To invest in US stock that attracts dividend tax of 30 percent and/or 40 percent estate duty tax OR invest in safe heaven Singapore stocks

[RedsYWNA]

I have used VUAA for my recurring investments, but recently I saw an article that touts the benefits of SPYL.

Has anyone looked at SPYL, vs VUAA/CSPX?

 

[HMAN]

diversify the portfolio, don't go 100% in dividend stocks in a single market.

 

[limster]

As I've said before, there are many ways to reach FI, pls DYODD and choose your strategy. Unlike some, I don't believe that there is only one way to invest. While there are things to learn from DW's and AK's portfolio, doesn't mean I have to follow their stock choices 100%. But at least they are willing to share their for others to learn.

If there was only 1 way to invest, then 90%+ of the Financial Sector is redundant.

 

[BBCWatcher]

I have used VUAA for my recurring investments, but recently I saw an article that touts the benefits of SPYL.
Has anyone looked at SPYL, vs VUAA/CSPX?

SPYL is a new Irish domiciled/London traded U.S. S&P 500 stock index fund. I'm not a big fan of U.S. S&P 500 stock index funds for general purposes for residents of Singapore. I suggest it's better to choose a global stock index fund such as ISAC or VWRA.

OK, with that caveat out of the way, let's look at these 3 funds: CSPX, VUAA, and SPYL. CSPX and VUAA have expense ratios of 0.07%, while SPYL is at 0.03%. Obviously the lower expense ratio is better, but they're all extremely low.

SPYL allegedly started on October 31, 2023, but I can only find exchange trading data starting on November 2. So let's arbitrarily use that date as a baseline for comparison....

November 2, 2023 (closing prices, US$)

CSPX: $450.05
VUAA: $80.71
SPYL: $10.32

February 14, 2023 (closing prices)

CSPX: $522.34 (+16.06%)
VUAA: $93.68 (+16.07%)
SPYL: $11.98 (+16.09%)

Nothing to get excited about there, and you can't really conclude much yet given such limited data. There just isn't enough "resolution" for an ETF at SPYL's price level over this short period of time. If SPYL closed at $11.97 (1 penny less) on February 14 then it'd be showing as +15.99% instead of +16.09%. The penny has to be rounded up or down on the day's final print, so that 2 to 3 basis point advantage could easily be a phantom.

What I think this does tell you, though, is that a replication strategy (SPYL's approach) with its counterparty risks doesn't seem to help. Someone really has to explain to me slowly and carefully why actual holders of stocks — the entities that have to pay dividend taxes — would strike deals with counterparties that ignore the taxes they're actually paying. It doesn't make any sense. Over this approximately 3 1/2 months with a circa 150 basis point annual dividend payout, we should be seeing about 6 or 7 basis points of purported tax savings showing up in SPYL if replication offered such advantages. But we don't, not yet anyway. Over this period we should see 1 basis point explained by the difference in expense ratios (0.03% v. 0.07%), so that fits.

If you cannot buy fractional shares then SPYL's lower share price is an advantage. VUAA then comes next (lower share price than CSPX). However, Interactive Brokers offers fractional trading for CSPX and VUAA but not yet for SPYL. So this advantage for SPYL actually reverses to a disadvantage if you're using a broker that offers fractional trading for CSPX and VUAA but not for SPYL. Not much of a disadvantage, but a little bit of one.

Anyway, I don't think this really matters. Take your pick of CSPX or VUAA if you want a London listed/Irish domiciled U.S. S&P 500 stock index fund. SPYL doesn't look bad, and the 0.03% expense ratio is nice. But its replication strategy isn't so nice (counterparty risks).

 

[RedsYWNA]

Thanks BBCWatcher for the v detailed explanation!

 

[Soomp!]

u have a very good example here. go calc how much u earned from cspx as compared to if u invest the same capital in your sgx counters. to be fair, u should calc based on your initial sgd capital and the actual sgd u will receive upon selling. my calc may not work for u because maybe different brokers, timeframes, etc. u need to calc them yourself. calculation is the most impt part of financial management.

take note that timing is more impt for reits than that of index etf. dont follow blindly.

It is all because I am trying to ask myself is the withholding tax of 30 percent will be ideal for us holding to US ETF

Second is because the currency conversion which I do not prefer

Thirdly, yes I admit DW and AK investment strategies did entice me to just follow them !

 

[Soomp!]

SPYL is a new Irish domiciled/London traded U.S. S&P 500 stock index fund. I'm not a big fan of U.S. S&P 500 stock index funds for general purposes for residents of Singapore. I suggest it's better to choose a global stock index fund such as ISAC or VWRA.

OK, with that caveat out of the way, let's look at these 3 funds: CSPX, VUAA, and SPYL. CSPX and VUAA have expense ratios of 0.07%, while SPYL is at 0.03%. Obviously the lower expense ratio is better, but they're all extremely low.

SPYL allegedly started on October 31, 2023, but I can only find exchange trading data starting on November 2. So let's arbitrarily use that date as a baseline for comparison....

November 2, 2023 (closing prices, US$)

CSPX: $450.05
VUAA: $80.71
SPYL: $10.32

February 14, 2023 (closing prices)

CSPX: $522.34 (+16.06%)
VUAA: $93.68 (+16.07%)
SPYL: $11.98 (+16.09%)

Nothing to get excited about there, and you can't really conclude much yet given such limited data. There just isn't enough "resolution" for an ETF at SPYL's price level over this short period of time. If SPYL closed at $11.97 (1 penny less) on February 14 then it'd be showing as +15.99% instead of +16.09%. The penny has to be rounded up or down on the day's final print, so that 2 to 3 basis point advantage could easily be a phantom.

What I think this does tell you, though, is that a replication strategy (SPYL's approach) with its counterparty risks doesn't seem to help. Someone really has to explain to me slowly and carefully why actual holders of stocks — the entities that have to pay dividend taxes — would strike deals with counterparties that ignore the taxes they're actually paying. It doesn't make any sense. Over this approximately 3 1/2 months with a circa 150 basis point annual dividend payout, we should be seeing about 6 or 7 basis points of purported tax savings showing up in SPYL if replication offered such advantages. But we don't, not yet anyway. Over this period we should see 1 basis point explained by the difference in expense ratios (0.03% v. 0.07%), so that fits.

If you cannot buy fractional shares then SPYL's lower share price is an advantage. VUAA then comes next (lower share price than CSPX). However, Interactive Brokers offers fractional trading for CSPX and VUAA but not yet for SPYL. So this advantage for SPYL actually reverses to a disadvantage if you're using a broker that offers fractional trading for CSPX and VUAA but not for SPYL. Not much of a disadvantage, but a little bit of one.

Anyway, I don't think this really matters. Take your pick of CSPX or VUAA if you want a London listed/Irish domiciled U.S. S&P 500 stock index fund. SPYL doesn't look bad, and the 0.03% expense ratio is nice. But its replication strategy isn't so nice (counterparty risks).

Thank you!!

 

[Soomp!]

why not invest with the barbell strategy ?
invest half in high growth stocks and other half in income generating assets (dividend stocks)

Hmmm ....I'm now full swing in dividend stocks

Thinking to add more positions or switch back to CSPX

 

[Soomp!]

Why nobody recommend him to buy property. I thought in Singapore, buy property sure huat?

https://forums.hardwarezone.com.sg/...-is-a-good-investment.6998227/#post-151306972

My upline all preach that ....

How can you sell house and said house can't make money....lol !
So my other thread is to cater to this query
If I have doubt in property I won't be able to sell with conviction

 

[DevilPlate]

My upline all preach that ....

How can you sell house and said house can't make money....lol !
So my other thread is to cater to this query
If I have doubt in property I won't be able to sell with conviction

Property is not js for investment lah….it is a shelter.
Anyway investor is rare and scarce now…..

hearsay top agent mainly transact HDBs.

 

[wutawa]

It is all because I am trying to ask myself is the withholding tax of 30 percent will be ideal for us holding to US ETF

Second is because the currency conversion which I do not prefer

to me how much i can earn is more impt then how much i am paying. i dont mind paying more as long as the end result i gain more,

eg. i spend $1k to buy cspx. i paid $20 for fx conversion (hidden) and $10 for expense ratio (hidden). i lost $20 on wht and $50 (hidden) due to lousier fx rate. instead of $500, my net profit is $400.
similarly, i spend $1k to buy mapletree log tr. i paid $5 for base management fee (hidden), $5 for acquisition fee (hidden) and $10 for performance fee (hidden). i get back full amount of $50 div. share price went up so i earned $150 (inclusive of div), my net profit is $130.

avoid being penny wise pound foolish

 

[DevilPlate]

USD seems to be quite strong relatively to all other currencies as well.

So no scare lah.

 

[tangent314]

How do you all overcome the challenges and accept the fact that your SGD will have to be converted to USD

I am actually using London Stock Exchange to invest in CSPX ticker so this actually lower my withholding tax to 15% instead of 30%
After I brought it around a year ago, the price had tank from 380 all the way to 520 which i last seen yesterday

And I been wannabe of DW and AK that I shift my focus back to REITS

Your CSPX strategy outperformed DW and AK. I don't understand why you would want to move. The obvious thing to do would be to continue with the strategy.

 

[yslvlys]

How do you all overcome the challenges and accept the fact that your SGD will have to be converted to USD

I am actually using London Stock Exchange to invest in CSPX ticker so this actually lower my withholding tax to 15% instead of 30%
After I brought it around a year ago, the price had tank from 380 all the way to 520 which i last seen yesterday

And I been wannabe of DW and AK that I shift my focus back to REITS

As of DW last post, I think the increase in his dividends has been more than offset by the decline in market value of his shares over the years. For AK, we dunno cos he never really share his cost of investment.

 

[Soomp!]

Why nobody recommend him to buy property. I thought in Singapore, buy property sure huat?

https://forums.hardwarezone.com.sg/...-is-a-good-investment.6998227/#post-151306972

My upline all preach that ....

How can you sell house and said house can't make money....lol !
So my other thread is to cater to this query
If I have doubt in property I won't be able to sell with

As of DW last post, I think the increase in his dividends has been more than offset by the decline in market value of his shares over the years. For AK, we dunno cos he never really share his cost of investment.

I think around 2 million invested

 

[silentears]

I'm not a big fan of U.S. S&P 500 stock index funds for general purposes for residents of Singapore. I suggest it's better to choose a global stock index fund such as ISAC or VWRA.

Hi BBC, why it is better to choose a global index fund such as ISAC or VWRA for residents of Singapore?

 

[BBCWatcher]

Hi BBC, why it is better to choose a global index fund such as ISAC or VWRA for residents of Singapore?

Better than what? What are you comparing it to? Better than using the money to pay for a pricey cancer treatment that ends up saving your child’s life, for example? Probably not.

What’s the goal? What are you trying to achieve?

 

[silentears]

Better than what? What are you comparing it to? Better than using the money to pay for a pricey cancer treatment that ends up saving your child’s life, for example? Probably not.

What’s the goal? What are you trying to achieve?

Compared to investing in S&P 500 i.e. CSPX / VOO

 

[BBCWatcher]

Compared to investing in S&P 500 i.e. CSPX / VOO

Well, some amount of CSPX (or VOO if you’re a U.S. person) could be appropriate if you’re planning to retire in the United States, in a U.S. dollarized country, or in a country with a local currency firmly pegged to the U.S. dollar. That’s because the S&P 500 stocks (in the aggregate) are probably somewhat more U.S. dollar-oriented in their real business activities than the global index stocks are. Do you plan to retire in any of those countries?

Or, if you have reasonably high confidence the S&P 500 Index stocks will outperform the global index stocks over the period of time you plan to invest, presumably you’d prefer to have a higher return. Do you have such confidence?

 

[CrashWire]

Hi BBC, why it is better to choose a global index fund such as ISAC or VWRA for residents of Singapore?

Compared to investing in S&P 500 i.e. CSPX / VOO

Not BBCW, but there's also the saying that "diversification is the only free lunch in investing". VWRA invests in 3,644 companies versus 503 for CSPX.