What is passive investing?

Passive investing departs from the idea “market return is good enough return” and beating the market is hard (there is a study in the US mutual fund that very high percentage - probably >90% - actually underperform their benchmark after fees.)

The most common and cheapest method is an ETF tracking an index. Their fee is low and they also handle lot money (liquid).

Passive investing, also known as Index Investing, begins with investing in indexes.

Essentially, indexes are a basket of companies used usually to represent the performance of a country's economy or an industry. For SG, we have the STI and the US has the S&P 500. By investing in funds that track these indexes, when the index moves up, our investments move together with it as well. Since markets tend to trend upwards, your investment should too as well in the long run. The S&P 500 has actually returned a whooping 9.8% since the 1920s per annum!

Between SG and overseas, I would definitely recommend a US index or a global index to start. Both have done well historically compared to the STI and are also much more diversified. You can try the following ETFs:

• CSPX (Irish Domiciled S&P 500 ETF)

• VOO/IVV (US Domiciled S&P 500 ETF)

• IWDA/VWRA (Irish Domiciled Global ETF)

• VEU/VXUS (US Domiciled Global Ex US ETF)

The returns from index investing is considered pretty high and relatively safe assuming you take on a long time horizon, the longer the better. What's important is to stay the course and allow your money to compound and grow with time.

You can find out more from my article on Index Investing and if you're not sure which broker to use, you can check out my broker comparison as well here!