Asked by Anonymous
Looking to grow my wealth, and looking at China's jump in stock prices seem quite keen in investing something there. Is it a good idea to invest now, or am I too late alr? If not what should I invest in SG?
A savings of 20k is a good base for investments - of course this must be after you have properly covered yourself with insurance such as whole life plans, a&h and your salary protection. Protection is just as important as investments, since a bad event can wipe out all your assets in a few months, so i'm assuming you're covered in that respect.
With the rest of the 20k, if you're looking to invest but are still a beginner at investments, i suggest not jumping the gun into china although china's growth in the stock market is currently in a bull run - this is all in my opinion speculative trading according to the news about the trade war talks. Firms in china are increasingly borrowing huge amounts of money from banks in order to chase this profitable period and the debt levels in china is very high now. For all you know it could be the same situation as 2015-2016 stock market crash due to risky debt funded trading, which china has a bad history of.
If you're looking to accumulate wealth at a steady pace, a good place to start is SG. SG has multiple REITs such as Capitaland mall trust and Ascendas investment REIT that pay out 6~10% dividend rate, and even the banks like DBS pay out 3.4% approx. our market, although not large in market cap, is a very good wealth accumulation market filled with stable blue chip high dividend stocks. you won't see much capital gain, but the regular income payouts are very attractive and consistent which is hard to find elsewhere.
If not, perhaps a tried and tested vanguard s&p 500 index mutual fund is a good place to park the money as well - it tracks the s&p 500 and that index has thus far shown a steady up trend, even after downturns. If America and the USD remains the main currency of the market (which it most likely will) and the global economy grows, your investments will grow too steadily. This website link (https://ycharts.com/indicators/sandp_500_total_return_annual) shows the year on year s&p growth - since 2010 it has only been negative once, which was last year due to trade war disputes, oil supply glut and other troubles that wiped out the gains of the entire year. If not, you should earn respectable returns, as seen in the table in the website.
these are my recommendations because i'm somewhat a risk adverse investor and i like more certain returns. if you want to go get capital gains, you can look into us stocks which are more credible and if i dare to almost say "predictable" but don't quote me on this. if not, best of luck, and always be sure what you are putting your money into! you don't want to spend money on something you don't even understand, and risk losing it all. there is no reward for unneccessary risk!
I'd ask, why china specifically?
How's your investing experience/knowledge? I'd recommended just parking 10k to get started locally first. Find something you are familair with, or just buy a stock to get used to the market, decision making, following up on news and the 'feel' of investing.
More importantly, only invest money you are willing and able to lose. If 20k is your total savings and not savings for investments, perhaps you should save 6 months to 1 year of pure emergency savings first. Only then start, and with 10k, a decent amount for stocks.
Just my opinion.
I have been a index investor for a few years now. Currently working in China and therefore I invest in China ETF (2801.HK) via HK exchange. However, I did not started investing in China straight away. Like many, what you can do is to start locally with STI ETF, SG Bonds ETF and maybe REITs ETF. Currently my portfolio is something like this:
STI ETF: 35%
MSCI China: 35%
ABF SG Bond: 20%
This is just my personal preference and every investor has their own. China is a growing market and will be the largest economy in just a mater of time. Crash? Look over the past few decades how many recessions and crash have we seen? If you are a long-term investor, look 30-40 years into the future. Just my opinion. =)
And yeah, do have emergency funds available. Good luck!
I would suggest you have at least 10k as emergency fund.
The rest of the money can be used to select a few dividend stock and purchase slowly.
Roughly around 5 stock will do, and 10% into each as you do not want to put all eggs in 1 basket!
Hope this helps!
You don't have to go to china. Local market can grow your wealth. It really depends on the tools you use and the risk you can take.
If you believe in the narrative that there’s still growth for china, why not, this is essentially marco-econs right?
Unless you are very familiar with china (im guessing you aren‘t hence the question), i wouldn’t restrict myself to geography and focus on the fundamentals surrounding the business and see geography as one of the many factors rather than the key consideration.
In my opinion, abit risky to invest in china due to trade war and rising debts. You can invest in the sti etf or robo advisors if you want to invest more globally. Just remember to do your research first before buying.