Hi, I am thinking of investing $500 every month. What are some good options for investment? My goal is to start saving for retirement as I’m nearing 40 but it’s better to start late than never right? - Seedly
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Anonymous

Asked on 01 Mar 2020

Hi, I am thinking of investing $500 every month. What are some good options for investment? My goal is to start saving for retirement as I’m nearing 40 but it’s better to start late than never right?

What are some good investments for me at my age?

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Summer
Summer
Level 5. Genius
Answered on 12 May 2020

Accumulate once every 3 months and put it into a S&P 500 ETF quarterly! The historical returns are 10% and I would say it is much better than saving bonds

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Frankie Rappaport
Frankie Rappaport

13 May 2020

Best advice
Summer
Summer

13 May 2020

Thank You!
Penny Chong
Penny Chong
Level 5. Genius
Answered on 11 May 2020

It's good that you are starting out now. Good job :)

My advice is that its importance to increase your financial knowledge first and understanding your personal risk appetite! This would require some effort put into research and self-reflection.

Some questions: "Am I investing in hopes of realising it all in the future to fund my child's future education/buy a house?" or "Do I want it to be an alternative source of annual income that can come in terms of dividend?" 

Important thing now is do not rush into buying popular stocks now just because they're cheap. You need the financial knowledge first to pick good stocks and evaluate them yourself. The notion of what goes down will come up worked in the last recession but this one seems to be an unpredictable battle to be honest.

I would recommend investing 50% in a market portfolio like S&P500 ETF as it historically yields 10% return and has a general upward trend. Another 50% can be other individual stocks that you like and see a potential of 10% return. Diversification is always important. There is no reward for bearing unnecessary risks. 

While building up your knowledge, you can think about investing in low-risk savings plans (e.g. from banks, SSB) first to gain some extra interest, instead of keeping cash in the bank.​​​

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Frankie Rappaport
Frankie Rappaport

11 May 2020

Good
Alvin
Alvin
Level 4. Prodigy
Answered on 12 May 2020

You have to think about your risk appetite. For a safer approach and passive investment, you can consider roboadvisors. I am using StashAway for US/Europe ETFs and DBS digiPortfolio for Asia ETFs.

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Jackson Chan
Jackson Chan
Level 3. Wonderkid
Answered on 12 May 2020

I don't think investing $500 every month is a good tactic. I rather save the money and keep it in cash and invest when market price is low. Your return will be much higher if you buy low-sell high, rather than investing every month.

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Frankie Rappaport
Frankie Rappaport

13 May 2020

No, difficult to time the market, studies show that during waiting periods a lot of performance gets lost. investing regularly averages but leads to optimum long term performance
Tay WenHao
Tay WenHao
Level 7. Grand Master
Answered on 12 May 2020

I think it depends on your risk appetite and how much returns are you expecting.

If you want to be 'safer' I would recommend ETF. Stable dividends but slow capital appreciation.

If you want to take abit more risk, can consider blue chip stocks. But do note that blue chip are still risky. E.g. SIA during this pandemic. We wont be sure whats ahead of us and which company would fall but best to do your own due diligence and keep up with the market.

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jul)

Level 9. God of Wisdom
Answered on 11 May 2020

Sure thing.

some alternatives, warning particularly from what not to do, here:

https://seedly.sg/questions/what-is-your-general-investing-philosophy-strategy

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MT2020
MT2020
Level 7. Grand Master
Answered on 06 Mar 2020

Yes, its always good to start early. you might want to allocate more towards bond since you are building for your retirement. A good place to start would be to invest via robo advisor. While doing that, you could read up and research about what are the different kinds of investment and how would you like to build your portfolio.

1 comment

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Frankie Rappaport
Frankie Rappaport

11 May 2020

Not convinced
Joe Lee
Joe Lee, Adventurer at Game of Life
Level 5. Genius
Answered on 03 Mar 2020

YES better late than never!

If you are investing for retirement, I will assume you will be doing more of dividend investing for you to have a passive income when you eventually retire or for you do be financially coasting when your dividend is able to cover some of most of your expenses.

I will suggest to read up on the different investing articles and guides out here, for REITS & stocks. This will take alot of effort and time but will be well worth it.

If you have limited time or simply too busy to do that, just invest in ETF and forget about it. DCA every month or quarter if your investment amount get bigger to save up on the robo advisor fees later on.

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Frankie Rappaport
Frankie Rappaport

13 May 2020

Whether to have dividen payouts versus peu à peu selling part of susscessful equity f.ex ETFs when trading fees are very low and no capital gain taxes given, maybe is not so different, particularly when more long term successful aa compared to dividend equity.
SH
Sze Hao, Analyst at Tech Firm
Level 3. Wonderkid
Answered on 03 Mar 2020

tldr; If you are sure you will not need that $500 monthly for the next 10 years(at least), DCA into ETFs/Robos

Long version:

A good investment for you really depends on a number of factors such as investment goals, risk appetite, investment horizon and most importantly, how much time/effort you want to put into investments.

If you want something quick, easy, and relatively effort-free, do Robos like Stashaway, Syfe, Endowus (See tldr)

If you are willing to put some time and effort into it, invest directly into ETFs yourself and avoid the management fees (~0.2% - 0.8%) of roboadvisors. STI ETFs for local exposure, S&P 500 or global ETFs for wider geographical diversification

If you are willing to put a lot of time and effort, AND you are a sophisticated investor who is willing /able to perform fundamental analysis, pick your own companies and invest in them directly. This has the potential for highest gains but also the potential for steep losses if you choose the wrong companies.

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Frankie Rappaport
Frankie Rappaport

11 May 2020

After the initial 'training' phase ETFs could also be very carefree

Before you start investing, it will be best to understand your objective. Here are some questions to help you:

  1. What is your capital?

  2. How will you want to invest your capital? E.g. lump sum or an amount on a regular basis

  3. How long will you want to stay invested? E.g. 10 years

  4. What is your risk appetite? E.g. How do you feel about short-term volatility?

  5. What is your objective for investing?

By understanding yourself, we are able to determine the right type of assets for you to invest in. This helps us to ensure that we are able to achieve your goals in an efficient manner.

Moreover, you may wish to create a well-diversified portfolio across different asset classes and risk level, e.g. bonds, ETFs, blue chips, stocks, unit trust, REITS. By creating such a portfolio, we reduce the portfolio risk.

Generally, one of the ways to create such diversified portfolio is through funds, e.g. ETFs, unit trust. If you are open to unit trust, here is the latest result from AIA Singapore: https://www.blog.pzl.sg/aia-singapore-investment-linked-fund-performance/

At the same time, you may wish to consider putting part of your budget into tools that gives you a guaranteed stream of income. Through this process, it ensures that you get the best of both worlds from your overall portfolio - guaranteed returns when market is not performing, and potentially higher returns when market is doing better.

All in all, answer the five questions to understand yourself better. Then determine whether you are able to complete this financial journey on your own. When necessary, speak with an experienced consultant who is able to share sound financial advice with you.

Here is everything about me and what I do best.

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Pang Zhe Liang
Pang Zhe Liang

13 May 2020

There are funds that have proven to beat the index consistently over a defined period. As for the benchmark, there are various reasons. For instance, an actively managed fund may change its asset under management. Consequently, the current benchmark becomes irrelevant or inaccurate. With this purpose in mind, there exists a need to use another benchmark that is more appropriate to this end.
Frankie Rappaport
Frankie Rappaport

13 May 2020

Thank you
Rais M
Rais M
Level 7. Grand Master
Answered on 02 Mar 2020

Always know that it is never ever too late to start investing. The only main differences are what is your investment knowledge and how much risk you should take.

If you have completely zero investment knowledge, you can consider the following first to start the investment journey.

1) Invest in STI ETF on a monthly basis (DCA approach). Check out POSB Invest Saver or OCBC BCIP.

2) Invest in Singapore Savings Bonds.

Once you are more familiar and understands business fundmentals, you can start looking into shares of companies. At this age, perhaps the best approach would be dividend investing rather than value or growth investing in view of your investment timeframe and risk level. The last thing we want is for you to lose money. Most blue chips companies paying dividends are strong and stable companies in Singapore.

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Geraldo L.
Geraldo L.
Level 7. Grand Master
Answered on 02 Mar 2020

Personally, I would consider CPF top-ups for the attractive interest rates and also qualify for tax relief (if applicable) provided I do not need the funds to be liquid. Otherwise, I would recommend Exchange Traded Funds (ETFs) as a good way to start - get more familiar with the markets and understand you react to the ups and downs. Later on, you can consider more sophisticated strategies (Value / Dividends, etc.) related to stock-picking if you feel that it's suitable for you.

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Andy Sim
Andy Sim, HR Professional at a Financial Institution
Level 7. Grand Master
Answered on 02 Mar 2020

Hi Anon, you can start with a roboadviser like Stashaway or Autowealth. Set your risk level, deposit money inside every month and let the robo do all the work. But important to know what the robo is investing in.

Alternatively, set up a regular savings plan from the banks.

If you've done your research and due diligence, you may then venture into stock/bond picking yourself. Maybe start with ETFs that track a global index like S&P500. But you'll have to do the rebalancing yourself.

At your age, build up a balanced portfolio of stocks/bonds since your investment horizon is not the longest. Then gradually shift to a more Conservative portfolio consisting of more bonds than stocks when you are older.

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Hi. It's never too late to start. Etf is a good way to start investing. You can start by filtering out Robo advisors and understand dollar cost average because that would be what u r doing. As time progress, learn about how to invest.

I would recommend having a goal u want to achieve. Is it variable, desirable, feasible? Then work towards them. E. G I want to collect 1k annual dividend by age 50. Then how u work towards it.

Another option is p2p lending, considerably more risky by both. It has a low barrier to entry (capital of $500, easy to pick up) and has average annual returns of 10%. As long as u play safe and take measures, there are a lot of things u can learn.

  1. Understand your risk tolerance. It is very easy to adjust because the minimum amount per loan is $2

  2. Learning to read financial. P2p reports are about 3 pages. How much info can u extract to make the right decision to take part in the loans?

  3. How do u want to diversify? The interest rate is from 4% to 18%. How much do u want to put in each loan? Possible opportunity cost if u did not because most have the tendency to quickly deplore their capitals at the start

pm me if you have any queries or need some research material

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Davin
Davin
Level 7. Grand Master
Answered on 01 Mar 2020

U can explore RSP or robo advisor if u intend to do it every month.

There are few brokers providing RSP service, DBS, POEMS, OCBC, FSMONE. I'm personally using DBS and FSMOne.

Then u hv to decide whether u want to stock pick or go for ETF. For a beginner, ETF is a good option.

Let me know if you need more info.

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Davin
Davin

03 Mar 2020

Hi Kyla, I would suggest 2 books that helped me starts my investment. 1) Rich by Retirement (Joshua Giersch) 2) The Simple Path to Wealth (JL Collins). The books r available at NLB and they are easy to read
Mohd Gaddafi
Mohd Gaddafi

04 Mar 2020

Hi Davin, The FSMOne interface isn't the easiest to use and there are like 40 ETFs. Which ones would you recommend? I would prefer to invest in overseas markets.