Hi! I am 31YO F married with a kid, have paid off my housing loan. I would like my cash to be working harder for me and to get started on investing, any suggestions? - Seedly
 

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Asked by Anonymous

Asked on 21 Jan 2020

Hi! I am 31YO F married with a kid, have paid off my housing loan. I would like my cash to be working harder for me and to get started on investing, any suggestions?

Currently, I have 100k parked in SC bonusaver account earning 3.88%, 75k parked in 2 UOB one account earning 2.435%, 100k in a 5year endowment from OCBC-GE maturing next year march and around 70k in OCBC 360 account earning just the salary interest. I am considering between opening another SC bonusaver account or getting started on investing. However, as a full-time working mother with a kid and planning another, I worry I might not have time to monitor the investments.

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Frankie Aufhauser
Frankie Aufhauser
Level 7. Grand Master
Answered 4w ago

If you're talking about more risky investments (=stocks, mutual funds, ETFs)

maybe you do it simple and take just one of these for ultra longterm:

Chart of VOO as an example

Vanguard SP500 ETF (ticker: VOO)

or

iShares SP500 ETF (ticker: IVV)

buy & hold for at least 10 years (you must be able to stash away that money for 10 y !)

bought with cheap online broker with regular new investments

don't open up new saving accounts

for having a perspective substract current Singapore inflation rate yearly from

your mentioned %-numbers

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Frankie Aufhauser
Frankie Aufhauser

4w ago

Disclaimer: past results are not necessarily correlated to future performance

I am a firm believer in value investing, and believe that with minimum effort, you can make your money perform much better over the long run than letting others invest for you.

In value investing, once you make a move, you don’t have to monitor the investment regularly. In fact, Warren Buffet encourages you to think of making no more than 20 investments in your lifetime. Buy, and hold it for at least 20 years.

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If you do not have time to monitor your investment, then you should avoid investments that require tremendous time and effort from your end. This is because time is more valuable when spent at work and especially with your family. As a result, it will make sense to invest in tools that can yield a similar rate of return without so much work.

However, before we start investing, it may be more important to spend quality time to understand your finances and your priorities in life. By understanding what you want for your future, we are able to maximise your money to its fullest potential. For instance, do you need so much immediate liquidity? Can we shift around the money in the banks to bring the returns up to the next level while maintaining the same rate of liquidity?

Thereafter, you may wish to decide whether you need this guaranteed return from the bank or to invest part of your money into tools that can potentially generate higher return over time. In your situation, I will suggest you to look into a diversified portfolio across different equity funds. (I will be able to explain the philosophy behind why it makes sense to invest only into certain equity funds instead of bonds while maintaining a reasonable risk level based on your risk profile. In other words, we will be taking calculated risk instead of unnecessary risk to this end.)

While there exists charges such as management fee, that is where it is the job of the fund managers to ensure that your invested capital grows over time. Furthermore, we can tap on the expertise from global investment firms like Mercer and BlackRock to create a customised portfolio based on your risk profile. In any case, all investment tools have charges and fees of their own.

In case you are wondering, this is the latest fund performance from AIA: https://www.blog.pzl.sg/aia-singapore-investment-linked-fund-performance/

Having mentioned that, past performance is never an indication for future performance. All in all, it is about sharing a common vision and to create a goal that you want for your future. Money is merely a tool to put into the right assets to achieve your goals.

Here is everything about me and what I do best.

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Question Poster

4w ago

Thank you for your reply. I have been shifting funds around for a while and thought of investing. I have read up on roboadvisers... are they a good choice in terms of ease and low fees as compared to engaging a FA? or should I DIY as many have recommended on seedly fb?
Pang Zhe Liang
Pang Zhe Liang

4w ago

As always, if you are knowledgeable and capable enough to be willing to sacrifice quite a bit of time to invest on your own, then you may consider to DIY. While it may save you some upfront fees, the intangible and unaccounted cost may vary, e.g. time loss, opportunity cost due to inefficiency, cost of fund switch. Every investment has its pros and cons. On the whole, the goal will be to build a well-diversified portfolio across major asset classes that are capable to help you achieve your investment objectives. All things considered, never put all your hard-earned money into a single asset, especially new start-ups.

Wow that's a lot of cash. Unless you're planning for an extremely huge purchase (like a down-payment for a property) using that money within the next 3 years, it should be invested.

Since you're a parent I would say at max, hold a year's worth of expenses in cash for emergencies, and any money needed within 3 years. Everything else should be invested.

I would suggest to hire a financial advisor to manage your investments with you. You should be looking to build a globally diversified portfolio that matches your risk profile. Build this asset to eventually provide you with financial independence so you can fund your retirement and your child's education.

Just investing 200k from your 420k and hopefully getting a 7% compounded return over 25 years would give you 1m at the age of 56.

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Question Poster

4w ago

Thank you for your reply. Is 7% return is achievable usually? would like to know more details as i know nothing about investing
Hariz Arthur Maloy
Hariz Arthur Maloy

4w ago

It's possible yes. Historically, global equities have performed 8.84% annualized for 50 years.