As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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Value Investing
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Sunday, 7 May 2017

What Are Those Hidden Costs Behind Index Investing That You May Be Ignoring Them???


e.g. STI ETF as index investing





Management fee/Income : 8.3%
  Transaction costs/Income : 0.8%
Total : 9.0%



No free lunch. Not much different from hiring domestic helper to do the dirty jobs without getting our hands dirty. Right?

Retail investing will require our time or effort to learn over market cycles; if not willing to spend some time and effort to learn this craft; then outsource to institutional based index investing.


Alternative to index investing?

How about?

Less Analyzing. More Investing - CW8888

But it is NOT less stressful investing!

Not same hor!







5 comments:

  1. The real stress from investing is from realizing losses and/or sitting on paper losses!

    ReplyDelete
  2. Err the correct measure of costs for ETFs is fees/assets = $1.343M/$594M = 0.26%

    The actual expense ratio for the SPDR STI ETF is 0.3% becoz still got trustee fees.

    STI ETF cannot promise you anything other then following the 30 STI stocks & giving you the dividends paid by those 30 companies. Buying a broad index ETF or index fund is basically a vote of confidence for that country or certain type of companies in that country/region.

    Whether is good to buy or not depends on the individual's characteristics, whether he wants to get his hands (& brain) dirty or not. What is the stage of asset accumulation, what is the purpose of this investment, what is the time period, what is the percentage amount as compared to his total net assets, what is the current market valuation, what is the current stage of the biz cycle, etc etc.

    Different people different answers. E.g. 22-yr old newly graduated with $3.5K salary job putting in $200 each month into STI ETF --- whether market valuation is expensive/depressed, whether it's a bubble or deep recession, whether got Korean War Part2 going on, may not be that relevant.

    OTOH a 45-yr old guy looking to top up $100K into ETF will need to consider all factors much more carefully.

    Anyway can always trade STI ETF using Uncle's major support & resistance lines liao. Intermediate level between buy & hold index funds & Uncle's less analyzing more investing, hahaha!!!

    ReplyDelete
    Replies
    1. Clap clap clap ... :)

      Beside using support and resistance, can consider using PER and PTB for index.

      Delete
    2. That is how ETF marketing its low mgmt by fees/assets i.e. 0.26%. So low and so cheap! LOL!

      But over income then not so low and not so cheap. :-)

      Delete
  3. Hahaha...same same as REIT... management fees vs asset value or NPI ? That's why they like to grow their asset value,,,, then the fees ratio looks so small ! :-)
    Cheers !

    ReplyDelete

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