facebookIs 70% SPDR STI ETF and 30% Nikko am Corporate bond ETF considered a safe and stable investment for a beginner? - Seedly

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Anonymous

29 Nov 2019

Stocks

Is 70% SPDR STI ETF and 30% Nikko am Corporate bond ETF considered a safe and stable investment for a beginner?

Hello,

I am new to investing. I’m very young and have some savings to invest with. My risk appetite is not high, my investment horizon is around 5-10 years and looking for at least 4.8 % annualised return.

Currently, not planning to invest in more variety as the minimum stock brokerage fee will eat into my investment.

Discussion (6)

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Whether you are a beginner or not in investing, had not much bearing whether certain instruments is safe and stable. It really depends on your risk appetite & how the products you choose perform thus far.

Equities in general as an asset class is generally more risky than bonds, which is why most who commented suggest your 70/30 asset allocation might need some reviewing. But what product(s) used to constitute this 70% equity exposure can vary. One need to bear in mind that individual stock picking tend to be more risky than equity ETF. Hence, there's a substantial difference in using individual stocks versus using an etf equity fund to represent your equity exposure under asset allocation

The fact you choose to use etf over individual stocks, to some extent mitigated the risk of individual stock picking. So whats left is to choose which ETF index to follow

If you look at the last 5 years, STI ETF have been meandering at circa $3 level, not much downside/upside. The net effect is bascially buying into a long-term bond, not much capital appreciation, only collecting 3-5% dividend income. I would say 70% of STI ETF, is less volatile than 70% in some mid/high risk bonds allocation. if you factor in your CPF as a bond component in oyur overall portfolio, that equity representation would also go down

There are some other ETFs that offer yield between 2% to 5% on SGX, including REITs and Fixed Income ETFs. You can check it out here: https://api2.sgx.com/sites/default/files/2019-0...

Alvin Teo

29 Oct 2019

Aviva Relationship Consultant at Aviva Affinity Channel

This allocation seems more equity-based despite you not being risky, but not a bad weightage also, c...

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