Month: January 2022

Guide to CPF Mandatory Contribution (MC) for Employee

Refer to the list of acronyms on CPF in the following blog post:
https://pwlcm.wordpress.com/2022/01/06/acronym-cpf/

I am a CPF Volunteer. If you find this blog post providing useful information about CPF matters and it leads you to using CPF online services, you may fill in my full name “Tan Choong Hwee” in the “Referrer Name” field in some selected CPF online services.

It is stipulated in the CPF Act that your employer is required by law to make CPF contributions to your CPF accounts, hence it is known as Mandatory Contribution (MC):
https://www.mom.gov.sg/employment-practices/central-provident-fund/employers-contributions

CPF Contribution Rates

CPF Contribution Rates refers to the % of wages that are contributed to your CPF accounts. It consists of employer and employee portions, the former is paid by your employer, and the latter is deducted from your salary. The rates is determined by your citizenship status, age group and wage band:
https://www.cpf.gov.sg/employer/employer-obligations/how-much-cpf-contributions-to-pay

Current contribution rates for Singapore Citizen and Singapore Permanent Resident (SPR)(from third year and onward) across different age groups are summarized in the following table:


Take note that the contribution rates is maxed at 37% for the age group of 55 and below, and will drop to lower % as we grow older towards higher age groups.

CPF Allocation Rates

CPF Allocation Rates refers to the ratio of contributions to the 3 CPF accounts (OSMA). It is determined by your age group:
https://www.cpf.gov.sg/content/dam/web/member/faq/growing-your-savings/documents/CPF_Allocation_Rates_from_1_January_2022.pdf

Current allocation rates across different age groups are summarized in the following table:


Take note that allocation to OA is the highest among OSMA before age 60 to cater for housing and education needs, and allocation to MA is the highest among OSMA after age 60 to cater for medical needs. Across different age groups, the highest allocation to SA happens in the age group of above 50 to 55, signifying the last mile effort to build up SA savings for retirement needs when RA is formed at age 55.

Ordinary Wage (OW) and Additional Wage (AW)

The Total Wage (TW) you received from your employer is divided into Ordinary Wage (OW) and Additional Wage (AW):
https://www.cpf.gov.sg/member/faq/growing-your-savings/saving-as-an-employee/what-is-the-difference-between-ow-and-aw

OW for the month refers to wages due for your employment during the month, e.g. basic salary, overtime pay, allowance, commission.

AW for the month refers to other wages not considered OW, e.g. annual bonus, leave pay, incentive payments.

OW Ceiling (OWC) and AW Ceiling (AWC)

There are ceilings that limit the amount of OW and AW that attract CPF contributions in a calendar month:
https://www.cpf.gov.sg/employer/employer-obligations/what-payments-attract-cpf-contributions

Current OW Ceiling (OWC) is capped at $6,000 in each month. If your OA is $7,000, only $6,000 is used to compute your MC, meaning the remaining $1,000 is not required for MC.

AW Ceiling (AWC) is applied on a per calendar year basis. The AWC is currently capped with the following formula:

$102,000 – Total OW subject to CPF for the year

Take note that the magic number $102,000 is equivalent to 17 months of OWC of $6,000.

AW can be given in any month of the year, making it a little tricky to compute AWC as full year OW might not be available at the time AW is given. Your employer has to estimate full year OW based on current monthly OW, make adjustments whenever there are changes in your OW, and finalize the exact AWC at the end of the year. Any shortfall or excess would have to be adjusted.

Refer to the AWC computation example given by CPF website:
https://www.cpf.gov.sg/content/dam/web/employer/employer-obligations/documents/ExamplesonAdditionalWageCeilingComputation.pdf

CPF Annual Limit (CPFAL)

Due to OWC and AWC, there is a cap to the total MC your employer can contribute to your CPF accounts per year:

(12 x OWC + AWC) x Max Contribution Rate
= (12 x $6,000 + ($102,000 – 12 x $6,000) x 37%
= $37,740

The magic number $37,740 is the current CPF Annual Limit (CPFAL), which is the maximum MC any employer can contribute to your CPF accounts.

If you have multiple employers in a year, either by changing jobs during the year or by having multiple jobs concurrently, each employer is required to pay MC based on the OW and AW payable to you. Therefore, CPFAL is applicable on a “per employment” basis, and your maximum total MC can be CPFAL x number of employers.

By the way, while all your employers have to pay the employer portion of MC, you may apply to limit the employee portion of MC if your total monthly OW from all your employers exceed OWC:
https://www.cpf.gov.sg/member/faq/growing-your-savings/saving-as-an-employee/can-i-choose-to-contribute-cpf-for-one-of-my-employments-only

Reference Links

Guide to CPF SA Shielding

I have written another post on CPF SA Shieldig using T-Bills here:
https://pwlcm.wordpress.com/2022/10/05/guide-to-cpf-sa-shielding-using-t-bills/

Refer to the list of acronyms on CPF and Investment in the following blog posts:
https://pwlcm.wordpress.com/2022/01/06/acronym-cpf/
https://pwlcm.wordpress.com/2022/01/07/acronym-investment/

Disclaimer: This post is just for educational sharing purposes. Please do your own due diligence on any products mentioned in this post.

What is CPF SA Shielding?

One of the topics frequently discussed in chat groups, online communities and social networking sites is this “hack” called “CPF SA Shielding”.

The origin of CPF SA Shielding is attributed to an article published in Straits Times on 20 October 2019 titled “Four ways to optimise your CPF savings” by Lorna Tan, former Invest Editor at Straits Times then. Specifically it was the first step “Maximising CPF” she described in the article that is now known as CPF SA Shielding or SA Shielding in short.

The whole process of SA Shielding involves 2 different CPF schemes for 2 different purposes introduced at 2 different times:

  1. Retirement Account (RA) creation with specific retirement sum at 55th birthday was introduced to address retirement adequacy.
  2. CPF Investment Scheme (CPFIS) was introduced to allow investment using CPF savings for potentially gaining higher returns than CPF interest rates.

On 55th birthday, RA is created with up to Full Retirement Sum (FRS, $192,000 for 2022). This FRS amount is first transferred from SA, and if SA savings is not sufficient, the remaining balance would be transferred from OA.

Since SA and OA interest rates are 4% and 2.5% respectively, we naturally prefer RA to be formed more from OA than SA. That is where SA Shielding comes in, where we set aside at least $40,000 in SA and “shield” the remaining balance by investing under CPFIS just before 55th birthday.

After RA is formed on 55th birthday, we can “unshield” by liquidating the CPFIS investment and returning the sales proceeds to SA. And now we have more savings in the two 4% interest rates accounts (SA and RA) than if we don’t do SA Shielding. We gain additional 1.5% interests on the shielded amount as it is effectively transferred from OA to SA.

To understand the above description visually, you may refer to the following articles on SA Shielding that present nice and easy-to-visualize infographics, special credit to a talented friend Kit who did one on her Instagram:

Selection of CPFIS SA Investment Vehicle

The role of the CPFIS SA investment in SA Shielding is to “hide” some amount in SA from being transferred to RA during the RA creation process. We should be looking at low risk, low cost, low volatility and high liquidity investment products. And we want to keep the investment holding period to within 1 or 2 calendar months so that we would not be missing more than 2 month worth of SA interests.

Among the products approved for CPFIS SA investment, unit trusts meet the low cost and high liquidity criteria. There are zero fees platforms these days (e.g. POEMS, dollarDEX, FSMOne) where we can trade unit trusts without incurring any sales charges, switching fees, and platform fees. And fund houses are guaranteed to transact unit trusts at the Net Asset Value (NAV) price.

There is a wide spectrum of unit trusts with different risk and volatility levels. Those near the lower risk lower volatility end of the spectrum would be money market funds and short term bond funds. I use FSMOne Fund Selector tools to search for candidates with the following parameters:

The tools generated the following Funds Table as of 7 January 2022:

Among the 3 unit trusts listed, the Nikko AM Shenton Short Term Bond Fund has the lowest Risk Rating and the lowest Annual Expense Ratio. It satisfies the low risk low cost criteria we set. Incidentally, this is the same fund Lorna used in her own SA Shielding manoeuvre.

To study the volatility of this fund, I have downloaded its historical price data (up till 31 December 2021) from Yahoo Finance:
https://sg.finance.yahoo.com/quote/0P00006G1T.SI/history?p=0P00006G1T.SI

I added 2 columns to the spreadsheet, 5-Day Price Move and 10-Day Price Move. This is to study how much did the price move in 1-week and 2-week periods. I searched for the largest loss the fund incurred and the date that it happened. Here is the result:

The largest 5-Day and 10-day losses were -0.98% and -1.70%, both happened on 25 March 2020, during the fast and furious stock market crash due to COVID-19 pandemic. To reduce the volatility risk, we want to keep the holding period as short as possible. Adding potential loss of up to 2 months of SA interests (4% x 2 / 12 = 0.67%), total loss might be up to 1.65% if we keep to 5-day holding period. This loss can be recovered by about 13 months of additional 1.5% interests.

Preparation for SA Shielding

  1. If you don’t already have an unit trust trading account, you need to open one with zero fees platforms, such as POEMS, dollarDEX or FSMOne (even though FSMOne charges platform fees for cash and SRS unit trust investments, it is zero platform fees for CPF investments).
  2. As unit trusts are considered unlisted Specified Investment Products (SIPs), you need to pass Customer Knowledge Assessment (CKA) with your unit trust platform. CKA is a self-declaration based on investment experience, working experience or education qualification.
  3. If you didn’t pass CKA, you can take and pass the CPFIS Self-Awareness Questionnaire (SAQ) on CPF website. You would need to send your SAQ Status PDF to your unit trust platform and request them to link your trading account to your CPF account for CPFIS SA investment.
  4. Some platforms may require you to link your trading account to your CPF Investment Account (CPFIA). If you don’t already have a CPFIA, you can open one with UOB, DBS or OCBC, where UOB has the lowest agent bank fees currently.
  5. You might want to test out placing a set of small buy and sell orders using SA just to get yourself familiar with the process and the timeline with your unit trust trading platform.

Steps to do SA Shielding

  1. Let T be your 55th birthday, then T+m and T-n means m trading days after and n trading days before birthday respectively.
  2. On T-3 Day:
    • Check the amount in your SA reserved under Retirement Sum Top Up (RSTU) Scheme for transferring to your RA at age 55. You get the Reserved Amount by login to your CPF account on CPF website, go to Account services –> Viewing your account balance, then click the link View amount reserved in your account(s). If you don’t see the link, it means that you have never RSTU to SA before, i.e. Reserved Amount is $0.
    • Determine the Set-Aside Amount in SA, which is $40,000 or the Reserved Amount, whichever higher.
    • Decide the Shield Amount you want, which can be up to your current SA Balance minus the Set-Aside Amount.
    • Place a buy order of the Shield Amount on the Nikko AM Shenton Short Term Bond Fund. Make sure you select CPFIS SA as the payment method.
    • You may get a call from your trading platform to confirm the order because the amount can be quite large.
  3. On T-2 or T-1 Day:
    • Depending on the cut off time of the trading platform, the Shield Amount would typically be deducted from your SA on T-2 or T-1 day.
    • The Allocated Units you get for the Nikko AM Shenton Short Term Bond Fund would be made known by the trading platform after the Fund Manager has done the calculation of dividing the Shield Amount by the Fund NAV on the purchase date.
  4. On T Day:
    • RA would be formed with FRS by transferring the Set-Aside Amount left behind in SA and the remaining balance from OA.
    • You can login to your CPF account and check that RA is formed.
    • Upon confirming RA creation and Allocated Units, you can place a sell order of the Allocated Units on the Nikko AM Shenton Short Term Bond Fund.
  5. On T+3 Day:
    • The sales proceeds would be credited to your SA probably on T+3 day.
    • Shielding P&L would be the sell price on T day minus the buy price on T-3 day.
    • The holding period would be less than 5 trading days if the whole process is proceeded smoothly.

To Shield or Not To Shield

The benefits of SA Shielding is 1.5% higher interest rate for the Shield Amount, but at a potential risk of up to 1.65% loss in the process, a loss that is recoverable within 13 months. Therefore, it is generally beneficial to go for SA Shielding for those below age 55, except for the following situations:

  • Risk averse person who simply can’t withstand any amount of loss.
  • Technophobia who is afraid of going through the whole process of account opening, monitoring and trading.
  • High net worth individual who can’t be bothered with such a relatively small benefits.
  • Someone with low CPF savings where not much excess SA balance is available for shielding and low OA balance to make up FRS amount for RA.
  • Someone who needs to withdraw a large sum of money from CPF accounts soon after unshielding.

May the Shield be with you!

Investment Acronyms

This blog post is a collection of acronyms I would use when sharing topics on Investment.

  • CSPI – Core Satellite Portfolio Investing
  • DCA – Dollar Cost Averaging
  • RSP – Regular Savings Plan
  • DCF – Discounted Cash Flow
  • DDM – Dividend Discount Model
  • FA – Fundamental Analysis
  • TA – Technical Analysis
  • FATA – Fundamental & Technical Analysis
  • CA – Cycle Analysis
  • SGX – Singapore Stock Exchange
  • CDP – Central Depository
  • SIP – Specified Investment Product
  • EIP – Excluded Investment Product
  • CKA – Customer Knowledge Assessment
  • CAR – Customer Account Review
  • NYSE – New York Stock Exchange
  • AMEX – American Stock Exchange
  • NASDAQ – National Association of Securities Dealers Automated Quotations
  • LSE – London Stock Exchange
  • SSE – Shanghai Stock Exchange
  • SZSE – Shenzhen Stock Exchange
  • HKEX – Hong Kong Exchange
  • CFD – Contract For Differences
  • FX – Foreign Exchange
  • REIT – Real Estate Investment Trust
  • ETF – Exchange Traded Fund
  • UT – Unit Trust
  • MAS – Monetary Authority of Singapore
  • SSB – Singapore Savings Bonds
  • SGS Bonds – Singapore Government Securities Bonds
  • T-Bills – Treasury Bills
  • NAV – Net Asset Value
  • DPU – Distribution Per Unit
  • EPS – Earnings Per Share
  • PE Ratio – Price-to-Earnings Ratio
  • PB Ratio – Price-to-Book Ratio
  • ATH – All Time High
  • PDH – Previous Day High
  • PDL – Previous Day Low
  • P&L – Profit & Loss
  • ROI – Return On Investment
  • IRR – Internal Rate of Returns
  • MWR – Money-Weighted Returns
  • TWR – Time-Weighted Returns
  • CAGR – Compound Annual Growth Rate
  • AUM – Asset Under Management
  • AUA – Asset Under Advice
  • TER – Total Expense Ratio

CPF Acronyms

This blog post is a collection of acronyms I would use when sharing topics on CPF.

CPF (Central Provident Fund)

  • OA – Ordinary Account
  • SA – Special Account
  • MA – MediSave Account
  • RA – Retirement Account
  • OSA – Ordinary & Special Accounts
  • OSMA – Ordinary, Special & MediSave Accounts
  • OSMRA – Ordinary, Special, MediSave & Retirement Accounts
  • MGN – MediSave Grant for Newborns
  • CDA – Child Development Account
  • PSEA – Post-Secondary Education Account
  • SPR – Singapore Permanent Resident
  • MC – Mandatory Contribution (refers to CPF contribution from employment)
  • AMCS – Additional MediSave Contribution Scheme
  • VC – Voluntary Contribution
  • VC-3AC – Voluntary Contribution to 3 Accounts (OSMA)
  • VC-MA – Voluntary Contribution to MediSave Account
  • TW – Total Wages
  • OW – Ordinary Wages
  • OWC – Ordinary Wage Ceiling
  • AW – Additional Wages
  • AWC – Additional Wage Ceiling
  • CPFAL – CPF Annual Limit
  • SEP – Self-Employed Person
  • MC-MA – Mandatory Contribution to MediSave Account (refers to CPF contribution for SEP)
  • NTI – Net Trade Income
  • RSTU – Retirement Sum Top Up
  • RSTU-SA – Retirement Sum Top Up to Special Account (for those below age 55)
  • RSTU-RA – Retirement Sum Top Up to Retirement Account (for those above age 55)
  • BRS – Basic Retirement Sum
  • FRS – Full Retirement Sum
  • ERS – Enhanced Retirement Sum
  • RSS – Retirement Sum Scheme
  • CPF LIFE – CPF Lifelong Income For the Elderly
  • PEA – Payout Eligibility Age
  • AMP – Additional Monthly Payout
  • MRSS – Matched Retirement Savings Scheme
  • BHS – Basic Healthcare Sum
  • MSL – MediShield Life
  • CSL – CareShield Life
  • ES – ElderShield
  • CPFIS – CPF Investment Scheme
  • CPFIA – CPF Investment Account
  • SAQ – Self-Awareness Questionnaire
  • VHR – Voluntary Housing Refund
  • AI – Accrued Interest
  • P+AI – Principal plus Accrued Interest
  • LBS – Lease Buyback Scheme
  • DPS – Dependent Protection Scheme
  • HPS – Home Protection Scheme

My Referral Links and Codes

This blog post listed all my referral links and codes of the services I used. You may engage in the services if you find them useful to you through my sharing (if any), but don’t take it as an endorsement on the products they offered. Please do your own due diligence before you decide to engage the services.

Robo Advisors

My Endowus referral link:
https://endowus.com/invite?code=J6YV3

My Syfe referral link:
https://www.syfe.com/invite/wealth/SRPTRJTFQ

My StashAway referral link:
https://www.stashaway.sg/referrals/choonght43

My MoneyOwl referral link:
https://moneyowl.com.sg/app/accounts/sign-up?referral_code=5FZY-58AG

My SquirrelSave referral link:
https://app.squirrelsave.com.sg/Start/Referralcode?referralid=2996

Brokerages

My POEMS referral link:
https://www.poems.com.sg/open-an-account/?referral=xeM5E

My FSMOne referral code:
P0004722

My Tiger Brokers referral link:
https://www.tigerbrokers.com.sg/activity/forapp/invitflow-intl/signup.html?template=invite202011&lang=en_US&invite=XGVAL5

My Futu Moomoo referral link:
https://j.moomoo.com/005jXt

My Webull referral link:
https://www.webull.com.sg/s/uIYsgnibpxGiBRajcV

My Interactive Brokers referral link:
https://ibkr.com/referral/choonghwee253

CFD Brokers

My CMC Markets referral link:
http://cmc.mk/WBSHWY

Crypto

My Tokenize Exchange referral link:
https://tokenize.exchange/topic/invited/?invite_code=Vn58M

Others

My CPF referral name:
Tan Choong Hwee

My Trust Bank referral code:
BJHT82X8

My Wise referral link:
https://wise.com/invite/ahpn/choonghweet

My YouTrip referral link:
https://youtrip.onelink.me/3xWB/sh392022

My Revolut referral link:
https://revolut.com/referral/choong486l

My DASH referral link:
https://appserver.dash.com.sg:443/mgm?DASH-USPR8

Robo War Experiment (RWE) Update – December 2021

This is an update to my Robo War Experiment (RWE) posted here:
https://pwlcm.wordpress.com/2022/01/01/robo-war-experiment-rwe/

Disclaimer: This post is just for educational sharing purposes. Please do your own due diligence on any products mentioned in this post.

Performance Update

Here is the December 2021 Performance Update:

Key Observations

  1. Endowus was the clear leader among the 3 robo advisors, performing almost +20% IRR.
  2. StashAway suffered losses due to their exposure to China equities and gold.
  3. Syfe stayed in the middle ground, performing about +14% IRR.
  4. Against the benchmark indices, only Endowus beats MSCI ACWI in terms of IRR.
  5. With 1 year worth of performance data, IRR would be the proper matrix for comparison moving forward.

Endowus: https://endowus.com/invite?code=J6YV3
Syfe: SRPTRJTFQ
StashAway: https://www.stashaway.sg/referrals/choonght43

Crypto Investment Update – December 2021

This is an update to my crypto portfolio posted here:
https://pwlcm.wordpress.com/2022/01/01/my-speculative-crypto-investment-journey/

Disclaimer: This post is just for educational sharing purposes. Please do your own due diligence on any products mentioned in this post.

Second Altcoin

When I posted my crypto journey, I was already watching another altcoin for a while. In addition to Proof of Work (PoW) and Proof of Stake (PoS), I came across another consensus mechanism known as Proof of History (PoH). That leads me to Solana (SOL), which is the first blockchain to use PoH. I read about SOL in an article “What is Solana? Guide for Beginners“.

On 1 December 2021, I decided to take the plunge on SOL, but I didn’t want to add capital with my crypto portfolio hitting 7% portfolio allocation. Instead, I took partial profits in LUNA, making it a totally risk-free investment, and channeled some proceeds into SOL.

Here were the charts of LUNA vs SOL when I made the decision:

As you can see in the chart, the bullish trends for both LUNA and SOL were still intact as indicated by their prices above respective Ichimoku clouds and the presence of the upwards channel. However, LUNA was hitting the upper boundary of its upwards channel, whereas SOL was closer to the lower boundary of its upwards channel as well as supported by the Ichimoku cloud. So it seemed logical to take profits from LUNA and invest in SOL.

Once completed the trades, I immediately proceeded to pair-stake SOL with TKX for an 8% APR.

Performance Update

Here is the performance update as of end December 2021:

My crypto portfolio had dropped to 6.49% of my overall investment portfolio. The newcomer SOL had declined -23.7%. As shown in the charts below, BTC/ETH/SOL all declined in December, only LUNA maintained its upwards movement:

Key Observations

  1. LUNA continued to be the star performer.
  2. SOL had a bad start, but I am not too worried.
  3. Overall portfolio value still double my capital.

References

Proof of Work: https://ethereum.org/en/developers/docs/consensus-mechanisms/pow/
Proof of Stake: https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/
Proof of History: https://tokens-economy.gitbook.io/consensus/chain-based-proof-of-capacity-space/proof-of-history
Terra LUNA: https://www.theancientbabylonians.com/what-is-terra-luna/
Solana: https://cryptopotato.com/what-is-solana/
Solana uses PoH: https://www.leewayhertz.com/solana-blockchain-using-poh/

Tokenize Exchange: https://tokenize.exchange/topic/invited/?invite_code=Vn58M

My Speculative Crypto Investment Journey

This blog post first appeared as Seedly Opinion Post on 3 December 2021 to document my journey in crypto investment:
https://seedly.sg/opinions/my-speculative-crypto-investment-journey

Disclaimer: This post is just for educational sharing purposes. Please do your own due diligence on any products mentioned in this post.

Background

I started hearing about bitcoin when it had a spectacular rally from sub-USD1k to USD20k in 2017. Imagine 20x returns within a year. It certainly piqued my interests, and I set out to learn about crypto by attending numerous seminars (and later webinars after pandemic claimed physical meetings) on crypto investing, trading and mining. But I didn’t invest in crypto then as it was deemed too volatile and speculative for me.

Bitcoin corrected from the peak in 2017 and stayed below USD20k for many years, only to break new highs starting from end 2020. It rekindled my interests in crypto. I happened to attend a webinar by Tokenize Exchange in January 2021, and was given 10 TKX as a bonus by attending. It was the first crypto coin I owned.

TKX is Tokenize Emblem, an ERC20 token based on the Ethereum blockchain, and can be used to pay for discounted trading fees in Tokenize Exchange. You can also get better APR by pair-staking it with other coins with Crypto Earn in Tokenize Exchange.

I resumed my crypto learning journey after attending the Tokenize Exchange webinar. This time round my learning was more extensive by continuously following relevant news, attending webinars, reading articles, watching YouTube and chatting with like-minded crypto investors. Eventually, I made my maiden crypto investment in June 2021.

My View

I view my crypto investment as a speculative investment, not trading, not gambling, not speculating.

It is neither gambling nor speculating because I spent several months (even years considering I started learning in 2017) researching crypto underlying blockchain technology and its application in cryptocurrency and other areas. There are arguments for crypto as an asset class to reckon with.

It is not trading because crypto is indeed highly speculative and volatile. While many traders like high volatility as they can profit from getting in and out of it quickly, it is just too unpredictable for me to consistently profiting from trading it.

It is an investment because I do see potential in its future as an asset class, and I intend to hold it for long term (10 years and above). I adopt a portfolio investment mindset where crypto is the aggressive end of the barbell strategy and I keep my initial investment within 5% of my portfolio allocation. And I invested in multiple coins for risk diversification, another investment concept.

It is still a speculative investment because there are plenty of uncertainty with many factors affecting its future. The stars need to be aligned for crypto to shine, hence the speculative nature of this investment. The small portfolio allocation helps to contain the speculation risk to not more than 5% even in the event that the whole crypto investment is wiped out.

In summary, crypto is highly speculative and risky, maybe a bubble as with all speculative asset, but it is nowhere near gambling (unless you didn’t do any homework researching it) and get-rich-quick scheme (if you are investing for long term instead of trading).

Initial Investment

Since I already had Tokenize Exchange account, I decided to fund and invest in crypto through it. I knew this is single exchange risk, but my allocated fund is small, an amount I’m prepared to lose in such a speculative investment. Besides, Tokenize Exchange deposit/withdrawal/trading fees are reasonable, and they have a simple user interface to trade and stake crypto.

The first crypto I picked was Bitcoin (BTC), the natural choice for rookies, as it was the coin that started this whole crypto revolution. The key to its value is limited supply (hard cap at 21 million coins) once it established its dominant position. Another driver is the 4-yearly Bitcoin Halving mechanism, which would slow down the rates at which new bitcoins are released into circulation.

The next crypto picked was Ethereum (ETH), the coin with the second largest market cap after BTC. The key driver is its Smart Contract infrastructure, upon which many decentralized applications can be built, the possibilities are simply endless. And we can look forward to ETH2.0 migration, implementing Proof of Stake (PoS) consensus mechanism over current Proof of Work (PoW) used in BTC and ETH.

Then I was looking at altcoins, and came across Terra (LUNA) introduced by someone in a chat group. LUNA is another coin with PoS consensus mechanism. I did some research, and found an article “What is Terra (LUNA)?” on The Babylonians. I liked what was expounded in the article and decided to put a small stake in LUNA.

That completed my investment in the 3 crypto coins. BTC and ETH are the 2 forerunners that layed the foundation for crypto, and LUNA is the altcoin deemed to have potential in success. The trading fees for these purchases were totally funded by the free 10 TKX I received as welcome bonus in Jan 2021.

Crypto Earn

Once I have selected and invested in the 3 crypto coins, the next step was to look at staking for yield while holding the coins. To take advantage of higher yield based on pair-staking with 100 TKX in Crypto Earn, I needed to load up my TKX holdings.

I managed to stake both BTC/ETH with TKX at 10% APR, and LUNA with TKX at 8% APR. Crypto Earn yield payment day is on the first day of the month, and there is an option to compound yield on payment days. Minimum deposit period is 30 days.

Performance Update

Here is the performance update as of end November 2021:

The “Allocation %” column represents my crypto portfolio value as a percentage of my overall investment portfolio value. It has exceeded my initial 5% portfolio allocation limit by organic growth. I was pondering whether to trim my crypto holdings, but decided to raise the limit to 10% instead, as I viewed the increasing institutional participation having an positive impact on crypto being a viable asset class to stay for a while.

I have included SGD kept in Tokenize Exchange as part of the portfolio. The cash is earning zero yield sitting idle in Tokenize Exchange. The objective of including it in the portfolio is to remind me of its cash drag effect to the portfolio.

Key Observations

  1. XIRR is exorbitant because of short investment timeframe. It will only become meaningful when we have multiple years of investment performance data.
  2. LUNA is the star performer in my crypto portfolio as of end November 2021, more than 12x my initial capital.
  3. TKX is also performing pretty well, probably due to its utility value as discounted trading fee payment and increased APR pair-staking.
  4. BTC and ETH performance were satisfactory.
  5. Overall crypto portfolio value has already more than double my capital.

References

Tokenize Exchange: https://tokenize.exchange/
Tokenize Emblem: https://medium.com/tokenize-xchange/tokenize-emblem-tkx-the-next-binance-coin-bnb-from-singapore-7da8b09af4da
Tokenize Crypto Earn: https://tokenize.exchange/earn
Bitcoin Halving: https://www.investopedia.com/bitcoin-halving-4843769
Smart Contract: https://ethereum.org/en/developers/docs/smart-contracts/
Proof of Work: https://ethereum.org/en/developers/docs/consensus-mechanisms/pow/
Proof of Stake: https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/
Terra LUNA: https://www.theancientbabylonians.com/what-is-terra-luna/

Tokenize Exchange: https://tokenize.exchange/topic/invited/?invite_code=Vn58M

Robo War Experiment (RWE)

This blog post first appeared as Seedly Opinion Post on 2 November 2021 to document an experiment started in January 2021 which compares the performance of Endowus Equity100, Syfe Equity100 and StashAway SRI36%:
https://seedly.sg/opinions/robo-war-experiment-rwe

Disclaimer: This post is just for educational sharing purposes. Please do your own due diligence on any products mentioned in this post.

Background

I started my investment journey with robo advisor when I invested in Endowus 100% Equity Portfolio using CPF OA in July 2020. Since then I came across other robo advisors like Syfe and StashAway. I was curious to find out how the investment strategy of each robo advisor performs and how they compare with each other. Hence I decided to start a Robo War Experiment (RWE) in January 2021.

Common Parameters

  1. I have decided to choose the most aggressive portfolio from the 3 robo advisors: Endowus Equity100 (Core Flagship), Syfe Equity100 (Core Equity 100) and StashAway SRI36%.
  2. Common source of funding for all 3 are cash in SGD.
  3. Initial lumpsum investment placed on the first trading day in January 2021.
  4. Monthly DCA placed on the first trading day starting from February 2021.
  5. Intend to continue monthly DCA until December 2021.

Performance Matrix

Monthly Return =

(Current Month End Portfolio Value + Current Month Redemption + Current Month Dividends) / (Previous Month End Portfolio Value + Current Month Investments) – 1

Quarterly Return =

(1 + Month 1 Return) x (1+ Month 2 Return) x (1 + Month 3 Return) – 1

YTD Return =

(1 + Jan Return) x (1 + Feb Return) x … x (1 + Current Month Return) – 1

Annualized Internal Rate of Return (IRR) =

XIRR(Values, Dates) function in Excel

All portfolio values are expressed in SGD, so I have picked the SGD numbers from Syfe Equity100 and StashAway SRI36% portfolios.

Performance Benchmark

The selected benchmark indices are MSCI World Index, MSCI All Country World Index (ACWI) and S&P 500. Their performance numbers are simulated with the exact same initial lumpsum and monthly DCA amounts on the same dates as that of the 3 robo advisors.

All the 3 robo advisors’ portfolios are globally diversified, so the more approprate benchmark indices to compare with would be MSCI World Index and MSCI ACWI. However, S&P 500 is also a popular index many people used as benchmark.

The simulated benchmark performance numbers don’t include trading cost, so real life performance may be lower than the simulated numbers depending on the total expense ratios, tracking errors, brokerage charges, bid/ask spreads, and any other fees for the corresponding index ETFs or funds used.

What I didn’t cater for in the simulated numbers are the dividend returns, simply because I don’t have a source of total return data for all 3 indices.

Since the indices are expressed in USD, I have taken FX rate into account for the benchmark numbers.

Source of Data

Source of indices and FX rates are taken from the following links:

MSCI World Index – https://www.investing.com/indices/msci-world-historical-data
MSCI ACWI – https://www.investing.com/indices/msci-world-stock-historical-data
S&P 500 – https://www.investing.com/indices/us-spx-500-historical-data
FX Rates – https://www.x-rates.com/historical/

Performance Update

I had provided mid-year performance update on Seedly community in July 2021, and continued to provide monthly updates since then. Here are the links to these updates for your reference, but all relevant info are now in this Opinion post:

Mid Year 2021 – https://seedly.sg/posts/mid-year-performance-update-on-my-robo-war-experiment
July 2021 – https://seedly.sg/posts/robo-war-experiment-july-update
August 2021 – https://seedly.sg/posts/robo-war-experiment-august-2021-update
September 2021 – https://seedly.sg/posts/robo-war-experiment-september-2021-update

I would be updating performance in this Opinion post in future. Plan to update monthly until December 2021, and quarterly from 2022 onwards.

Here is the November 2021 Update:

Key Observations

  1. Endowus portfolio was taking a lead among the 3 robo advisors so far, and StashAway portfolio was falling quite far behind.
  2. Endowus portfolio followed quite closely the movement of the 2 world indices, and managed to outperform them.
  3. Both Syfe and StashAway portfolios were alternating between profit and loss from month to month.
  4. StashAway portfolio mainly sufferred a setback from exposure to China equity and Gold.
  5. Observation period is too short to make a conclusive verdict on their relative performance.

Endowus: https://endowus.com/invite?code=J6YV3
Syfe: SRPTRJTFQ
StashAway: https://www.stashaway.sg/referrals/choonght43

Design a site like this with WordPress.com
Get started