Asked 3w ago
I am currently diversifying through different platforms, focusing on different things on each. Is it okay? Or am i over-diversifying? Should I be putting more capital in just a few instead of several?
I'm still more passive with investing mainly using robo-advisors (Stashaway&Syfe) and RSPs (DBS InvestSaver, FSMOne) mainly.
My roboadvisors have a few different portfolios & risks (3 in each platform) such that one invests more into bonds/gold, one into equities/commodities etc. And my FSMOne RSP currently invests into 6 different ETFs and i'm thinking of investing into more.
Am I overdiversifying, as I'm only investing $50-100? Should I instead focus on increasing capital put into each?
I think going with different platforms is not necessarily over-diversifying as long as your underlying holdings are different. E.g. your 6 ETFs with FSMOne are different from the Stashaway / Syfe ones. Do note that some ETFs are also invested in the same companies; VOO is invested in pretty much the same names as SPY.
If this occurs, it might be better to consolidate your investments with just 1 - 3 platforms.
Just my opinion, you are way over diversifying. No point opening so many accounts and portfolios if you're investing such a small amount. Honestly won't see much growth in each portfolio. Rather you focus on one like Syfe equity 100 and let it grow and compound better and faster
I think, problem your are facing is you have too many good ideas and you are too worried about portfolio drawdowns. When i started my journey, i had same issues.
I dont see anything wrong with your diversification. You can create wealth slowly over the long run. But, as you go down the rabbit hole, you will realize that you dont need so many instruments to express the same economic view... find the best possible stocks/etfs or funds to express your views.
Just accept the fact that there will be drawdowns. What you need to focus is how you manage risk holistically. Think about risk interm of your life situation rather than % portfolio performance (How 5%/10%/20% drawdown can affect my life style).
As Randy mention in his comments, diversification will never be there when you really need it. Because 99% of the portfolios are in the same trade (short volalilty). When Vol spikes almost all assets will correlate to 1 unless you have long vol strategies in place. So keep your processes as simple as posible with proper asset allocation and stick to your good investment habits (DCA,rebalance and etc), you will do well in the long run.
I think no, What matters is your asset allocation, how many % equity, % bond, % commodities, as they will drive your long term return, not the providers.
The thing about diversification is, they will never be there when you really need it (a.k.a during the worst month - March 2020, you will see every asset price movement is correlated, doesn’t matter if it is equity, REIT, bonds etf, even gold). So, not panic selling is also key.
For me personally. I used to invest in multiple platforms. An incident which happened to someone i know changed my decision. Im now only invested using DBS. Cause if anything were to happen to me, atleast my kids n wife dont have to crack their heads to find out where else are my investments. Its all held by DBS. Yes i do agree that fees paid are higher. But atleast im rest assure to know that if 1 day im not around. They only have to remember DBS
Couldn't have said it better myself with all the answers provided here, I have nothing more to add in terms of monetary considerations.
Maybe let me add on a little non-monetary perspective, being on so many platforms, also means you're diversifying your time and energy. If you consolidate, it would probably yield you better "returns" in other aspects of your life too!