Hi all,

I have read through this thread from page one till the last page. I am rather new at investing and may not be very familiar with certain concepts, so I apologize in advance since I'll be needing some guidance in my understanding.

For simplicity, the following will be my assumptions:
1. Trade ETF through TDAA
2. Commission fee of USD10.65 per trade
3. TT fee of USD50
4. MYR/USD = 4.5
5. Purchasing VTI (Vanguard Total Stock Market Index Fund ETF Shares

With the above assumptions, say if I have the required USD3,500 deposit to open the account, that would mean I will need:
(USD3,500+USD50) x 4.5 = MYR15,975 --- [50/3550*100=1.4%]

With the initial USD3,500 in my TDAA account, I purchase 29 shares ot VTI at USD116.68 each:
USD116.68 x 29 + USD10.65= USD3,394.37; Balance in account: USD105.63 --- [10.65/3394.37*100=0.31]

After that, assume that I am able to allocate up to MYR10,000 in a year to purchase additional shares, I would have:
MYR10,000/4.5 - USD50 = USD2,172 --- [50/2222*100=2.25%]

Purchase additional shares:
USD116.68*19 + USD10.65 = USD2227.57; Balance in account: USD50.06 --- [10.65/2227.57*100=0.47%]

Questions:
1. So does this mean that just from TT charges, commission fee and the VTI expense ratio, I would have actually lost upfront a total of roughly:
First purchase: 1.76% (1.4%+0.31%+0.05%)
Second purchase: 2.77% (2.25%+0.47%+0.05%)
I do understand that with larger investment sum, the percentage will drop further and vice versa.
2. Say if I bought an Equity and Bond fund, does that count as two separate trade, incurring 2 x USD10.65 commission fee, thus further increasing the percentage that I had calculated earlier?
3. Does the commission fee also be charged when selling or re-balancing? I suppose any selling of one fund and buying another would be considered as additional trades and the commission fee would be charged separately for each transaction. Is my understanding correct? Was reading up on another thread by Dreamer - Asset Allocation Investing using US ETF, Basic approach to asset Allocation ETF

I am not sure if my calculations are correct so feel free to correct me if they are wrong. Like I mentioned, I'm here to learn from more experienced people around here since I'm rather new to all this and am still am unfamiliar with some of the concepts.

1. It's just an assumption for me to get a feel of the numbers. Whether it's tdaa or ib I'll just need to adjust the numbers to reflect accordingly.
3. I got that value from the first post where it's stayed that roughly the total tt charges would be around usd 50. That rm10 is just charges by local banks. I would assume that there might be some charges by receiving and intermediate banks in us.
5. I thought as nra, were eligible to get a 15% deduction on the wt if we fill up some form by every April? Well,I suppose that is still some extra work compared to buying Ireland domiciled etf.

Tbh, 30k would be close to what i earn yearly. I supposed us etf is just out of my reach atm.

Thanks for your feedback.

usd 5k pa with current exchange rate would translate to rm22500 pa. Looks like I'll have to double my salary before i can make us etf any worthwhile.

I'll try to read up on this value investing and options that you've mentioned. But somehow i get the feeling that the latter is something with high risk. Maybe I'm wrong since i actually do not know anything about options. Haha.

actually, I have the usd10k now for my initial investment. However, it took me four years to save up due to the increase in exchange rates.

That means if I were to go ahead, I can only buy once now, save up another four years then only top up. I supposed this wouldn't be advisable? Or is my understanding wrong?

This post has been edited by RayleighH: Jan 20 2017, 10:14 AM

Thanks for the input. Does the same considerations also come into play when the intention is to buy and hold for long term instead of actively trading and timing the etf? Seems like I really have a lot more to learn and understand.

Thanks.

This post has been edited by RayleighH: Jan 20 2017, 01:12 PM

So if my goals are:
1. Have a long term (5-10 or more years) investment in US index fund (Vanguard) with initial investment of USD10K.
2. Each future transaction >USD5K or preferably USD10K (which may mean a window of a couple to several years between transaction) to minimize effects of fees from tt charges, transaction commision.
3. Diversified assets (i.e. A combination of BND, VTI or VOO or both) for a starter.
4. Yearly re-balancing as per Dreamer's basic guide.

What are your take on this plan? Is the amount still too small to be worth it or maybe i missed out something which makes my rough plan above is not feasible.

What is your take on just buying into the index fund once and then just re-balancing yearly. Will the cost of the commission fees defeat the purpose?

Not trying to be rich fast, just that I noticed that US index funds are quite attractive sans the tt fees and forex fluctuations.

This post has been edited by RayleighH: Jan 20 2017, 02:33 PM

ah. Just saw your post after I hit the reply button. Thanks for the info. Will look into this re: local brokers.

Just a thought re: joint invest with siblings/relatives. From reading previous posts in this thread, I gather that you are the one doing the investment and your sister is riding along as the passenger. Do you have any legal documents which protects your sister from her money kena songlap by your side (or the other way round, if you're the passenger)? e.g. you kaka d, and then the investment gets passed down to your wife/child/next of kin, and then they decide to not return your sister's portion of the investment? Just wondering if you do take any kind of precaution for those or similar kinds of situation.

This post has been edited by RayleighH: Jan 20 2017, 02:58 PM

When you mention iTrade, do you mean iTrade CIMB?

It seems like they only have two ETF listing: CIMBC25 and CIMBA40. What are your thoughts on these two ETFs? It seems like one tracks 50 largests stocks in China and HK while the other tracks the 40 largest companies in several ASEAN countries.

Also, through your (or any other of you sifu's here) experience, are US Vanguard Index Fund/ETF available through local broker?

This post has been edited by RayleighH: Jan 20 2017, 03:58 PM

1. Can Malaysian open an account with Standard Chartered SG, Maybank KE or DBS Vickers? Do we need to have a Singaporean address or anything like that?
2. Does it mean that we do not directly own the shares bought through Standard Chartered SG and Maybank KE? What are the impact to us as the client when one is a custodian account while in the other, we own the shares other than having the rights to attend AGMs?

But if you factor in the cost to travel from Malaysia to Singapore, it might be more expensive than the bank rates?

This post has been edited by RayleighH: Jan 20 2017, 05:52 PM

Haha..will do, will do. Any knowledge is valuable. Thanks.

Atm, I don't have the time to browse through the other threads, but are there people who actually do that?

I understand that earning through investing/trading is anything but simple. I would like to think that I am not greedy and do not look to make quick money, else I would definitely be in forex and actual stock trading.

However, everytime I research on methods to investing, I come across many who would recommended investing long term in index funds, particularly vanguard funds even for your everyday average joe/jane. Most of them mentioned that index funds:
1. In the long term would provide decent returns. Nothing too fancy, amazing nor terrible which is what I am looking for.
2. In the long term, it is rather stable due to their diversification (Equity across the whole US economy and the whole world's economy + Bonds which covers the whole US economy)
3. In the long term, if one can weather the major dips and not pull out, eventually after many years it will eventually recover. Whereas, one may stand the chance lose all their money in other types of investment.

All these points mentioned by other websites recommending Index funds make it sounds like it is something which one can buy and be relatively comfortable that it is quite unlikely to lose all their investment in the event of a major financial crisis, provided one can weather the downturn period and not pullout. That is why it seems quite interesting to me.

The only downside and blocker at the moment is the fact that I am earning in MYR which translate to the huge sum which is required in order to make the investment worthwhile be it through a US or SG brokerage.

I do acknowledge that there are risks involved by investing in index funds, although I may not be able to properly size/feel it due to my inexperience. Like you have mentioned "if u hv not seen the devil, u will not cry".

However, at the moment, I can only think of three major risks with regards to investing in Vanguard index fund ETF. Please do enlightened me on any other risks of investing in Vanguard index fund ETF.
1. MYR/USD forex fluctuation.
2. Risk of fees eating up profit if investments amount is too small.
3. US & World economy downturn (though, wouldn't this also affect other funds/investment types in other countries to an extent?)

This post has been edited by RayleighH: Jan 20 2017, 09:05 PM

Usually, articles that I come across advocate for a mixture of Total Bond Market ETF (BND), Total Stock Market ETF (VTI) and Total International Stock ETF (VXUS).

Although I the devil in me is telling me that S&P 500 ETF (VOO) returns are quite tempting. However, I am staying away from it at the moment since I do not fully understand the risks that may come with VOO.

These same articles would also always mentioned that timing the market is not the point for the type of investment that they're advocating. The majority of the work would be in the annual/trigger re-balancing or the occasional topping up whenever there's extra funds at hand.

Over many years, this would provide a stable platform for a decent return only if one has the discipline (and not be greedy) and ability to weather any downturn so as to not withdraw during those times. Which is what my goal is: a stable and decent return.

I agree with his method, which is similar to other articles which I have read.

The part which I have to figure out now is the forex rate (since I'm earning in MYR) and the recommended investment sum to ensure that the fees (tt, commission, etc) not eat up my profit and make the investment useless (which a few of you have provided some insights be in through local, SG or US brokerage)

agreed. That's what I am planning to do over the next few days (or week maybe XD pardon my tardiness).

Although the result may indicate that foreign index fund may be out of my reach at the moment due to the required investment sum when converted from MYR, at least I'll have a sound knowledge of the numbers around it

Emergency fund is already ready although it is only a year's worth compared to what others advocated for of two years' worth. May eventually try to target two years worth but slowly.