Asked by Anonymous
Asked on 27 Aug 2019
How should I be investing, single premium or DCA?
My current idea is to diversify by splitting into STI ETF (Nikko AM or SPDR STI), bond (not sure which), and REIT ETF (probably lion Philip because it has 30 assets underneath).
Any thoughts are welcome!
For 5% pa, STI ETF would not meet your criteria as it gives only about 3% pa. For REIT ETFs, similarly it gives about 4+% pa. If you want 5% pa, minimum is individual REITs but you would have to do your research and due diligence as there are only a few which are strong, and by the way they are quite overvalued now.
For REITs, recommended to lump sum invest once it reaches a suitable valuation, for example when it reaches your target yield of 5% at that point in time.
Top Contributor (Dec)
5% per year, with LTA's PARF. Hope this helps you in what you are looking for.
Higher returns but safer assets.
I personally won't invest because I prefer higher returns instruments like stocks. I am holding most of my cash waiting for a stock market correction.....
29 Aug 2019
I won't go into stocks now.... inverted yield. The recession won't come tomorrow but pretty sure within next 2 years?
Maybe buy something short term (6months to 1 year) and wait for the stock market crash?
29 Aug 2019
It’s been 4 months since this question.
Assumption before the bottom is valid: You’ve insurance protection for your dependents, your parents and yourself.
Invest in what I know & understand; applies to all tools that you’ve on hand.
I invest in REITs that I know; commercial REITs - know my properties, understand the factors that can increase its rental revenue, decrease its operating expenses, maximise its leverage game of interest spreads.
In another words, do my homework.
Diversification has its strengths. Even that, if you choose to invest in ETF, do our homework too for the value of an ETF also relies on certain underlying assets.
It depends on your financial goals. Are you looking for dividend income or to have a long term plan ie retirement? Is your 20k 100% of your savings, or do you have more?
When you do lumpsum investment ie single premium, you are betting that your point of entry being a favourable price.
When you DCA, you remove that uncertainty at the cost of a lower return.
Does your CPF Balance have 60k? The first 60k will achieve a bonus interest of 1%, which would mean if you put your fund in CPF SA, you earn a guaranteed interest of 5%. If you are yet to achieve it, I would suggest you do so. While CPF monies above 20k in the OA and 40k in the SA can be used for the CPF investment funds, the guaranteed returns from CPF would make for a weak argument for do so, especially SA monies which earn a nice 4% guaranteed interest.
Another way is to consider putting it into SRS- you gain tax relief for doing so, then use the amount to buy into Unit Trusts or Stashaway- apparently, MoneyOwl and Endowus who are carrying the excellent Dimensional Fund are in the midst of becoming SRS certified.
Personally, I feel that the markets are overvalued now. Am waiting for the market crash then go all in:)
You can set up your very own Dividend Re-Investment Plan(DRIP) for REITS.
Do your due diligence and select well established market leader eg Mapletree
Plough back your dividends every year and watch your nest egg grow
Step 3(Optional): Set aside some of your annual bonus and add to your sum
Looking back at the answers here where many are holding their money to wait for a market crash, comparing it with how indexes and stock prices since then, seems like many has missed out on money-making opportunities. Hence the saying 'Time in the market rather than timing the market'. No one can predict what would happen or when the next recession would come.
That aside, as what others have mentioned, REITs do offer the yield you are looking for. Alternatively, given how DBS has promised to give $1.20 dividend, you could keep a lookout when it falls till $24 and snap some of it up.
Your current idea to "diversify by splitting into STI ETF (Nikko AM or SPDR STI), bond (not sure which), and REIT ETF (probably lion Philip because it has 30 assets underneath)" is something i would recommend.
This is because it does diversification beautifully and thus minimises your risk to an extent
Dollar cost averaging is not a foolproof investment strategy. Here is why: https://www.blog.pzl.sg/dollar-cost-averaging-singapore-does-it-really-work/
To determine if the market condition is favourable to invest, the question will be: Is there a right time to invest?
Accordingly, I have compiled a list of financial crisis and disasters since the 90s and every other strong reasons not to invest. However, the market has proven otherwise year after year.
Therefore, focus with the right investment strategy by knowing your investment objective. Then decide the tenure and decide if a lump sum or smaller amount works. Finally, invest into assets that suits your risk appetite.
Here is everything about me and what I do best.