Sunday, July 4, 2021

My review of Moneyowl and Endowus

 [This post is not sponsored and i have accounts with them. The values stated are as per date of post]

The arrival of roboadvisors is a god-send and thanks to them, Singaporeans will be able to build their wealth quicker due to the lower fees. They have laid bare the ridiculous fee structure that have plaqued the wealth management industry. 

Imagine if your traditional finanical advisor sold you the fund above and you invested $100,000. You would have already paid fees of $5,000 at point of purchase due to the initial sales charge of 5%. Additionally, you will be paying $1700 every year due to the management fee, part of this fee going back to the traditional financial advisor as trailer fees and part of it being fund-level fees being paid to the asset managers. This is ridiculous and indeed passive income for the advisor.

Instead, if you had invested this $100,000 with a roboadvisor, you will be paying zero initial sales charge and very likely less than $1700 every year depending on the platform or access fee or the trailer fee rebates given by the roboadvisor. 

The reduction in fees is not a free lunch as the roboadvisors basically does not have much of an advisory, human touch, unlike a traditional financial advisor and they do not give advice on insurances for a complete financial review. ( MoneyOwl has a insurance and will writing on its platform but still no human element).If your traditional financial advisor has been doing a comprehensive financial review, including your insurances and mentoring you well along the away, helping you with medical claims and watching out for you, then please let him earn. Otherwise, fire him and go with the robos.

I am currently using Endowus and Moneyowl as i haven't found a traditional financial advisor who is worth the fees.  I have started with Endowus first as the founders values resonated with me  regarding transparency of fees and to help the public gain access with lower fees. It is quite challenging to compare roboadvisors as they seek to differentiate themselves with different products and each have their plus (negative)points. After reading up more on Moneyowl, i do see how one can further reduce fees at this point in time and i have redeemed all my investment using Cash out of Endowus and investing them into Moneyowl, leaving only my SRS in Endowus.

Both Moneyowl and Endowus are the only roboadvisors to have dimensional funds and these funds have no trailer fee rebates since their fund level fees are already so low. If one were to compare the universe of unit trust funds held by them, dimensional funds have the lowest fund-level-fees and if i were to get bang for the buck, i might as well invest in these which can't be found outside easily. These dimensional funds are unit trust and i could see similarities with popular ETFs such as IWDA and EIMI in terms of underlying composition of companies.  Specifically, IWDA( fund level fees 0.2%pa)  versus dimensional global core equity fund (fund level fees 0.26%pa) and EIMI (fund level fees 0.18%pa) versus dimensional emerging large cap core equity fund (0.36%pa).

Top Sector Weighting

Top Country weighting

Top Company weighting

Top Country weighting

Top Sector weighting

Top company weighting

From above, they are broadly similar in their country and sector weighting with many similar companies in their top 10. In terms of number of underlying holdings:

Dimensional Core equity fund ( fees 0.26%pa) : 7724


Dimensional Emerging Markets large cap core equity fund ( 0.36%pa): 1147 ( this may seem as though it has less companies than EIMI but take note that one of its holding is iShares MSCI India, so the number of holdings understate the true number of companies it has exposure to).

EIMI (0.18%pa): 2998

All the above are irish-domiciled and similar taxes prevail.

Now, a likely question would be: Why would i not want to DIY completely by buying the ETFs  instead of the UT since the fees for the ETFs are cheaper? I see some value in paying more in fund level fees if the number of underlying companies is more ( whether it mutes performance in boom times or crisis is another story). In addition, the UTs are priced in SGD while the ETFs are priced in USD. Rebalancing, investing and redeeming the UTs are less psychologically taxing as we do not have to deal with changing currencies and depending on the broker one uses, currency transaction cost can be expensive. Also, one would not be able to use their SRS to buy the ETFs in the first place. SRS is allowed for the UTs but not for ETFs, so for SRS investing its a no brainer as ETF is not an alternative.

Now the next question would be, how about the additional access fees( also known as platform fees) which are on top of the fund level fees paid to the robos, wouldnt these added layer of  fees now make it much more expensive than to DIY with ETFs? ( We cant DIY with UTs without the roboadvisors or approved financial advisor) This is a question i have been struggling with for many nights for my cash investment and my short answer is, it is better to DIY with etfs for the cash portion if one has the time and is disciplined. Imagine an investment of $100,000, one will be paying a yearly access fee of $600 to the robos (0.6%pa). Don't get me wrong, the robos have to be paid as they provide a service such as automatic rebalancing and access to such cheap UTs but it is too high for essentially something passively held by them without any further work. For me, due to my intense work and family schedule, i am still with the robo advisors for my cash and as usual still having thoughts of changing to DIY with ETFs frequently due to it being so much cheaper. 

Why did i transfer my cash to Moneyowl funds?

Moneyowl has a lower barrier to enjoy lower fees(now till mid 2022, with NTUC60 promo code, there is a 10% off the access fees). Less than 100K is 0.6%pa fees but above that is 0.5%pa. This is for  SRS and CASH. The SRS and CASH can be pooled together for the AUM so its easier to reach $100k to enjoy the 0.5%pa access fee for cash. This is tiered, meaning if one were to invest 110k, the whole amount is charged 0.5%pa and not 0.6%pa for first $100k and 0.5%pa for next 10k.

For Endowus, it is also similarly tiered like Moneyowl.  Less than 200K is 0.6%pa fees but above 200k  is 0.5%pa. Above $1 million, the access fees is 0.35% pa. This is for CASH. For SRS, it is 0.4%pa for any amount. The SRS and CASH cannot be pooled together for the AUM. They are treated separately for the fees unlike Moneyowl.

As i need to reduce the high fees, the strategy is to leave my SRS in Endowus for the  0.4%pa fees and transfer my CASH into Moneyowl for 0.5% pa fees ( being 0.45%pa fees till mid 2022 due to NTUC60 promo code). If Endowus could give a mid tier between $200,000 to $1 million of  0.4%pa fees, then my CASH would be with them. The thing is, there is no transaction fees for both of robos, so there is no switching cost between them.

In summary, i would suggest Endowus using SRS but for cash i would suggest MoneyOwl , until one hits $1 million in cash assets before switching these to Endowus since one would then enjoy a lower 0.35% pa access fees with Endowus. And i wouldn't bother with anything other than Dimensional Core equity and Dimensional emerging markets funds as their fees are the lowest while future performance is always an uncertainty between any other funds, so why risk it.

DIY ETFs through brokerages is still the best in my opinion if one has that time and psychological bandwidth at this point in time to rebalance and DCA until at least the robos lower their access fees to perhaps 0.2-0.3%pa which will make their 1)auto rebalancing,  2)not needing to convert currency and 3) no transaction cost (brokerages charge about 0.2% per buy and sell transaction) worth it. As these funds are usually held long term say 10 years or longer, 0.72% pa ( 0.6%pa access fees + 0.12%pa higher average fund level fees based on dimensional over said IWDA and EIMI ETFs) based on $100,000 investment will cost $720 extra per year and $7200 extra every 10 years.

With the access fees of 0.6%pa, i would not even consider investing my CPF OA. The dimensional funds performance  have to cross the hurdle rate of 3.41%pa guaranteed (2.5%pa CPF return+ 0.6%pa + 0.31%pa average fund level fees of the two said dimensional funds ) to make it breakeven.  Especially so when CPF OA has many important uses such as housing and education and could serve as  emergency funds.

I really do hope that as the robos get bigger with larger AUM under them, they will lower the access fees to around 0.25% flat like how the popular US robos like Betterment and Wealthfront  charges.

[I am not a financial or tax advisor. There is indeed a use case for the two robo advisors as stated and my referral code is here for endowus and here for moneyowl. For the former, we both get $20 off access fees and for the latter, we both get $20 grabfood credits]

Tuesday, May 15, 2018

About rental car excess insurance - Apex vs Jucy - New Zealand holiday

Rental car insurance is a rip-off. Be careful of excess insurance reduction from rental car companies as the list of exclusions are difficult to interpret OR easily manipulated to fit into their definitions.

We have narrowed down 2 rental car companies that gives real value for money in New Zealand.
Apex car rental and Jucy. These are considered 2nd tier rental companies. 1st tier ones would be Hertz, Avis e.t.c who generally uses very new cars with little mileage but the prices are easily 20-40% more expensive.

Apex and Jucy prices their cars  roughly the same but here is why Apex beats Jucy hands down.

Roof damages

Apex Car Rental (top)
Jucy (bottom)
For full excess reduction insurance, it cost $20 per day for both companies. Apex will cover any roof damages, period. ( standard tncs apply). However, for Jucy, it doesn't cover any roof damages regardless of any circumstance . This was quite shocking to me as Jucy further elaborated that hail and falling of a tree branch, both being quite possible and through no fault by the driver, is not covered.

Claim Administration fee

Jucy also charges NZD 75 bucks per claim, irregardless of having full excess reduction insurance or not, or whether one is at fault or not, while Apex doesn't have such a fee. This fee by Jucy feels very ridiculous to me.

Authorised driver

Apex allows one to add authorised drivers for free while Jucy charges $2 per day, per additional driver. While this cost is not a deal breaker ,do note that the rental insurance is only valid if the driver was added.

Toll and infringement administration fee

Jucy charges NZD$60 for each toll/infringement claim incurred but Apex charges NZD$10 for each toll claim and NZD$25 for each infringement claim.

Sunday, May 13, 2018

Opening an Australian bank account by a Singaporean

I have been getting some queries on my post on opening an Australian bank account. I guess the reason is because the aussie dollars have reached parity with the Sgd lately and people are becoming more interested.
I have kept my Australian account for about 2 years 5 months just purely for holidaying and have not been taxed a single cent on my interest income. I will summarise the way to avoid taxes legally or at least minimise the tax incurred.

1)  Put a non-Australian address ( a.k.a put your Singapore address)

If you put an australian address, maybe because you have an investment property there, the Australian Tax Office (ATO) will deem you a resident and tax your interest. As you are not working there, you have no tax file number ( TFN) and so will leave this field as blank. That's spells disaster!
The bank will, by default, charge you the highest tax of 46.5% on your interest earned.

By putting a Singapore address, your interest income is subjected to 10% tax.

2) Keep the total annual interest income lower than $120

With my National Australia Bank (NAB) earning about 2.5% pa annually, my full interest income will be taxed once the deposits reaches about $4800 ( interest is compounded monthly since interest is credited monthly so the threshold is actually slightly less than $4800) . 

Now, knowing this, i would open in my wife, father, mother, sister, helper, mother-in-law, father-in-law name, friend name, so that i have many accounts to squirrel into to be below the threshold. BUT, one need to be there in person to open. Haha... no free lunch!

3) Open the account in your children's name

The annual interest income threshold for a child is $420, which is deposits less than $16,800 ( the threshold is lower based on the reason i cited above). They still have to be there in person to open.

Anyway, i will gladly pay the 10% anyway if i were to invest in Aussie dollars while waiting for the commodities super cycle since, i will still be getting 2.25% pa NETT interest without the many hoops i have to jump across of local banks and the caps that each have. (UOB one, DBS multiplier, BOC smartsaver, Citibank Maxigain, SCB bonus saver).

Wednesday, April 11, 2018

Are you Return-focused OR Return on Risk Focused?

Taking the opportunity to sell into strength! Please go higher and higher!
Which would you rather pick? The bigger apple may not be better -

Monday, March 19, 2018

My thoughts about the Singapore property market

Everywhere i turn, i can't escape from someone getting a windfall from their enbloc sale. My parents, my secondary school friend, my client, my cousin and the newspapers. And i didn't. Horror of horrors!
The following are taken from SRX.

Private property ( non landed) Sale - above and Rental- below index

HDB Sale- above and Rental-below Index
1) For private property, the price is increasing but the rental is decreasing. Coupled with increasing interest rates, i wonder what is the fuel that will sustain the price increases? Euphoria borne from the spate of enbloc sales? 

2) HDB is following a more logical path, price goes down and rental also go down. And not all HDB dwellers are with a bank loan as they can take HDB loan. Such will be immune to interest rate rises going forward.

3) If HDB rental continues to fall, where is the "floor" to support private property rental rates?

4) I can see on hindsight how property prices continued its appreciation till 2013 as property price increases are coupled with rental increases. ( not to mention low ir). 

Tuesday, December 26, 2017

About Bitcoins, Ethereum and other Altcoins

I feel like i am living in a tulip mania. Admittedly, i am not technologically inclined or maybe i am not as open-minded as i think i am. And it is very very difficult to tell what is real in this time and age. I feel more alone as i get older.
"Human action can be modified to some extent, but human nature cannot be changed. "- Abraham Lincoln.
I want to believe in digital currency but i can't seem to find the answers. People who have spoken to me have been mixing up Block Chain with Bitcoins, Ethereum, Litecoins or other Altcoins and showing me articles about major banks and MAS sanctioning trials on Block Chain instead.

Some questions that needs to be answered.
1) The advantage of digital currency is decentralised, so no one can control it.
But what happens when the digital currency vanishes, who do we turn to or is there insurance like SDIC 50k in singapore? Which country law to apply?
And it seems that it can be controlled or at least corrupted if a group takes over more than 51% of the mining power based on this link

2)The advantage of digitial currency is its limited supply, with Bitcoin purportedly capping the supply at 21 million coins. Miners , earn digital currency by verifying the transactions, so what happens when 21 million coins is reached? No more miners, mean nobody willing to verify anymore since there is electricity bills involved?
I think they will increase the cap when this is reached but then again, it contradicts its original aim which is to stop the disadvantage of money printing by governements.

3)Internet says it saves transaction cost compared with traditional credit card fees or wire fees. But when i see i want to convert into bitcoin or trade, the fees damn high like 5-6% for ATM conversion or 3.99% for some transactions. Is this a marketing lie about the fees involved?

4) Is it impossible to hack these kind of thing to steal? I understand that the information is stored in millions of computers so one cannot change one ledger without no one knowing since it wont tally with the others millions of computers ledger based on BlockChain technology. With a virus that can affect millions of computers at one go like wannacry or God knows what, is this really unhackable? At least for a centralised source, the company or bank can spent billions for security but for millions of computers who many dont or use low grade security, is it really safer?

5) The software is also open source, meaning that anyone can look at it to make sure that it does what it is supposed to. It seems like there is transparency especially with all the negativity about secrecy agendas of the government so it appeals to the masses , BUT shouldnt open source be easier to hack and who has MORE motivation to check the codes, a person who wants to profit OR a person who is civic minded ?

Sunday, November 19, 2017

Some Corporate Bonds and their Yield to Maturity

To me, investing in corporate bonds is easier than investing in equities, because all one needs to care about is not whether the company makes more and more money in the future, but whether the company can make enough money to survive the holding period of the bond. 
However, needing to fork out generally $250k a unit ( except retail ones) adds to the risk. Given that there is little capital appreciation, the greediness to leverage looms large. I really need to give myself a slap in the face if i ever think about it and thank God, i have not levered ...yet.
The fall of Swiber, Marco Polo, krisenergy is a lesson for bondholders. Other than just simply looking at pure numbers, it is imperative to know what kind of assets a company holds. A company holding computers as assets does not give one peace of mind. 
Perpertual securities and preference shares are a very tricky lot and they must be adjusted for by deducting them from equity and adding to liability in the balance sheet.
From the table, generally, the higher the liabilities/equity, the greater the yield to maturity (ytm). The further the maturity of the bond, the greater the yield to maturity.
Heeton seems very "value" from the perspective of it having a lower liabilities/equity than Tuan Sing, Oxley and Aspial but commanding a higher ytm.
(ytm taken from bondsupermart. liabilities/equity taken from financial statements.)

Wednesday, October 25, 2017

Committing Financial Harakiri and the ICBC Travel Mastercard

I will be going overseas to splurge on luxury watches (looking for Pateks and Audemars Piguet) hence committing financial harakiri. Sweat.... Actually, its a gift to people special so damn it, better make it bang for the buck. Save on the taxes. I can't possibly be carrying more than ten thousands of cash overseas. Fortunately, a special shoutout to a forumner called BBCwatcher who alerted the public on the ICBC Travel Mastercard. No link nor picture, as i am not advertising for them nor paid by them.

My motive of this post is for constructive feedback in case i did my calculations improperly or for any alerts if there is a better card out there for overseas foreign transaction because every cent counts.

The ICBC Travel Mastercard has a bank fee of 2.5% and an unlimited cashback of 3% on foreign transactions.

I used the following 2 websites.
1) The official Mastercard website that lists the indicative forex rates. We can input the bank fee which i inputted as 2.5%.
2) A money exchange website that lists the exchange rates that one can find in Singapore ( i am not being paid so no link).
Official Mastercard Website
Money exchange website
Nett cashbacks for transactions in stated currencies after bank fees 
(done on 25/10/2018 11.10am)
YEN = 0.41%
USD = 0.53%
AUD = 0.22%
MYR = 0.43%
NZD = 0.74%
EUR = 0.46%
KRW = 1.4%

The KRW and NZD are aberrations. I will need to observe them again as what Mastercard does is to convert foreign currencies to USD before converting to SGD. Since all foreign currencies have to be converted to USD first before being converted to SGD, it is unlikely that the nett cashback on any foreign currency to be higher than the nett cashback on USD. Perhaps the money exchange website isn't showing correctly for these rates.