The weekend before Singapore’s National Day!

Singapore turns 58 and having been born in Singapore and lived here all my life, I am proud to say that I have no regrets. While Singapore’s not perfect, I think it’s one of the few countries in the world where it’s safe even for a woman to go home alone at night. The public transportation here is also amazing – it’s affordable, convenient, and (mostly) reliable. Government spending is also not profligate, which is reflected in our fairly stable and strong currency. Lastly, while the ingredients are not the freshest because almost all of it has to be imported, the food is still amazing.

Happy National Day, Singapore!

Photo by Mikes Photos on Pexels.com

THE ROBO-ADVISOR CHOICE PARADOX
(cheerful.egg)

I didn’t realise that Endowus now has nearly 190 funds available for retail investors to choose from. That’s a ridiculous number of funds and really shows that they’ve lost the plot. In my course of work, I’ve met many fund houses trying to pitch different products and honestly, after hearing so many different pitches, they all sound the same.

Recently, I’ve been talking to many fund managers about ESG investing and it turns out that all of them pretty much tell me the same thing – it depends on what you want.

Need a product that excludes contentious sectors? No problem.
Need one that focuses on aligning the fund’s investments with the Paris Agreement? Sure, we have it.

And therein lies the rub. Fund managers just want your money. They don’t really care whether ESG makes sense as an investment or whether the way they implement ESG in investments makes sense; they’ll come up with products that they think clients will buy and the reason they have so many different types of products is because they have as many different types of clients.

If you ask me, a great fund is like a sushi master. A great sushi master focuses on making great sushi. If you don’t like sushi, that’s your right. Just go eat something else. The sushi master doesn’t care about your business, he just wants to be good at what he does.

Safe Withdrawal Rates Reading

The Problem with the 4% Rule (and Why You Could Retire Even Sooner) (madfientist)

The Problem With FIREing At 4% And The Need For Flexible Spending Rules (kitces.com)

Decision Rules and Maximum Initial Withdrawal Rates
(Journal of Financial Planning)

Kyith from Investment Moats did a great in-depth video on the 4% rule which led me down this rabbit hole because I’ve been aware of the other research surrounding safe withdrawal rates.

The first link provides a great point on a strategy that adjusts withdrawals based on returns in the stock markets (which impact portfolio values) and incorporates the idea that not all spending is necessary. If one is willing to adjust withdrawals for discretionary spending when times are bad, that greatly mitigates the sequence of return risk and therefore extends the longevity of the portfolio.

The second link provides an overview of safe withdrawal strategies alternative to the 4% rule.

The third link is to a paper by Guyton and Klinger which, using monte carlo simulation, provides insight into how different withdrawal rules affect a portfolio over a 30- and 40-year period. The findings of when portfolios are likely to run out of money also point to the usefulness of having a flexible withdrawal strategy (such as the strategy outlined in the first link). Very interesting paper.