Asked 2w ago
I'm 36 yr old. Newbie in investing so I have lots of catching up for my retirement.
After reading through articles through seedly ( thank you to all the community for the advices ), I started to DCA with Syfe. 400 for Equity100 (for growth) and 100 for REIT+ (for future passive income).
But I recently came across an article saying that these are satellite portfolios and it's best for me to have a core portfolio whereby I have bonds and also gold.
I have 1yr of emergency fund
Any advice? 🙏
You have to see what's the purpose of the gold and bond. For most people who have amassed a huge capital in their working years (eg a 45 year old with 500k savings) and you want to let it grow decently without taking too much downside. These kind of person may want to include some bond and gold to hedge against the systemic risk of the market since gold and bond are safe haven assets (negative beta) which means the returns are negatively correlated to the stock market.
But you must understand that gold and bonds are depreciating assets while stocks appreciate over time due to the underlying business. If you are sure of what you are doing and the inherent risk you are subjected to by investing in stocks (equities), i dont see a point in gold or bond as they weigh down returns over the long run. So it depends on you. Whats your goal, your retirement age etc. Best to have it planned out by doing so with a financial advisor. If you need any help, do let me know!
No, gold is meant for hedging and bonds honestly the returns are subpar, it's more to reduce the volatiltiy.
and for reits, to get a decent passive income, you need a huge capital. so if i were u, i'll go all in for syfe100 to get more growth first, think about passive later.
TLDR: For your core portfolio, consider a broad market ETF like VTI and VOO, and at least invest in government bonds.
According to Investopedia, the core portfolio should consist of "passive investments that track major market indices", where you simply invest in the entire market, instead of selecting a few sectors. ETFs like VOO and VTI will fall under this category.
The satellites refer to investments that you make where you selectively choose sectors/stocks that you think will do well. Hence, these investments are more 'actively' managed in that you are looking for winning positions that can outperform an index.
By the definitions above, the Equity100 does fall under the category of satellite investing, as it employs a more 'active' strategy to pick select sectors instead of investing in a broad market ETF.
The idea behind core-satellite investing is that you still invest in the entire market, but you set aside some investments in sectors that you think will perform well and yield more returns.
Hence, the inclusion of bonds and gold are meant to help diversify your core portfolio and reduce overall volatility. Bonds and gold are meant to help you protect against certain scenarios.
Theoretically, bonds are less volatile than stocks, so if the value of your equities falls, the value of your bonds should not fall as much. Hence, this helps to protect the value of your core investment from falling too much.
Theoretically, gold is there to hedge against high inflation. Even if the value of USD is eroded, your investment in gold is meant to protect you from that. It is also supposedly uncorrelated to stocks. Hence, even if your equities do badly, gold isn't supposed to be badly affected.
With that, I would recommend you at least invest in government bonds. I do not recommend corporate bonds since it carries a higher risk and you already have investments in equities for growth. Your investments in bonds are really meant to be more stable. Whether you want to invest in gold is up to you. I personally don't invest in them.
Some roboadvisors that you can consider for your core portfolio are:
Autowealth since they invest in broad market ETFs and government bonds.
Syfe's Global ARI since they have a global portfolio that diversifies between equities, bonds, and gold. Hope this helps!