Thanks. This is fine if we can still manage our investments every year until aged 85+ . Some of us may lose the mental capacity to do this or require assisted living.when we are older. In such a scenario , CPF Life provides greater assurance.of income.
Hi Guan, great content. I'm actually also in a similar frame of mind as my parents will be faced with what to do with their SA monies in excess of FRS. Would like to hear your opinion on a few things considering a retiree's risks: 1. At withdrawal phase, sequence of returns really becomes a primary concern. Esp this year market looks somewhat shaky. A) if we treat the CPF OA as the cash bucket to withdraw monies into (so that in poor markets, parents will not withdraw by selling but just take from the CPF OA cash bucket earning 2.5%), what will the financials outcomes be in comparison with what you modelled currently? 2) given the current market situation, do you recommend dca of the amounts that are no longer in SA into the market if they are still in CPF OA? 3) have you assessed poems Vs endowus in terms of user friendliness? Parents aren't very savvy and I'm wondering as they age will the costs from endowus justify the relative ease of withdrawals?
Thanks for watching the video and for these excellent questions! Let me share my thoughts - as always, this isn't financial advice, just my perspective on the pros and cons. 1. You're spot on about the importance of sequence of returns in retirement. Timing the market is notoriously difficult, so mitigating this risk is key. DCA (Dollar-Cost Averaging) over a few years is one way to approach this. While studies generally suggest that lump-sum investing yields higher average returns than DCA, the latter can be psychologically beneficial and reduce the risk of investing a large sum at a market peak. Another strategy to consider is incorporating a value or momentum tilt into the investment portfolio. This involves selecting funds that invest in "cheaper" stocks (value) or stocks with strong upward price trends (momentum) compared to a broad market index. Endowus offers funds from Dimensional that have a value tilt, which could be an interesting option. However, it's worth noting that these funds often come with slightly higher fees. 1a. So if one were to put it in OA and not invest it, the out come would be very different in the model, I projected 6% vs 2.5% in OA. So the ending "bequest" amount would be significantly lower. But potentially we still can get the same distributions a year. 2. Whether to DCA depends heavily on individual risk appetite. If I was more risk-averse and believed the market is somewhat overvalued, DCAing could be a prudent approach. 3. In terms of user-friendliness, Endowus is significantly easier to navigate than POEMS. Their user interface is clean, intuitive, and much simpler to use, especially for those less familiar with investment platforms. So, if I'm assisting, my parents with their investments, it might be worthwhile to accept the slightly higher fees of Endowus for the sake of ease of use and reduced potential for errors due to confusion. The peace of mind and simplified experience could be well worth the extra cost.
Growing your money is important but IMO our generation (1970 and after) are more prone to chronic illnesses (mainly due to stress and also the lifestyle/diet we adopted). Its tougher to boost your overall health compared to boosting your financial health, take my word for it. With strategic planning on where to invest, earning money can easily be done with just a few clicks. For health, it's all about lifestyle changes, and staying consistent and disciplined. The experience of having ongoing medical treatments or feeling discomfort in your body and joints can take away the joy of spending money. A significant opportunity cost of poor health lies in the diminishing happiness that money can bring. Watch your health and Work on it before it is too late. God bless you.
Hi very useful topic. Is it correct to say that Endowus and poems total distribution is higher due to higher rate though this rate is pegged to how global equity market is performing. Risk is a bear cycle can wipe of some of capital during the course of investment period?
Thanks for watching! Yes that is right, by investing in the fund that indexes on MSCI, it is subjected to the equity market's performance, so yes the risk of a bear market is real and the capital is subjected to drawdown.
Hi Guan, thanks for sharing. In your example let’s said the poems one, the additional Death Bequest is the the amount of $213k you out in and grow from 55 to 85? And assuming you withdraw 18.8 to 21 k per year, otherwise the amount can grow even bigger? This principal amount of 213k will not be protected if market take a nose dive, correct? Thanks once again🥂
Hi Neo, thanks for watching and the questions! Yes the death bequest amount is the $213k invested in the market with at $18-21k withdrawn per year after 65, if no withdrawal happens it will be a larger amount. But yes this 213k is not protected at all and is subjected to market fluctuations, so might go down substantially.
Thanks. This is fine if we can still manage our investments every year until aged 85+ . Some of us may lose the mental capacity to do this or require assisted living.when we are older. In such a scenario , CPF Life provides greater assurance.of income.
Thanks for watching and your comment. Yeah you might be right here, hopefully I’ll have family support then to help manage this at that time!
Regarding the Fees, where did you find the info on POEMS? Bokerage Fee and Management Fee. Thanks
Hi Guan, great content. I'm actually also in a similar frame of mind as my parents will be faced with what to do with their SA monies in excess of FRS. Would like to hear your opinion on a few things considering a retiree's risks:
1. At withdrawal phase, sequence of returns really becomes a primary concern. Esp this year market looks somewhat shaky.
A) if we treat the CPF OA as the cash bucket to withdraw monies into (so that in poor markets, parents will not withdraw by selling but just take from the CPF OA cash bucket earning 2.5%), what will the financials outcomes be in comparison with what you modelled currently?
2) given the current market situation, do you recommend dca of the amounts that are no longer in SA into the market if they are still in CPF OA?
3) have you assessed poems Vs endowus in terms of user friendliness? Parents aren't very savvy and I'm wondering as they age will the costs from endowus justify the relative ease of withdrawals?
Thanks for watching the video and for these excellent questions! Let me share my thoughts - as always, this isn't financial advice, just my perspective on the pros and cons.
1. You're spot on about the importance of sequence of returns in retirement. Timing the market is notoriously difficult, so mitigating this risk is key. DCA (Dollar-Cost Averaging) over a few years is one way to approach this. While studies generally suggest that lump-sum investing yields higher average returns than DCA, the latter can be psychologically beneficial and reduce the risk of investing a large sum at a market peak.
Another strategy to consider is incorporating a value or momentum tilt into the investment portfolio. This involves selecting funds that invest in "cheaper" stocks (value) or stocks with strong upward price trends (momentum) compared to a broad market index. Endowus offers funds from Dimensional that have a value tilt, which could be an interesting option. However, it's worth noting that these funds often come with slightly higher fees.
1a. So if one were to put it in OA and not invest it, the out come would be very different in the model, I projected 6% vs 2.5% in OA. So the ending "bequest" amount would be significantly lower. But potentially we still can get the same distributions a year.
2. Whether to DCA depends heavily on individual risk appetite. If I was more risk-averse and believed the market is somewhat overvalued, DCAing could be a prudent approach.
3. In terms of user-friendliness, Endowus is significantly easier to navigate than POEMS. Their user interface is clean, intuitive, and much simpler to use, especially for those less familiar with investment platforms. So, if I'm assisting, my parents with their investments, it might be worthwhile to accept the slightly higher fees of Endowus for the sake of ease of use and reduced potential for errors due to confusion. The peace of mind and simplified experience could be well worth the extra cost.
Growing your money is important but IMO our generation (1970 and after) are more prone to chronic illnesses (mainly due to stress and also the lifestyle/diet we adopted). Its tougher to boost your overall health compared to boosting your financial health, take my word for it. With strategic planning on where to invest, earning money can easily be done with just a few clicks.
For health, it's all about lifestyle changes, and staying consistent and disciplined. The experience of having ongoing medical treatments or feeling discomfort in your body and joints can take away the joy of spending money. A significant opportunity cost of poor health lies in the diminishing happiness that money can bring. Watch your health and Work on it before it is too late. God bless you.
Hi very useful topic. Is it correct to say that Endowus and poems total distribution is higher due to higher rate though this rate is pegged to how global equity market is performing. Risk is a bear cycle can wipe of some of capital during the course of investment period?
Thanks for watching! Yes that is right, by investing in the fund that indexes on MSCI, it is subjected to the equity market's performance, so yes the risk of a bear market is real and the capital is subjected to drawdown.
Hi Guan, thanks for sharing. In your example let’s said the poems one, the additional Death Bequest is the the amount of $213k you out in and grow from 55 to 85? And assuming you withdraw 18.8 to 21 k per year, otherwise the amount can grow even bigger? This principal amount of 213k will not be protected if market take a nose dive, correct? Thanks once again🥂
Hi Neo, thanks for watching and the questions! Yes the death bequest amount is the $213k invested in the market with at $18-21k withdrawn per year after 65, if no withdrawal happens it will be a larger amount. But yes this 213k is not protected at all and is subjected to market fluctuations, so might go down substantially.
Hi guan, I am unable to find this etf under poems. is it this: amundi msci world ii units etf? Thks.
Hi YTC, great question, you can find the Amundi MSCI world fund under the Unit Trust section and not under ETF section
@GuanMinMax is this the one u are referring to -Amundi Index MSCI World A12S (C) SGD
Yes that is correct!
Are poems abd Endowus returns guaranteed?
Hey thanks for watching. No the returns are not guaranteed and the capital is at risk. It will fluctuate depending on the fund performance
Just all in bitcoin la. All of this is a waste of time
😂
Sure if you like to see your money go up and down 20% every day. Not good for your heart if you are 55 years above