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Anonymous
I wanted to diversify so I am spread into different sectors etc, and am intending to increase the amount invested as I get older, but is it wiser if I were to consolidate now and diversify later? can't quite figure the best strategy :'/
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thefrugalstudent
01 Feb 2021
Founder at thefrugalstudent.com
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Zac
01 Feb 2021
Noob at Idiots Invest
In short, it's probably better to consolidate your investment when you're starting off and have low capital. I think keeping things simple is under-rated.
You can go with a digital advisor to help you create a diversified portfolio, or you can invest in an ETF that tracks global indices. Many ways to skin a cat.
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Hi Anon,
Yes, you are right for worrying about the transaction fees that you are paying for kristal.AI/FSMOne/DBS Invest-Saver. Even though they market the transaction fees to be low, when it comes to investing, fees can never be too low - you want to pay as little fees as possible, so that your money gets invested as much as possible.
This is especially the case because there are minimum transaction fees. For example, assuming you are buying through FSMOne via their RSP, the marketing fee is 0.08%, min $1. If you are investing only $100/month into FSMOne, you are paying $1/month or 1% in fees every month - this is a huge fee to be paying when it comes to ETFs, and will end up eating away at your returns in the long run. On the other hand, if you are investing $500/month, this fee would work out to be 0.2%/month - a much more reasonable sum to be paying.
While it is definitely good to diversify, ideally, it should not come at the cost of paying higher fees unnecessarily.
It may be a good idea to look at what you're currently invested in across all your portfolios, think of which are the ones you want to build up a position in first, and concentrate on those. Perhaps in the future when you have more capital to deploy for investing, then consider diversifying into more sectors and funds.
All the best!
Regards,
thefrugalstudent