What unit trust to invest in?

(22-01-2014, 12:46 PM)felixleong Wrote: you are welcomed.
for SA yes, you can buy the sti etf


http://mycpf.cpf.gov.sg/NR/rdonlyres/171.../0/etf.pdf

It's important to read the fine prints.

General Information
1. ETFs are investment funds that are listed and traded in an Exchange. They are designed to track indices of markets and sectors or fixed baskets of stocks.
2. ETFs are traded on the SGX Xtranet. They are bought and sold in the same way shares are bought and sold on SGX Mainboard and Catalist. You can place your orders either through your broker or via your online trading account.
3. For more information about ETFs, please refer to SGX's website at http://www.sgx.com/wps/portal/marketplac...ducts/etfs
4. Currently, these two ETFs are only available under CPFIS-OA.

Opmi-san

Thank you very much!

STIETF
1) No, you cannot use SA funds to buy this

2) (if your SA is below the prevailing minimum sum), your 1st $20k in OA cannot be used, otherwise you can used all 100% of OA to buy the two STI ETFs

3) IA = your CPF Investment A/c
note that when you sell, your CPF Invmnt Bank do NOT auto transfer sale proceeds from your IA back to your CPF OA a/c - unless your IA been inactive for TWO consecutive months.

=> so its better you effect a transfer, confirm balances oledi in CPF O/A, then email or call them to do the recalculation.

4) For those with a huge negative "net amount withdraw for investment", it is only possible to completely invest the 35% stock limit if you do it at one go, before the next cycle of computation kick-in.

BECOZ when regrossing back your OA balance, for recomputing the 35% of OA, CPF Board always take a negative "net amount withdraw for investment" as ZERO ==> so what you already withdraw for direct stock investments DUN get regross back to your OA balances... and they apply the 35% to a lower regross OA balance, before further subtracting out your "Cost of Stock Investment" to give the new balance available for direct stock investment...

I know its confusing... for those of you with a huge negative "net amount withdrawn for investments" (meaning you transfer lots more profits back into CPF, than you had withdrawn out) you will likely to know about this abnormality...actually CPF Board know about this issue, but chosen to leave it this way.

NB: edited to add-in the underline portions...
5) CPF always using historical prices to determine your "Cost of Investments"... no matter after how many years.
so assuming you had $300k in CPF OA, so 35% stock limit is roughly =$100k, and for simplicity, assuming you had buy 100 lots of HiapHoe at $1 before the 2008 crisis.
Even when HiapHoe was trading at $0.10 in late 2008, you can't average down !! your Costs of Investments for that 100 lots of HH is still $100k even though mktvalues is now only $10k.
BUT if you sold off everything, transfer back to CPF and forced a recalculation,
then it will be 35% of a lower OA of around $210k => so new direct stock limit approx. $70k,
which will then allow you to repurchase around 700 lots of HiapHoe at around 10c !!! and imagine if you have kept to today - wunderbar !!!

==> but this move is v. drastic, coz I) transaction costs and ii) time lapse during which market might move in the wrong direction => reverse bungee after you sold off .

Actually for most people, I would like to recommend leaving CPF money alone as FD. FD pays ~1% for a 1 year period while CPF pays 2.5%. You should invest with cash on hand instead.

Even though technically CPF is an lifetime FD, you can withdraw them out as a loan should you need the cash.

CPF regulations is indeed very confusing!!

(22-01-2014, 05:40 PM)Vseeker Wrote: STIETF
1) No, you cannot use SA funds to buy this

2) (if your SA is below the prevailing minimum sum), your 1st $20k in OA cannot be used, otherwise you can used all 100% of OA to buy the two STI ETFs

3) IA = your CPF Investment A/c
note that when you sell, your CPF Invmnt Bank do NOT auto transfer sale proceeds from your IA back to your CPF OA a/c - unless your IA been inactive for TWO consecutive months.

=> so its better you effect a transfer, confirm balances oledi in CPF O/A, then email or call them to do the recalculation.

4) For those with a huge negative "net amount withdraw for investment", it is only possible to completely invest the 35% stock limit if you do it at one go, before the next cycle of computation kick-in.

BECOZ when regrossing back your OA balance, for recomputing the 35% of OA, CPF Board always take a negative "net amount withdraw for investment" as ZERO ==> so what you already withdraw for direct stock investments DUN get regross back to your OA balances... and they apply the 35% to a lower regross OA balance, before further subtracting out your "Cost of Stock Investment" to give the new balance available for direct stock investment...

I know its confusing... for those of you with a huge negative "net amount withdrawn for investments" (meaning you transfer lots more profits back into CPF, than you had withdrawn out) you will likely to know about this abnormality...actually CPF Board know about this issue, but chosen to leave it this way.

5) CPF always using historical costs... no matter after how many years.
so assuming you had $300k in CPF OA, so 35% stock limit is roughly =$100k, and for simplicity, assuming you had buy 100 lots of HiapHoe at $1 before the 2008 crisis.
Even when HiapHoe was trading at $0.10 in late 2008, you can't average down !!
BUT if you sold off everything, transfer back to CPF and forced a recalculation,
then it will be 35% of a lower OA of around $210k => so new direct stock limit approx. $70k,
which will then allow you to repurchase around 700 lots of HiapHoe at around 10c !!! and imagine if you have kept to today - wunderbar !!!

==> but this move is v. drastic, coz I) transaction costs and ii) time lapse during which market might move in the wrong direction => reverse bungee after you sold off .

Indeed very confusing! Why don't CPF adopt a tier-based investible on balance amount calculation. Simply and easy to understand while giving those with large amount of CPF monies more flexibility.

To get a proper return for the remaining 65%, the selected investment needs to beat at least ~3.5% (2.5% CPF interest rate + ~1% annual fee) and even so only matches leaving the monies in CPF-OA. I invested in Unit trust in 2009 and the return till 2013 is only 1.8% pa. Really suck given that the equity market was up and away since 2009. Many stocks recovered from heavy sell down since. So I cashed out and are looking for other investments. Only found ETF but unless I believe STI is going to up and away again, I cannot see myself putting monies into it. What good investments are available to me? Now monies sit in the CPF account and earning that 2.5% is the best return I found so far.

Any buddy can share what are still available and attractive out there for that 65%?

(22-01-2014, 05:40 PM)Vseeker Wrote: 4) For those with a huge negative "net amount withdraw for investment", it is only possible to completely invest the 35% stock limit if you do it at one go, before the next cycle of computation kick-in.

Tell me about it! Complained several times to CPF but to no avail. These rules are there to protect the terrible investors but ended up penalising the successful investors...

(22-01-2014, 06:41 PM)HitandRun Wrote:

(22-01-2014, 05:40 PM)Vseeker Wrote: 4) For those with a huge negative "net amount withdraw for investment", it is only possible to completely invest the 35% stock limit if you do it at one go, before the next cycle of computation kick-in.

Tell me about it! Complained several times to CPF but to no avail. These rules are there to protect the terrible investors but ended up penalising the successful investors...

The people who reply to your queries doesn't set the rules. Nothing they can do about it. So what can make CPF review this? Surely there must be some people who know to approach this.

(22-01-2014, 06:26 PM)GPD Wrote: Indeed very confusing! Why don't CPF adopt a tier-based investible on balance amount calculation. Simply and easy to understand while giving those with large amount of CPF monies more flexibility.

My sentiments exactly! My track record for buying unit trusts is also very dismal.....

(22-01-2014, 07:12 PM)GPD Wrote:

(22-01-2014, 06:41 PM)HitandRun Wrote:

(22-01-2014, 05:40 PM)Vseeker Wrote: 4) For those with a huge negative "net amount withdraw for investment", it is only possible to completely invest the 35% stock limit if you do it at one go, before the next cycle of computation kick-in.

Tell me about it! Complained several times to CPF but to no avail. These rules are there to protect the terrible investors but ended up penalising the successful investors...

The people who reply to your queries doesn't set the rules. Nothing they can do about it. So what can make CPF review this? Surely there must be some people who know to approach this.

Actually this is a "happy problem" to have, but as there are probably not a large number of people who have this problem, and even lesser number complain about it, so it's unlikely to get changed anytime soon.