09 Dec 2019
I have $5k take home pay each month. Plan to allocate $1.5k to investments - already putting $200 in Stashaway and $300 in NIKKO STI ETF. Interested in Equities?
If I wanna venture into REITS, does that mean I can spend $1000/month buying reits/stocks?
I think putting away $200 & $300 into Stashaway & STI ETF is okay. These 2 asset classes are pretty suitable for Dollar Cost Averaging (DCA) means.
However, for REITs, I personally feel it's not something to put in monthly. Reason being is REITs work differently from Stashaway & STI ETF. Even though the yield is higher, certain REITs may be overvalued and that's where you will not buy in. Instead, keep a watchlist of the REITs you want, making sure it meets the criteria you determined (increasing dividend, net asset value etc). Then, once it reaches close to P/B = 1, and then you do a Lump Sum investing.
While waiting for that, build up your warchest, you don't always have to invest that amount every month, it can be kept for future opportunities :)
Spending $1000 a month buying REITs is not recommended. You'll have to deal with transaction costs which can be quite high as a % of your investment amount, and these can eat into your returns. You already have quite a fair bit of your allocation into ETFs (1/3 in fact), and can afford to take part of your cashflow to look at other asset classes. You will need to understand how other asset classes work in order to decide what you want in your portfolio.
In fact, I would recommend that a portion of your $1K be allocated to a warchest instead. Opportunities will always be present, and I'd prefer to deploy into a REIT/stock when it's at a low rather than DCA, largely due to the transaction costs involved. UTs are better suited for DCA as they can have no transaction costs.
You could set aside something like $300/mth to build your warchest, $300/mth to do UT RSP, and another $300/mth to start an annuity as a hedge for your entire portfolio, since right now if you were to go all in to equities and UTs, your portfolio is market correlated and you'll need something that is not correlated to market movement as a hedge against volatility and risk.
Please don't invest blindly. Understand portfolio allocation and asset classes before you put any mo...
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