Asked by Anonymous
The outcome of investing is to have a better retirement in the future. Think of retirement as a Pyramid - you will need a solid base to work on. My solid base consists of CPF, followed by global index funds (IWDA) and local index funds (STI ETF)
Why CPF?Contribution to CPF RSTU and MA helps to reduce income tax. https://www.areyouready.sg/YourInfoHub/Pages/News-Voluntary-Contribution-vs.-Retirement-Sum-Topping-Up-Which-suits-you-better.aspx
Meeting FRS early means that bulk of your CPF funds during retirement will be from the government. (Rule of 72, compounding interests)
Eventually you will meet FRS and MA capped so why not take this chance to reduce your income tax!
Why gobal index fund IWDA?
Why local index fund STI ETF?
I will probably "invest in myself" and get myself well protected with insurance first. Then 5k into STI ETF and maybe 2k intp blue chip stocks to get me started on equities! will aim to diversify my portfolio with stocks and bonds
Passively and diversify the capital across asset classes (stocks; government bonds), geographical markets, industries and companies. This is a more conservative way to achieve consistently decent investment returns.
Remember the research by Standards & Poors Dow Jones shared earlier? Here's the link to the report. Page 6 and 14 shows the summary statistics where an overwhelming majority of professional fund managers underperformed general markets consistently over short, medium and long term.
If an overwhelming majority of professionals who went through the good finance education, have the best market data/tools at their disposal (eg. bloomberg) and who devote 8 hours a day managing investments can't even match the general market performance, I would suggest investors to carefully consider if they have the confidence to outperform first the professionals and second the general market.
hmm I would divide into 3 portion after putting aside the emergency fund: investment fund, opportunity fund & education fund.
Education fund: fund I used to educate myself on investment, this may be on books, courses, etc.
Opportunity fund: is fund which I put aside, until I am ready to invest further or the market is bearish or the market is at the price I wanted.
Investment fund: likely to be amount which I will allocate monthly to contribute into the investment tool(s) which i am comfortable with.
Definitely will combine 3 of them into my portfolio :)
This is a pretty good question! In fact it's something which we often discuss about in our community because the first step can really be so hard sometimes.
Make sure you have 3 - 6 months of rainy day funds first before going into investments. That will allow you a buffer for unpredictable events. (eg retrenchment or accidents etc.)
In fact we actually asked some local financial bloggers what they thought of before jumping in with their first $10k: https://blog.seedly.sg/how-singapores-top-financial-bloggers-will-invest-their-first-10k/
Here's my own take:
For someone in the age range, 25 - 35 years old, here are some Investments you can consider: (from most recommended to least)
Robo-advisors (for exposure to US and global market indices at low cost) (you can read reviews of the robo advisors here)
STI ETF (via RSP a regular savings plan and investing in local SG market index movements)
REITs and Blue Chips (stable dividend paying stocks)
SSBs (to beat inflation in the long run)
Again, these are benchmarks but you can go and figure out these investment products to properly determine which you are most comfortable with before committing to it. But beyond that, I feel that it is important to take the first step so you are 'vested' to get better. Most people pay market lessons to the market before really learning deeper. You may learn from your small losses, but over time your long term gain and compounding can really be a huge gain.
Hope this helps :) Cheers!
This is based on the assumption that the individual not being good at investing or trading strategies.
if the individual has a more aggressive profile, he/ she can maintain 3 months‘ of expenses and focus on investing the rest.
Something slightly contrarian to the usual diversification response, but I would suggest concentration only on 1 or 2 investments, even if the investment can be a diversified investment (i.e an ETF). There is no need to split the amount across 4 or 5 investments at this stage as this increases your transaction costs (brokerages charge a minimum transaction fee) which in turn increases the return you need to achieve in order to break even. Also, assuming you are continuing to save, this 10-20k will not be the last investment you are making and so you can use your later investments to diversify.
On details, maybe you could consider 1 ETF and 1 stock to split your initial sum. The ETF can give you some diversification, and the stock can give you some practice in analysis and choosing shares to invest in, which will help you in the longer run as well.
Good luck! :)
If this is my rainy fund, I will put in higher interest account which gives flexibility to withdraw any time without much penalty.
Good to start with dividend Income investing on defensive stocks that give 6% and above in dividends. Always focus on reducing your Risk, instead of focusing on the Potential Returns., as Higher Returns comes with Higher Risk too. Manage your risk with a portfolio of 6 - 10 stocks. Learn the trips and traps of the Stock Market through Investing Courses, not Forex or trading courses. You either pay below 4k to learn the tested approach, or lose >10k to learn the hard way. Of course, you could read up yourself and test out yourself. Just be mindful that many of these books don't provide the updated details and tools relevant to the countries that you are investing. Attending courses also give you more friends and avenues to get different perspectives on a stock too.
Putting my eggs in different baskets: 1) some in a decent savings account--for me this is the DBS multiplier account 2) some in a stable investment, e.g. SSB or top-up CPF 3) some in sth riskier, e.g. roboadvisor or even P2P 4) some in self-care and self-improvement, e.g. yoga classes, gym membership, books, courses 5) some in building a sustainably affordable lifestyle, e.g. certain cards/apps/memberships for discounts on food/activities/groceries
Being lazy and risk averse, I'll DCA into STI ETF.
If the first 20k is after accounting for emergency funds and your liabilities, I will put around 10k in risk free assets like SSBs or a high yielding bank account. This part is to make sure that I am beating inflation and hopefully gain a little.
The next 10k I will likely split between the relatively more risky investments like stocks, roboadvisors, ETFs, funds, private equity bonds like Astrea etc depending on how active you are as an investor. Remember to do your own due diligence and cost analysis as cost matters more when you are a small retail investor!
Personally I am more conservative so I would prefer a 50-50 or max 40-60 split until I have my emergency funds built up.
Invest if you can spare the money to build your wealth, after building your emergency funds, after reducing your liabilities, after you are properly insured.
SSB Because i cant afford to lose my capital
Set aside about 3 months worth of expenses as cash, this is for emergency.
The rest you can split between Singapore Savings Bond (treat as high interest savings) and ETFs either STI or one of the global ones. The younger you are the more you can put in equity vs bonds.
I'm lazy so I would rather keep in ETFs than manage actively. But if you have the expertise and drive to do active trading, then you can keep some of this amount as capital for that.
I’m more risk adverse so I’ll put some into Singapore Savings Bond first! For the remaining sum, my other options would be to look at would be STI ETF and blue chips.
Assuming that you have already put aside emergency cash and these are cash that is mainly for investing, below is what i will do if you are age below 30
50% for dividend stocks which can be REITS or consistent dividend stocks
15% for bonds such as temasek bonds or SSB
35% for growth stocks that have high probability for price appreciation
I would set up a regular savings plan with POSB invest-saver to buy Nikko AM Singapore STI ETF
Firstly, I would have managed a sufficient amount of emergency fund at least 3 to 6 months worth of expenses calculated via my seedly expenses or even dbs app does it for you for your 3 months expenses just total up and save that amount via hard cash or a normal savings account you have.
Next, if you’re 20-25 and keen to have at least 1% of interest in a bank account, put in your 1st $10K into it and let your money grow for up to 10 years. Must at least have $1K.
Once your money bloom inside, while working full time invest at least $100 in STI ETF/blue chip or etc to at least have a portfolio.
I may be noob because I am still reading up on investments and such skills they have.
A very not so young chap trying to learn more and adapting life saving and cost saving skills. Do correct me if I am wrong:)