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Lin ML

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Lin ML

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Lin ML

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Investments

CPF

Retirement

Lin ML
Lin ML
Level 2. Rookie
Updated on 07 Jun 2019
Great question about CPF as part of investment portfolio. Let's talk about the CPF Ordinary Account (OA). Note that the OA is a risk-free way to net up to 3.5% interest (2.5% plus additional 1% on combined OA, SA & MA balance up to $60,000). The CPF OA is a good way to earn a little interest, but why not make it work harder for you? I use my CPF OA to invest in relatively stable and "safer" stocks on the SIngapore Exchange. Here are a few criteria I look for in stocks when using my CPF OA: 1. Dividend yield above 4% (My OA balance only gets excited to leave CPF if it can reap more than 3.5%) 2. Low dividend payout ratio - this is to ensure that the company can continue to pay out and even raise dividends sustainably. 3. Solid balance sheet 4. Strong track record I also deployed my OA funds like an "opportunity fund". This means that the OA monies were only triggered on rare occasions to invest in stocks on my watch list that were depressed or under-valued for whatever reasons. With this method, I invested in ST Engineering and OCBC Bank successfully and reaped returns higher than the promised 3.5%.

Value Investing

Investments

Lin ML
Lin ML
Level 2. Rookie
Updated on 16 Apr 2019
The best way to think about value investing is to compare it with discounted shopping. There is a new Smart TV released in the market. As a shopper, I did some research and found that it has several awesome functions that I like. But when I see its price tag, I gawked at the lofty price; probably because it is still a new product and there's a lot of hype about it. I thought to myself, it can't be worth that much. Over the next few months, I keep a lookout on that TV and monitored its price. Finally, the Great Singapore Sale arrived and there was a 15% discount from its recommended retail price. Sounds like a steal! But I wait out for a deal. I window-shop and stared at the 15% discount daily until I found a display unit selling at an additional 10% off. Ahh! I thought to myself. The Smart TV that I've been watching out for the past few months is finally selling at a solid 25% discount; its awesome functions and features remain unchanged. Then, I swoop in to buy the discounted unit. In sum, value investing is like looking for a deal. You want to buy a good stock with solid fundamentals at a fair (or even discounted) price.

Investments

Dividends

Stocks

Lin ML
Lin ML
Level 2. Rookie
Answered on 16 Apr 2019
It is astute of you to notice the 30% withholding tax before you invest in dividend stocks in the US! If you'll allow me to share my personal example: In splitting my investment portfolio between the US and Singapore markets, i paid attention to the strengths and drawbacks of the stocks of each market. Like you pointed out, the 30% withholding tax of US stocks' dividends was a big issue for me. Who woud want their dividend payouts to be reduced unnecessarily? But, I also realised that US stocks (even the big caps) are generally more dynamic (or volatile). This means that investments in US stocks could be used to derive strong capital gains. Conversely, SG stocks are less dynamic. But, we have a suite of attractive REITS what are regulated to pay out a significant portion of their income as dividends. Several blue-chip stocks in Singapore also pay out generous dividends. For example, the banks at this time pay out in excess of 3%, while ST Engineering typically has a dividend yield in excess of 4%. Naturally, the SG stocks could be targeted for a dividend strategy. With that in mind, I focus on growth and value companies among my stock picks from the US markets. On the other hand, I identify stable companies with a good track record of sustainable and generous dividend yields to generate income. Some investors call this a dumbbell strategy - growth/value investing on one end and income investing on another. This has so far worked well for me =)

Robo-Advisors

STI ETF

Investments

Lin ML
Lin ML
Level 2. Rookie
Answered on 08 Apr 2019
Given that you've chose investment funds, in this case an exchange-traded fund (ETF) and index funds (through roboadvisors), I'm gonna assume that you're not incline to stock-picking. If I were in your position, I would explore other assets such as real estate investment trusts (REITs), which pay out relatively generous dividends. If you like funds, you could opt for a REIT fund such as the Lion-Philip S-REIT ETF and the Nikko AM STC Asia REIT, just to name a few. However, instead of investing in the STI ETF, which has lower volume and is less dynamic, I would opt for an ETF that tracks the S&P500 for growth.
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