, and have obtained employment in the industry to see how the going is. Looks like life will start to be very busy soon.

8. I guess an "identity" is very important to any man. I know an individual who lost his job, and lost 10 kg within a month, going mad. He was not even financially poor with skills highly desired, and also has a wife who makes good money. His wife lamented and confused over why. I think now I know clearly why.

I guess its the shame of not being a provider. I have almost forgotten the satisfaction of being a provider and being proud of myself. When you meet up people and you can proudly tell them u are this or that, rather than I'm unemployed or retired. You get tired really quickly.

Conversations do not get as interesting as it used to-maybe I've run out of stories since life now is all about being cooped up at home and kids and spending way too much time on hwz shiny part 3.

9. Oddly, the wife doesn't suffer any of these ailments, and happily enjoys watching korean dramas along with her obsession of buying stuff online.....

but I do know a former female client, who gave up a high paying strangely no stress job to start at the bottom because she wanted a challenge-a big one-but again, she is already rich. I guess we can't always generalise.

That is a bit of an utopia. For 90% of the population, this is a not choice to do what you like. Lots of stars need to be aligned for you to find your passion, be good at it, then get paid for it also.

Even the most successful and ambitious people, who seem to be really liking what they do, often dont. It is just that they are addicted to the rat race and want to reach the top. For that they willing to pay with their blood and soul.

But that is what life is all about. There is no easy way out. If you look at animals, a lion has to go out and hunt and find food for its survival. Would it be happy to stay in a zoo and be fed well and dont have to do anything? I dont think that is that is the purpose of the lion's life. Its purpose is to go and hunt and find food, even if it is a struggle.

 

[Listopad]

from your posts @swan02, it boils down to fear of $ not enough to last this retirement with 2 young dependents. it then manifest itself, creating frustration, as deep down in you, you somewhat knows its going to be a very very tight retirement and likely not being able to provide your family comfortably without making certain compromises. With such a low eq % allocation for a young retiree with dependents, is really not a good idea.

you have not planned for retirement properly, be it $ terms and on emotional engagement as well. i wouldn't use that to conclude there is not much benefits to early retirement ....

 

[chrisloh65]

If anybody claimed to be "retired" but still worry that money is not enough to last his/her retirement, then obviously the person is not in a position to really "retire" yet, just that he/she has jumped the gun too early and is now suffering from "wrong decision" syndrome.

from your posts @swan02, it boils down to fear of $ not enough to last this retirement with 2 young dependents. it then manifest itself, creating frustration, as deep down in you, you somewhat knows its going to be a very very tight retirement and likely not being able to provide your family comfortably without making certain compromises. With such a low eq % allocation for a young retiree with dependents, is really not a good idea.

you have not planned for retirement properly, be it $ terms and on emotional engagement as well. i wouldn't use that to conclude there is not much benefits to early retirement ....

 

[swan02]

U r somewhat right. Back then I believed I was prepared. I think it’s impossible to plan emotionally for it till u go through it first hand. No regrets doings so especially when done still young. U can call it testing waters. Plus I was in a highly demanded profession and still have a residency to a country of decent social benefits ie no fear for health and retirement.

alternatively once advised by BBC, the option to max up both myself and wife’s CPF for an everlasting annuity yet confident to last till 65 with leftovers. But the greed in me what more.

It’s good in retirement planning theory, but in practice we are all unique in how we deal with it.

People who have greater than 5m still fear. To some, 2m think they are rich. The best I’ve read for early retirement is to have 3.2 percent SWR set at equity starting 60 percent and rising till 100 percent with little fear of SORR especially after the first 5-10 years. This in theory to last 60 years or more.

What I did not expect was that I was not prepared to take on more risks. So although my SWR is definitely less than 2 percent.

Which in theory is way more than adequate hence I thought was prepared ? ... on top of that I still have my pricey hdb to down grade or rent out rooms and also a large enough inheritance to boot.

Ain’t I not prepared enough ? sure to put a downer to many who aspire to FIRE if that was inadequate.

I know the fear of running out can be fixed over time as long I gradually keep adding to risk maybe over 10 years. The unknown is still dangerous however. I can easily just work in Macdonalds if money was an issue or return to another country of social benefits and relax forever.

So currently I’m not exactly keen to work to provide, but rather keen to find a job I like that I can do for many years no matter how badly I’m paid. Hence this search has been been for many years while still not bearing fruit.

from your posts @

 

[Listopad]

It’s good in retirement planning theory, but in practice we are all unique in how we deal with it.

People who have greater than 5m still fear. To some, 2m think they are rich. The best I’ve read for early retirement is to have 3.2 percent SWR set at equity starting 60 percent and rising till 100 percent with little fear of SORR especially after the first 5-10 years. This in theory to last 60 years or more.

What I did not expect was that I was not prepared to take on more risks. So although my SWR is definitely less than 2 percent.

Which in theory is way more than adequate hence I thought was prepared ? ... on top of that I still have my pricey hdb to down grade or rent out rooms and also a large enough inheritance to boot.

Ain’t I not prepared enough ? sure to put a downer to many who aspire to FIRE if that was inadequate.

Quantum of $1-2m for early retiree in our beautiful singapore will definitely tamper ability to take risks as when the market tanks , the sequence risk impact will be too drastic. I can understand why you find it hard to increase alloc and sleep well despite a low SWR. Quantum of our retirement $ has to be calculated together with our age horizon. Yes retirement bubble burst if one intend to retire EARLY in SG with kids.

And you would feel the stress on children education too, as you know you will not able to afford the extra tuition (hence the stress supervising , ensuring they measure up) and ur wife’s online shopping is likely going to make you tick if it increases. There’s no fun in early retirement , I agree if $ is not enough for you and your family to pursue varied interests (not extravagant by any means) and some life’s pleasures .

 

[Listopad]

@swan02 I am also an early retiree 43, with 2 children. In early 2018, I was only 10% in equities , and been vesting into the markets especially on ‘big drop’ days. I steadily moved into a now 48% equities position. And intend to glide into 60 % equities over 10 years. During big market drop days in Mar - Apr, I was vesting almost DAILY.

I stopped work last November19. Since then it has been the best time of my life. I enrolled in courses that interest me, try different hobbies that I didn’t have time for previously and spend a lot of time reading + exercise! When I retired, I intentionally relax things abit with my kids and simply enjoy TIME with them (so that my presence at home will be FUN memories and not a dread). A big part of fulfillment comes from volunteering ! I went out there , served in a community, get to know many more people. My social interactions with people from all walks of life increased a lot more and my perspectives widen as a result.

I check my portfolio daily, read finance blogs etc as it interest me , and keeps me vested. When you read a lot of fear milling in the blogs (or on this forum haha) , it’s often the time to vest again. That’s how I manage my fear to increase my eq alloc....

Hope this helps or able to give you any idea to explore .