Category: invest_gtmp

q[property_income]钱生钱: diverging preferences

Posted on by tiger40490

In economics, property_income is an umbrella term for cash cow income i.e. 钱生钱. It is a subset of passive income and nonwork income.  https://en.wikipedia.org/wiki/Property_income lists 3 common types of property income:

  • RR) rent .. main risk is political, legal, physical risks
  • II) interest (+dividend) .. usually periodic [1].
  • PP) realized profit
  • —-
  • aa) realized rEstate appreciation .. is not property_income IMO. This profit is similar to buy/sell of paintings.

Company profit can become unrealized gain for a small partnership, but in stock market, profit shows up as either dividend payout (or buyback) or stock rally.

[1] 1 in 20 credible stocks have a history of random dividend that is utterly unreliable. In all other stocks, either there’s no expectation of dividends, or management has the responsibility to meet shareholder expectation of non-zero dividend every year.

— I am different from peer investors in my attitudes towards property_income
Many of my U.S. peers favor PP, like a windfall
Many of my Singapore and China peers favor aa over PP (denoted “aa > PP”)
I am different. I favor RR > II > PP

— credit risk .. affects II most, also RR
— market risk .. affects PP most, and also dividends

##[24]ideas:SGD to buy USD assets

Posted on by tiger40490

I feel convinced USD will strengthen within a few years.

Shall I use SGD to buy USD-denominated assets?

— #1 idea: SRS to buy more US ETFs?

How does D07 compoare to S27?

— Convert SGD to USD and place FixD

  • With Street money changer, I needed to pay SGD 12920 to get USD 10k physical cash, then I need to pay SGD 66 (USD 50) to deposit to citi, then USD 3 for a cheque.
  • On BankOfChina mobank, I paid SGD 12985 to receive USD 10k. SmsOtp. No need to wait for cheque clearance.
  • HSBC preferrential rate was no better than BOC

I saved time in addition to saving cost.

Up to 20 Sep 2024, I have “invested” SGD 12985+13002+13002 into USD 30k. I hope the 10Y probability of converting back to SGD is small. I may need to keep track of simple total return when the SGD liquidation amount is comparable to the initial SGD investment. To keep things simple, I will ignore the time value of money. See https://tanbinvest.dreamhosters.com/wp-admin/post.php?post=12668&action=edit

— Syfe flexi USD .. I think when I exit, it will be converted back to SGD

Conclusion: Inferior to UsdFixD in terms of tx cost, and also non-guaranteed

am effectively long LIR

Posted on by tiger40490

So far, I have experienced two short windows of LIR (pre-paid). So far, I see myself as net-long LIR i.e. thriving on rising LIR. However, this 3rd loan tenor will be “indefinite”… the prem financing loan (https://tanbinvest.dreamhosters.com/wp-admin/post.php?post=110&action=edit). Am 90% confident that I’m still long LIR.

— Observation: rising LIR has always accompanied rising DIR, though DIR may rise less than LIR.

— Fact: net creditor to banks… My cash balance always dwarfs my bank loan. At any time I always have enough to pay off my loans.

— Fact: big saver… Most of my adult life (let’s focus on post-2007) I have enjoyed a good brbr. Consequently, during high-LIR times, I have amassed growing cash piles and rode the DIR wave, or suffered from low yield

— Fact: high-LIR environment helps prop up payout rate of my paid-up insurance plans.

— Observation: high LIR may accompany inflation [ erosion of SGD purchasing power ] but LIR and inflation are not well-correlated. Singapore inflation is more correlated with exchange rate not LIR .. a key feature of the Sgp economy and MAS.

##irreversible money wastes

Posted on by tiger40490

See also

J4 this bpost: Anything close to these red buttons are dangerous. In this list, I want to expose unfamiliar but specific and real dangers.

Q: what form of money wasted (5k+) is irreversible?

  • [$=over 10k]
  • [$$=over 50k]
  • [$] enroll in a private college for a semester and quit
  • [$] Sachin breaking 2M notice (legal requirement) -> penalty
  • [$$] oversized compliance breach -> job loss without (100k+) severance, but this 100k is not like 100k taken out from my bank account
  • —- investing
  • [$] borrowing a large sum from a financial lender. U-turn is “permitted” at a prohibitive cost. Might be 20% of the repayment quantum ($500k). Might have a minimum fee exceeding your loan quantum.
  • [$] investing in dubious unregulated securities like land banking, HY/PE, or bccy
  • [$] investing in gold at peak before a 20Y trough
  • [$] buying a deep OTM option
  • [$] F.Fu terminating an RSP commitment pre-maturely, and losing all invested amount.
  • [$$] investing in a large insurance plan with a long prison term, and surrender too early
  • —- buying a real item that’s illiquid
  • medication .. buying expensive medication.. Vendor won’t accept return.
  • wine .. buying some expensive wines (seldom 5k). Once opened, you can’t return it.
  • airticket .. expensive airtickets for the family … usually can get partial refund
  • [$$] car .. As soon as you drive out, the car is second-hand and worth 50% less if you resell it
  • [$$] rEstate .. buy in a haste, without due diligence..

##[23]bank annoyance

Posted on by tiger40490

See also bank customer hotlines

Now I think most banks have some limitations in terms of service quality or convenience. Imperfection is normal. Fixation on “perfection” is unhealthy, unrealistic and breeds anger, frustration,,,

Below annoyances are half-ranked by severity.

— CIMB | server overload .. hopefully rare and /brief/
— SCB | automatic login suspension
Spent too much phone time? Suspension is unpredictable, uncontrollable.

— BOC | FAST | weekend downtime notice not so visible.
— HSBC | delink account | takes too long
Spent too much phone time? Hazard

— CIMB | FAST | scheduling limitations
— Citi | mobile auth too complicated
— HSBC | FAST | downtime unannounced
Also, hotline had limited knowledge of HSBC error code.

— HSBC | PLOC | account creation took 2M
— HSBC | PLOC | int compounding .. small cost to me

cut-loss ^ BnH2BrE #bondMufu

Posted on by tiger40490

k_babysit4exit

No investor can forever avoid cut-loss. Some cut loss too early. Some cut loss too late (me?). Both are less than wise. My BrE criteria is simple, sustainable, modest… but arguably too rigid when I face a decision to cut loss.

— buy-n-hold till we beat riskfree benchmark .. some investors use the riskfree rate as benchmark but it sets an uncomfortable, often insurmountable, high bar.

— buy-n-hold-to-BrE .. my traditional habit in many markets [rEstate, U.S. stocks, individual bonds, ]

However, this habit may not be effective in mufu, partly due to expRatio. A few times I paired up two mufus A/B, then used a $200 profit from A to get rid of the lousy mufu B, releasing myself from my BrE criteria. This  liberates myself from guilt. Fairly Rational if A/B are somewhat “related”… grey area.

Q: Does the asset class have potential to recover despite the exp ratio + currency depreciation?

 

SRS #18%

Posted on by tiger40490

benefit: reduce chargeable income.

— SRS cash balance… can invest in gold, ETF@SGX, a few stocks@SGX … Alternatively, accrual 0.05% per year if not invested.
too much dry powder (like > 2k) .. idle cash earning “no” interest
too little   dry powder (like < 2k) .. s27 may bounce to Poems account

Complications:
* SSB purchase .. amount is immediately deducted from SRS into an invisible earmark account
* SSB redeem .. sale proceeds comes in beginning of the month
* Once you contribute the max, you can’t top up more until next January, but you can redeem any SSB position.

==== tax rule and investment horizon

$15,300/Y max deposit into this account as tax exempt income. Tax saving of more than $2.7k/Y
After 5Y (say 2030) can withdraw as 2030 income, but my tax bracket in 2030 would be the lowest, because first 40k in 2030 is not taxed in Singapore.

Before 2030, During the 5Y lock-in, withdrawal penalty is 5%.

— my marginal tax rate 15% in YA2021, but 18 or 19% in YA2022 i.e. Mar 2022.
Every $1 of chargeable income beyond $120k attracts 18% marginal rate

— zero-coupon bond analogy (by Aaron Lee) as a summary
(Ignoring SRS investment yield) receive a 15% net savings upfront to sacrifice liquidity for X years.

— rules around age 62 i.e. official retirement age
* before 62, withdrawals will incur 5% early withdrawal penalty (no minimum). The 95+5% (the entire 100%) will be considered chargeable income of the withdrawal year
* after 62. No early-withdrawal penalty. 50% of the withdrawal amount goes into assessable income

I spoke to IRAS hotline with 0 minute wait and received the link to official IRAS explanation and FAQ (so much better than IRS system): https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Special-tax-schemes/Supplementary-Retirement-Scheme–SRS-/Tax-on-SRS-withdrawal/

— simple plan: Assuming I still have high salary in the U.S. but not in SG:
1) Lock up SGD10k in 2020 to save $1.5k as immediate cash “payout”. 2) When not working in SG, withdraw $10k (up to 20k/Y) and pay 5% penalty.

If no investment return then the 15%-5%=10% gain would be rather low to compensate for the loss of liquidity (like iPhone lock-up) over the intervening years? This simple plan is good for

  • high-earners near 62, or
  • in my last few years in SG. Why? Within a few years my SG income would drop very low, and the withdrawal would incur $0 IRAS tax. Therefore, I should withdraw and pay the 5% penalty as soon as I leave Singapore (subject to breakeven)

— slightly bigger plan
* before 62 I can withdraw around 20k/Y. I pay 5% early withdrawal penalty. The entire 20k goes into assessable income and hopefully incur no tax.
* after 62 I can withdrawal up to 40k/Y. Half of it will be assessable income to IRAS. 20k chargeable will incur 0 tax

CPF top-up is an alternative, but more severe liquidity constraint
==== investment choices to consider later.

  • SIA engineering?
  • SGX Reits
  • eqMufu in Turkey, Russia, Thailand, China etc
  • “You can, however, buy a SGX-listed ETF that tracks an index of the US stock market… Some do not offer you the option to invest your SRS funds. This includes Tiger Brokers, Moomoo “. FSM disallows SRS invested in USD stocks (including ETFs)

https://thefipharmacist.com/can-i-use-srs-to-buy-us-stocks-and-etfs/ has details on US stocks

Unit trusts dividend? I feel reinvestment is better, as performance is easier to track.– fees by DBS:

  • For stocks/ETF .. only transaction fees. No periodic fees by FSM, CDP or DBS
  • For unit trusts .. only transaction fees 0.82% for online purchase. No periodic fees.
  • for gold?

Warning: DBS SRS snapshot has a display bug — it is unable to remove zero positions of tBill or SSB. I reported to DBS and they called back to understand my complaint.

— 6M tBill .. I invested $3k (debited 9 Jan). I feel OK about it.
No $2 fees. Higher return than SSB.

— SSB parking of SRS balance .. After full contribution near 31Dec, I can leave 5k behind and put most of the SRS balance into SSB.

Redemption has a flat $2 fee. Avoid redeeming within 3M; avoid leaving too much (like 5k) in SRS acct. $1000 * 2.8 ppa/12M = $2.xx/month

====
— SRS account’s two snapshot ..
1) cash snapshot shows liquid cash balance
2) monthly statement snapshot shows all securities.. Consolidated statement under my own name

Monthly statement also shows dividend payment for the past N years.

— record of my DIVA position

  • total cost: $2193.00 .. “subscription” amount as shown on some not all statements
  • upfront: 0.82% i.e $18
  • net amount sent to DIVA: $2175
    • bought price: $2.4216/unit on 2 Feb 2021 .. “NAV” price as shown on statement
    • units bought: 898.17

— record of my stock position .. see also https://tanbinvest.dreamhosters.com/19508/sia-bought-by-srs/

make every dollar work hard4u@@ #SBH

Posted on by tiger40490

See also priorities in stock trading

It is Perfectionist and unrealistic to make every dollar work hard for us. Many experienced investors (few are wise investors and even fewer are real “experts”) stay invested, having very small amount of idle/unproductive/unemployed cash, like 12x monthly expenses. See https://tanbinvest.dreamhosters.com/24728/12x-monthly-expenses/

For decades, I have lots of USD or SGD sitting in bank accounts earning below 0.5% pa. asset%allocation: imprecise snapshot=best shows my cash allocation at around 15%, much higher than equities. Used to be 50%. I have long accepted low return in exchange for “excess liquidity“.

I didn’t complain. I usually complain only when I lose capital or lose liquidity (as defined in liquidity[def]: how I gauge illiquid products) .

* memorable eg: I remember the professional analysis of AllianzIncomeProtector. The annualized return turned out to be very poor. (I think cpfLife may also show a low annualized return, despite the high DYOC.) I probably don’t mind that low return. However, I do mind the horrible liquidity[1].

* memorable eg: Buffett’s IBM “mistake” shows an embarrassing but positive return on this IBM investment. Not spectacular but no disaster either.

I think these are some of the key reasons I don’t see myself as an “aggressive investor”. So not every dollar (sometimes not even half the dollars) in my possession is working hard. When my cash “productivity rate” did hit 90% (i.e. 90% of my spare cash deployed into /productive/ assets), I sometimes had my fingers burned:

  • In 2021 I deployed all my spare cash to FSM bond funds. About 80k is currently stuck.
  • I had a 150k position in the supposedly safe Allianz HY fund. Stuck for years. I lost liquidity and lost capital, but in terms of e2etr [end-to-end total return], probably up to 1 to 5% loss only.
  • I only invested about 40k with Jill, in contrast to 6-figure commitment of other investors. We lost capital.

— If I carry a 250k mtg at 2.5 ppa, but have 250k idle cash, then I would feel the pressure to make the idle cash more productive.

— Jolt: SBH in HDB.. why I can easily save 100k but won’t spend 100k on a new HDB? I wanted the 100k to be more productive, working harder to generate returns.

After Susan’s discussion, I feel 100k invested in a SlightlyBetterHome is different from “excess liquidity” mentioned above. This 100k will be non-productive for decades 🙁 In fact, part of it is cost (reno/fees), rather than investments. The rmSelf tends to neglect the xpSelf.

  • Investments are the focus of the evaluative rmSelf;
  • Those costs were incurred to provide experienced wellbeing of the xpSelf.

PnL calc on FSM #wife

Posted on by tiger40490

This blogpost is focused on mutual funds. Here’s the FSM methodology

  • Sound byte: when you buy, WAC may change, but not (never) when you sell. No FIFO rule.
  • Sound byte: methodology was presumably designed for buy-once-never-sell, or buy-once-sell-repeatedly.

Before you sell, the WAC [weighted avg cost] was last updated in the previous buy event. From then on, all units are treated as bought at the same cost i.e. the WAC. When you sell 11 units,

  1. units reduce by 11
  2. investment amount reduce by … ? { 11 * sales price } I guess the updated value may approach $0
  3. $ pnL i.e. unrealized PnL is updated to { units * WAC – investment amount }
  4. % pnl = $ pnl / investment amount

$ profit is unrealized profit. (The realized profit is now show in the blotter.)

For stocks, the $10.30 upfront is part of the displayed cost

==== wife’s account end-to-end PnL before my 50th birthday

  1. Total Portfolio Valuation 0
  2. (-) Total Investments SGD299,029.16
  3. (+) Total Withdrawals SGD306,000.56
  4. (+) Total Coupon/Dividend Payout SGD864.60
  5. (=) Profit & Loss SGD7,836

— complete exit plan:

As of Christmas 2023, there is only one unsold fund in the account. Invested 1k (initial valuation) a few years ago….. now valuation dropped to $714. I hope to sell a bit higher, like $720. Sold $735 🙂