facebookWhat should I do If I'm able to invest $2k-$4k monthly? I'm personally quite new to investing and $3-5k is already after deduction of all expenses? Quarterly Investment of $9k to max cash upfront fees? - Seedly

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Anonymous

11 Feb 2020

βˆ™

Stocks

What should I do If I'm able to invest $2k-$4k monthly? I'm personally quite new to investing and $3-5k is already after deduction of all expenses? Quarterly Investment of $9k to max cash upfront fees?

Investing for a diversified portfolio. I'm quite new but I feel that I'm not experienced enough to time any market or equipped with enough knowledge to buy in at the right time.

Discussion (14)

What are your thoughts?

Elijah Lee

Elijah Lee

17 Dec 2019

Level 18Β·Independent Financial Advisor at Phillip Securities (Jurong East)

Hi anon,

I would advise that you take a diversified approach towards investing. Regardless of your free cash flow.

There are two basic asset classes: Those that are variable and those that are guaranteed. What we want is to buy into income producing assets. You can't buy your lunch with Amazon shares, but you can buy it with dividends/coupons/payouts that were credited to your bank account.

Variable

  • Equity/Stocks - High risk, high return. You will have to do some research to understand which companies/businesses you want to buy into, based on concepts such as fundamental analysis. You will want to keep a watch list, as just because a company is good to invest in, does not mean that the price is good as well. Also, be aware of brokerage costs (costs of investing) so you will want to ensure you reduce your transactional costs as a percentage of the contract value. As you have correctly calculated, $9K will more or less minimze the transactional cost. (at least for SG market). Can pay dividend up to quarterly.

  • UTs - Many kinds. Equity or fixed income or balanced. Look at return nett of fees and their performance against reference benchmark, along with other metrics like alpha, beta, sharpe ratio, etc. Good ones will beat the reference benchmark across multiple timeframes. However, you can DCA into UTs monthly since there are no transactional costs involved (at least on POEMS), which is good for starters. Can pay dividends monthly.

  • ETF - Many kinds as well. Equity, fixed income, etc. They exist to track the market, so don't expect world beating returns from them, as that is not their mandate. You will incur brokerage, so the same advice on transactional costs as stocks will apply. Usually semi annual dividend

  • Fixed Income - Retail bonds have low liquidity but may provide a measure of stability to your portfolio. Usually semi annual dividend. But seeing as how you have corporate bonds and SSB already, you can probably focus on the asset classes I have mentioned above instead.

Guaranteed

  • Annuities - Immune to market conditions. Zero risk. A guaranteed rate of return to provide a peace of mind as well as mitigating sequence of return risk when you are retired. Guaranteed returns will rise over time as bonuses are added to the annuity's value. Pays monthly.

I would recommend that you ensure a good mix of both variable and guaranteed income sources. Do not try to time the market in the case of variable investments, instead, spend time invested in the market instead. For guaranteed instruments, the earlier you start, the earlier that compounding can work wonders for you. Don't be worried about experience, as gaining knowledge will take time, but gaining experience comes with getting your feet wet by starting something. There is no substitute for experience.

Over time, aim to build an income stream that is from multiple sources, such that your entire portfolio is low in volatility, but with reliable and predictable income. You'll also want to ensure that your streams of income are inflation hedged.

This is of course, provided you have your emergency funds and insurance already in place, if not, you'll need to sort that out before starting.​​​

With that amount of money, you should learn more about investing first. Sharpen your skills and knowledge. So you can be able to look for great company to invest in. No one can time the market. So don't bother to waste time on it.

Bjorn Ng

Bjorn Ng

17 Dec 2019

Level 13Β·Business Analyst at 10x Capital

Hi there,

Don't rush to put in your spare $ into investing. Focus on building up the knowledge firs...

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