S&P 500 Index
Asked on 26 Mar 2020
Came across the bogle head 3-fund portfolio consisting of a local index (STI ETF), international index (eg. s&p500, VWRD, IWDA, EIMI) and lastly a bond. What is the investment objective of this portfolio?
This portfolio is to achieve these:
match market returns: of 8-10% on average
lowest possible fees: 0.1% to about 0.5%, compared to mutual fund which is at least 1%
no need to manage investment: fund self cleanse by removing stocks which no longer fit to be in a fund and replace with another better stock
The local + international index will make it more growth portfolio.
The bond index will make it more income portfolio.
Personally I modified the fund to be as such:
local fund: Removed. STI ETF is very bad as banks as telcos has a very large percentage in it. Hence it is not as diversified as S&P. Furthermore, I am not convinced Singapore's index will outperform US index.
International index: I use IWDA + EIMI. Both reinvests dividends so i do not have to manage the dividends. The 2 of them covers developed (IWDA) n emerging (EIMI) markets. So I have the broadest diversification possible
Bond: Removed. Our CPF acts as a bond already. Also, I have long time horizon to invest, hence i would sacrifice stability of a bond which gives 3-4% to get a higher return of 8-10% from international index funds
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27 Mar 2020