I just graduated and started working. I currently have $5k savings and plan to set aside $500-800 monthly to invest. How would you suggest to allocate them? - Seedly
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Anonymous

Asked on 16 Jun 2020

I just graduated and started working. I currently have $5k savings and plan to set aside $500-800 monthly to invest. How would you suggest to allocate them?

I currently already have Syfe 100% REITs, Stashaway General investing that I DCA $100 monthly.

  • Should I save up and invest lump sum into individual stocks/ ETFs? I intend to DIY invest in the future

  • I’m currently also eyeing Kristal AI VTI/QQQ cos of US exposure and no commission fees. Is it a good idea to spread my resources this wide?

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Sharon
Sharon
Top Contributor

Top Contributor (Jul)

Level 6. Master
Updated on 16 Jun 2020

Hope $5K is after you are covered for insurance and emergency funds have been set aside.

I'd suggest you save up first and invest lump sum later. In the meantime, read more about investing and you may even want to pay for courses to help accelerate your learning.

It's going to be a long winter. Coronavirus is like a mosquito that doesn't seem to go away. Like our dengue cases....

Just today, I received an email from my alma mater, requesting alumni whose companies are still hiring, to consider our juniors first. It's the first time I hear anything like that from my university.

Who knows this $5K may in useful in times of need.

$5K is not a huge sum. Since you are DCA-ing $200 every month ($100 each for Syfe and StashAway), assuming you don't have a job now, $200 × 12 months is $2,400, for you to set aside in case you don't land a full-time employment in 1 year (that, I think, will be like worst case scenario but you got to be prepared for it).

Left with $1,900. I find one will see a more meaningful gain with a larger amount.

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Adam Yam
Adam Yam
Level 3. Wonderkid
Updated on 17 Jun 2020

Should I save up and invest lump sum into individual stocks/ ETFs? I intend to DIY invest in the future

-- I think you should take note that US ETFs attract both withholding taxes (30%) and if you pass on, you're liable for estate duty taxes (very hefty!). Think carefully before investing in US ETFs. The withholding taxes is real, you'll literally see -$$$ on your statements.

I’m currently also eyeing Kristal AI VTI/QQQ cos of US exposure and no commission fees. Is it a good idea to spread my resources this wide?

--When deciding on an allocation, my personal opinion is to have both growth and income aspects regardless of age. Some say growth should be the focus when you're young, but I believe some income keeps you sane. I like allocating 2/3rds into growth and 1/3rd into income. This way I get to see some dividends coming in, while knowing I've growth stocks too.

For the growth portfolio, don't bother with Singapore ETFs. At least in my opinion, I feel that money should be put into countries at the forefront of innovation - USA. A large part of the growth portfolio can go into US stocks, Get some Europe and Asia exposure as well. To reduce the volatility, you can add bonds inside too.

For the income portfolio, I like just investing in Singapore. This way at least 1/3rd of the portfolio is in SGD! I don't like a 100% exposure to US currency. This is primarily in REITs and the top dividend yield companies in Singapore.​​​

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Benjamin Mok

20 Jun 2020

What are the platforms you used for your income and growth portfolios?
SG Invest St-neve
SG Invest St-neve

24 Jun 2020

I totally agree with Adam. He is using the same strategy that I have been following for the past 10 years. I do hope you have done well in your investments as well as i hope for mine.
Chen Zhirong
Chen Zhirong
Level 5. Genius
Answered on 23 Jun 2020

Keep that 5k as emergency savings and build it up till you have about 6 months first. In the meanwhile, continue DCA-ing. I know it can be tempting to go all in with that cash pile, but even Warren Buffet believes cashflow is king and has been storing his cash rather than investing it.

Honestly unless you have 10k to spare, I wouldn't even bother going into a single stock. That's why Endowus has a minimum investment sum of 10k too. You can increase your DCA amount if you FOMO but meanwhile do paper/virtual investing, set your in/out targets and monitor if your virtual portfolio actually beats Stashaway after a year. By that time you should have more than 10k stored up and know if your investing is good to go or if you are better off putting everything in Stashaway.

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AT
Andrew Tan
Level 4. Prodigy
Answered on 27 Jun 2020

For the $500-$800 monthly, you can consider buying a Saving Plan monthly with POSB/DBS with minimum sum of $100 or invest in OCBC Blue Chip

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SG Invest St-neve
SG Invest St-neve
Level 3. Wonderkid
Answered on 24 Jun 2020

Welcome to the working world. I was exactly in your situation when I started out working. I had about SGD 5K and I convert to USD 3K to start off my investment journey.

One of the things i prepared was to read up. I hate reading books but if there are any books to read, I would recommend these 3 books.

Next you will have to consider the type of online brokerage accounts to use for the long term. I'm sure you can look up on the many reviews online to choose but here are the tried and tested that I used over the years.

It's ok to start with SGD 5K. The important thing is to start and get it done. That's the most important step.

I wish you well and good luck!​​​

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K
KxR
Level 3. Wonderkid
Answered on 23 Jun 2020

Check out this blog, he covered most of the scenarios: https://ofdollarsanddata.com/

Overall just invest what you can every month into ETF / Index Funds like Vanguard after covering basic expenses, emergency fund & insurance. Do that for 20 years, boom you are a millionaire. ​​​

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Teck Hwa Yeo
Teck Hwa Yeo
Level 3. Wonderkid
Answered on 23 Jun 2020

Always save 10x your salary as emergency fund.

Afterwards, try and look into funds that are closely related to bonds.

They dont have high entry requirement like stock brokerages.

They don't have high net returns, but it is safer due to the current covid outlook

Also, u need to take into consideration the management fee and the one-off fee you pay for buying the fund. They really eat into your fund, and it will take at least 3 years of consequetive growth of 3% to break even.

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 16 Jun 2020

Go to libbyapp.com and login via your NLB account, and go borrow as many personal finance / value investing books. Borrow books that are written from a practictioner perspective. Can start with beginer friendly:

The Five Rules for Successful Stock Investing by Pat Dorsey

The Ultimate Dividend Playbook: Income, Insight, and Independence for Today's Investor, Josh Peters

If books are not your cup of tea, there are a couple good US financial youtubers to follow

Graham Stephan: https://www.youtube.com/channel/UCV6KDgJskWaEckne5aPA0aQ

PPCIAN: https://www.youtube.com/channel/UCXtrYuGksGkkyls50lPWvYQ

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