What unit trust to invest in?

[opmi]

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.

The rule may be a good thing indirectly. Means that the profits is locked up and not put at risk.

[ghchua]

The "net amount withdrawn for investments" is one thing. I always don't understand the cost of my stock investment in CPF Investment Account. Companies pay dividends, capital reduction etc but the cost had not been reduced. Which means, technically, you are still sitting on losses if a company did a RTO and paid out most of the proceeds from selling the business!

I have this problem on Eng Wah. After Transcu was injected and most of the proceeds from selling Eng Wah was paid out, my cost is still the previous cost from buying Eng Wah.

Similar for Elite KSB. They have given out so much dividends plus capital reductions but my cost is still 31cts! Like that how to make a profit?

[chialc]

bingo...

anyway, I don't complaint because it's just statistics...

only compliant is everytime when they charge me $10 plus GST...
that really pains me...

Love Compassion

[opmi]

The "net amount withdrawn for investments" is one thing. I always don't understand the cost of my stock investment in CPF Investment Account. Companies pay dividends, capital reduction etc but the cost had not been reduced. Which means, technically, you are still sitting on losses if a company did a RTO and paid out most of the proceeds from selling the business!

I have this problem on Eng Wah. After Transcu was injected and most of the proceeds from selling Eng Wah was paid out, my cost is still the previous cost from buying Eng Wah.

Similar for Elite KSB. They have given out so much dividends plus capital reductions but my cost is still 31cts! Like that how to make a profit?

If I am not wrong, if you sell your 'high cost' shares, your stock limit immediately goes up by the cost. Provided you have balance> that cost in OA. Correct?

[Temperament]

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.

i agree to a certain extend. But What's the average dividend yield for STI ETF since inception 2002-04-17? Is it greater than 2.5%? Not to mention some capital gain if B&H from inception till now.

[Vseeker]

The "net amount withdrawn for investments" is one thing. I always don't understand the cost of my stock investment in CPF Investment Account. Companies pay dividends, capital reduction etc but the cost had not been reduced. Which means, technically, you are still sitting on losses if a company did a RTO and paid out most of the proceeds from selling the business!

I have this problem on Eng Wah. After Transcu was injected and most of the proceeds from selling Eng Wah was paid out, my cost is still the previous cost from buying Eng Wah.

Similar for Elite KSB. They have given out so much dividends plus capital reductions but my cost is still 31cts! Like that how to make a profit?

If I am not wrong, if you sell your 'high cost' shares, your stock limit immediately goes up by the cost. Provided you have balance> that cost in OA. Correct?

OPMI is correct... except when you had huge negative "Net Amt Withdraw..", then Regross OA much smaller than actual OA balance until you sell everything, including ETFs.

Direct Stock limit is = [ (35% * Regross OA ) - Cost of Stock Invmnt ]
so Cost of Stock Invmnt is 3 times more painful !! coz it is deducted ONLY after 35% is apply to Regross OA !!

Example A:
so if you have buy 2000 shrs in Creative at $50 during dotcom days, and kept till now with mkt price @$2.00
==> your Cost of Stk Invmnt is still $100k, while mkt value is closer to $4k for donkey years.

assuming your CPF Regross OA is $300k => then 35% of Regross OA = $105k,
but after deducting the $100k (Hist Cost of Stk Invmnt for 2000 Creative), you're left only $5k for direct stk invmnt !!!
==> if you sell off Creative and recalc ==> your Direct Stk limit become 35% * $204k = $70K ==> buy 2 lots of Creative for $4k, and you'll still have $66k left for other direct stk invmnt

Example B:
you buy 10,000 ABC shrs @$1 each, and ABC give spdiv for 90c pershr => XD, ABC price adjust to $0.10 => your Cost of Invmnt for ABC remains forever at 10,000*$1=$10k but mktvalue now closer to $1k
you buy 10,000 XYZ shrs @$2 each, XYZ do bonus wrts that resulted in XB price adjusting to says $0.20 => your Cost of Invmnt for XYZ remains forever at 10,000*$2=$20k but mktvalue now closer to $2k

IN ALL of the above examples, the ONLY way to reset is SELL off that counter completely,
.if you must retain explosure to it...its better to wait for a recalc before repurchasing it back again..

[ghchua]

If I am not wrong, if you sell your 'high cost' shares, your stock limit immediately goes up by the cost. Provided you have balance> that cost in OA. Correct?

Selling "high cost" shares just to get some stock limit doesn't make sense for a long term investor. My point is that those shares are not supposed to be high cost in the first place as they gave out a lot of cash to shareholders.

[Vseeker]

If I am not wrong, if you sell your 'high cost' shares, your stock limit immediately goes up by the cost. Provided you have balance> that cost in OA. Correct?

Selling "high cost" shares just to get some stock limit doesn't make sense for a long term investor. My point is that those shares are not supposed to be high cost in the first place as they gave out a lot of cash to shareholders.

GH, no offence intended, but it make less sense for you becoz you're spread from A~Z,
but make lots more sense for more concentrated portfolio.
in fact for your case, its impossible to reload coz just that $2 per 1000 shr charge (cap at $25 per counter ??) will be too costly for you, unlike a portfolio with said 5~10 counter - saved by the cap per counter.

However more worthwhile doing such "reloading" only at times of extreme depressed valuations,
I did a full reload only twice in my lifetime: to max-up calculation for my Direct Stk limit
iirc 1st time was post AFC to recollect more TIHs and more recent was late subprime stage to collect lots more HoBee around 30c, HH at sub 10c and a couple others... cheers !

[opmi]

If I am not wrong, if you sell your 'high cost' shares, your stock limit immediately goes up by the cost. Provided you have balance> that cost in OA. Correct?

Selling "high cost" shares just to get some stock limit doesn't make sense for a long term investor. My point is that those shares are not supposed to be high cost in the first place as they gave out a lot of cash to shareholders.

If you want to invest more CPF-OA stock limit, then sell and buy back lor.
At least you can use CPF-OA (from special dividends) that was previously not useable due to the stock limit. It is a workaround.

CPF dont care about corporate actions. They live in a world of their own.

[smallcaps]

If I am not wrong, if you sell your 'high cost' shares, your stock limit immediately goes up by the cost. Provided you have balance> that cost in OA. Correct?

Selling "high cost" shares just to get some stock limit doesn't make sense for a long term investor. My point is that those shares are not supposed to be high cost in the first place as they gave out a lot of cash to shareholders.

If you want to invest more CPF-OA stock limit, then sell and buy back lor.
At least you can use CPF-OA (from special dividends) that was previously not useable due to the stock limit. It is a workaround.

CPF dont care about corporate actions. They live in a world of their own.

I'm not so sure about this but assuming the total market value of the stocks held already far exceeds the 35% limit, wouldn't selling and buying back reduce the total market value of the stocks held?