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My friend's windfall...how to invest it.

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  1. #41

    Join Date
    Oct 2006
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    Hong Kong
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    Quote Originally Posted by jobin
    My friend made a choice. We went to the HSBC in her area and talked to a bank investment advisor. Friend was offered AB American Income portfolio which she accepted. Bank took 1.6% upfront fee and AB fee of 1.1% per year. The bank fee was negotiated down from 2.5% but the AB fee is static. The fund, a mutual fund, invests 98% in US Treasury type bonds and yields about 5% per year, payable monthly.
    Friend will be getting a goodly monthly income with very little risk, as i see it. So, looks OK for the retirement years.
    If interested, you may look here:
    https://www.alliancebernstein.com/fu...n=LU0417103065

    Turns out friend received this money 2 yrs ago and it has been sitting idle in the HSBC account. I was unhappy to learn this but now something better is underway.



    Looks like HSBC is the winner here.
    dfc likes this.

  2. #42

    Join Date
    Jul 2011
    Posts
    741

    HSBC is only the broker in this transaction. From what i can learn, buying bond funds requires a broker, unlike online equity purchases. AB funds get none of that broker $ but do get the 1.1% which is about average for such funds. And we did get the broker fee down from 5% to 1.6%, which is good.

    One question i have not answered is whether that money used to buy the bond fund remains in the HSBC vault or is transferred to some bank in Luxembourg. If that $ remains in local bank then of course HSBC can leverage that cash to loan out, etc.

    If you have more information, Mr. PIN, please feel free to advise us. In one sense i feel my ignorance of bond mutual funds has drawn negative criticism, so i do hope you are not kicking me while you think i am down; in order to build yourself up.

    And finally, if you think I'm a loser, plz Mr. PIN tell me the end of the story, as it will transpire 10 years from now.


  3. #43

    Join Date
    Oct 2010
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    19,298

    Past performance is no guarentee of future returns. We're in the biggest bond bull markets ever, where markets are so distorted investors are paying money to borrow from them.

    When this bubble pops, it will make the 1999 Tech bubble seem like a child's party.

    It's entirely possible the next ten years look nothing like the last ten.

    traineeinvestor likes this.

  4. #44
    bdw
    bdw is offline

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    Feb 2009
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    5,655

    I have a few of these unit trusts. Standard Ctartered promotion now is 1.5% unfront fees for everyone that purchases online, but I still go through my relationship manager and get 1%.

    The trick for me is not to invest in just one, don't put all your eggs in one basket. But I have about 10 different unit trusts. Some are bonds, some equties, some mixed. Some are global, some are US, some are Asia focused. I just bought a European one for the first time last week before I left HK. YTD return has been 14%, over last 5 years around 5.5% per year. I'm ok with something like this.

    The ones I have all pay out monthly dividends without dispursal fees, which is great since I no longer have a HKD income but I do have HKD expenses, property in HK etc. So I'm after some HKD income to cover periods when my property isnt rented etc. But of course when looking at the performance of the fund, I don't look at the dividend. If I can get over 5%pa return over a sustained 5 year period, then I'm happy. Whether it pays out a monthly dividend and fund price remains stable, or whether it pays nothing and keeps growing, is not something I look at in determining the performance of the fund. But my choice is to go for ones that payout monthly for the reason above.

    Don't forget, on top of all this, with Standard Chartered these unit trusts unlock the "Wealthpro" function and then I can leverage my investment, get a multicurrency overdraft up to 70% of the value of the investments. I borrow in JPY at the moment and only pay 1% interest rate, send the money to Australia and save 4% off my Australian mortgages, and I need to buy a car and house full of furniture etc in Australia now


  5. #45

    Join Date
    Oct 2006
    Location
    Hong Kong
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    13,673
    Quote Originally Posted by bdw
    I have a few of these unit trusts. Standard Ctartered promotion now is 1.5% unfront fees for everyone that purchases online, but I still go through my relationship manager and get 1%.

    The trick for me is not to invest in just one, don't put all your eggs in one basket. But I have about 10 different unit trusts. Some are bonds, some equties, some mixed. Some are global, some are US, some are Asia focused. I just bought a European one for the first time last week before I left HK. YTD return has been 14%, over last 5 years around 5.5% per year. I'm ok with something like this.

    The ones I have all pay out monthly dividends without dispursal fees, which is great since I no longer have a HKD income but I do have HKD expenses, property in HK etc. So I'm after some HKD income to cover periods when my property isnt rented etc. But of course when looking at the performance of the fund, I don't look at the dividend. If I can get over 5%pa return over a sustained 5 year period, then I'm happy. Whether it pays out a monthly dividend and fund price remains stable, or whether it pays nothing and keeps growing, is not something I look at in determining the performance of the fund. But my choice is to go for ones that payout monthly for the reason above.

    Don't forget, on top of all this, with Standard Chartered these unit trusts unlock the "Wealthpro" function and then I can leverage my investment, get a multicurrency overdraft up to 70% of the value of the investments. I borrow in JPY at the moment and only pay 1% interest rate, send the money to Australia and save 4% off my Australian mortgages, and I need to buy a car and house full of furniture etc in Australia now
    14% YTD is frankly quite bad considering the S&P500 has performed about 28% YTD. Also the fees, the fees!!!! Honestly the only person who has done well out of this is SCB. They get you on the fees EVERY DAMN TIME FOR EVERY PRODUCT YOU INVEST WITH THEM.

  6. #46

    Join Date
    Sep 2019
    Posts
    1,765
    Quote Originally Posted by pin
    14% YTD is frankly quite bad considering the S&P500 has performed about 28% YTD. Also the fees, the fees!!!! Honestly the only person who has done well out of this is SCB. They get you on the fees EVERY DAMN TIME FOR EVERY PRODUCT YOU INVEST WITH THEM.
    Quite a wide spread of equity markets, in fact, seem to have returned in the high 20s YTD. I hope everyone here has a merry christmas, and I'll save the "bah humbug!" for the new year. Cheers.

  7. #47

    Join Date
    Dec 2018
    Posts
    974
    Quote Originally Posted by bdw
    I have a few of these unit trusts. Standard Ctartered promotion now is 1.5% unfront fees for everyone that purchases online, but I still go through my relationship manager and get 1%.

    The trick for me is not to invest in just one, don't put all your eggs in one basket. But I have about 10 different unit trusts. Some are bonds, some equties, some mixed. Some are global, some are US, some are Asia focused. I just bought a European one for the first time last week before I left HK. YTD return has been 14%, over last 5 years around 5.5% per year. I'm ok with something like this.

    The ones I have all pay out monthly dividends without dispursal fees, which is great since I no longer have a HKD income but I do have HKD expenses, property in HK etc. So I'm after some HKD income to cover periods when my property isnt rented etc. But of course when looking at the performance of the fund, I don't look at the dividend. If I can get over 5%pa return over a sustained 5 year period, then I'm happy. Whether it pays out a monthly dividend and fund price remains stable, or whether it pays nothing and keeps growing, is not something I look at in determining the performance of the fund. But my choice is to go for ones that payout monthly for the reason above.

    Don't forget, on top of all this, with Standard Chartered these unit trusts unlock the "Wealthpro" function and then I can leverage my investment, get a multicurrency overdraft up to 70% of the value of the investments. I borrow in JPY at the moment and only pay 1% interest rate, send the money to Australia and save 4% off my Australian mortgages, and I need to buy a car and house full of furniture etc in Australia now
    A question on the use of Yen to fund AUD acquisitions. 4% is avery good spread between the AUD and Yen borrowing rates but how much of that get eaten up by (i) FX conversion costs and (ii) the yen's appreciation against the AUD over the last 5 years? The reason for asking is that I'm considering refinancing a USD loan currently costing around 2.95% with a Euro loan costing 1.25% but I'm not sure if 1.7% is enough to justify the conversion costs and FX risks?
    Paxbritannia likes this.

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