I'm currently 25, with a $65,000 yearly income. I'm looking to construct a 100% equities portfolio to hold for the next 10 years, before slowly adding bonds. Is that a good strategy? - Seedly

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Asked by Anonymous

Asked on 05 Mar 2019

I'm currently 25, with a $65,000 yearly income. I'm looking to construct a 100% equities portfolio to hold for the next 10 years, before slowly adding bonds. Is that a good strategy?

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I think you should always have some bonds in your overall portfolio, even if you're super aggresive.

You want to make sure you have a cushion and a portion of your portfolio that is negatively correlated.

I'd suggest 10-25% in bonds for your age.

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Kishor Bhagwat
Kishor Bhagwat
Level 4. Prodigy
Answered on 06 Mar 2019

Sure..you have age on your side, and your horizon for holding equities is longer than the 10years you mentioned here. Just remember to not look at the downturns that will come. I would suggest country/regional ETFs (based on valuations) and not single stocks - in this disruption world you never know when a company will fold, and you dont want to be fiddling with the portfolio too much.

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Abhishek Singh
Abhishek Singh
Level 2. Rookie
Answered on 04 Apr 2019

Best investment according to legendary warren buffet , late jack Bogle is to buy Low cost index fund ie vanguard s&p500 index fund. Buy it every month for 10, 20,30 yrs and u will do well. Take away the emotions out investment as market never goes in a linear fashion. In Long run market has delivered 10% return, so imagine if ur money compounds at 10% for 10, 20,30 yrs what fortune u will make.

In theory it looks very simple but when it comes to apply it’s not easy. Bcoz it’s human nature to be emotionally affected once u invest in market and there will be time when market will be stagnant and may give negative returns for long period of time but we as an investor have habit of looking at our stock portfolio every mins and getting emotionally affected by it.

so again in theory it’s simple but not easy to apply , otherwise we would have so many millionaires in this world.

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Lee Jiahui
Lee Jiahui
Level 5. Genius
Updated on 07 Jun 2019

I had 100% equities too when i was 25. that was because i didnt deem cash and cpf as part of portfolio lol... it motivated me more to save more and think of it as 100%... follow what rocks your boat.

at 35 yo, i included cpf in the portfolio then equities to cpf ratio became 1:1

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Lee Jiahui
Lee Jiahui

15 Apr 2019

I did oa to sa transfer and switched to cash repayment for loan in 2013 (the yr matters more than age cos back then property and stock prices were high). The main consideration then a growing warchest with nothing to buy. Back then the plan was to reach FRS asap. In 2015 when stock prices fell, i used a bit of warchest. So if you wanna make your cash work harder, switch to cash repayments.
Andrew Kwek
Andrew Kwek

15 Apr 2019

Interesting perspective. Thanks Jiahui!
Kai Kai Boon
Kai Kai Boon
Level 3. Wonderkid
Answered on 15 Mar 2019

I would think that a 100% equities strategy make sense if you have the risk appetite, being able to withstand market volatility and not sell in panic. Otherwise it is always good to have bonds (20-25%) that you can re-balance and smooth out the volatility in your portfolio.

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Andrew Kwek
Andrew Kwek
Level 2. Rookie
Answered on 15 Mar 2019

At age 30, I am too going for 100% equities. I have 6-12mths worth of expenses as cash and also cpf which I consider them to be safe. I am planning to hold it longer than a 10 year horizon though.

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Terence Tan
Terence Tan, Finance at Singapore Management University
Level 3. Wonderkid
Answered on 07 Mar 2019

A 100% equities portfolio is good. But there is no stock you can safely state that you can hold for 10 years.

Do think about this point before engaging in this strategy.

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Generally speaking, at 25, you only need 15% bonds/fixed income in your portfolio.

$65k income equals about $24k annual income.

you can consider cpf as your bonds up to a certain age because cpf contribution is 37% and only small portion goes to SA. OA is 2.5% not really a high fixed income.

And You cannnot count monies you are using for hdb

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Benny Tan
Benny Tan
Level 3. Wonderkid
Updated on 07 Jun 2019

Hariz, could I please ask how you got to the figure for the bond recommendation?

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Hariz Arthur Maloy
Hariz Arthur Maloy

06 Mar 2019

It's a rule of thumb. Your age should be the % of bonds in your portfolio. So if you're 25, that's 25%, and when you're 50, that's 50%.
Luke Ho
Luke Ho, Money Maverick at Money Maverick
Level 6. Master
Answered on 06 Mar 2019

I actually think it's 'generally' a good strategy looking long term. So you intend to have your equities and you're going to add bonds using different capital, suggesting that your time horizon is considerably beyond that 10 years. I think that's fine.

All I'd suggest is mentally prepping yourself for the wave and to be disciplined about it. I usually track historical lows for the stocks/funds - that's the least I can do - so that I know that a specific loss is not out of the ordinary before it'll eventual bounce back. It's not a foolproof strategy, but its the least a young person should do.

Please also to remember to assign your money to a purpose. There's nothing worse than enduring sleepless market cycles without conviction - you'll end up losing money, like 90 - 95% of all traders/investors out there.

I could put together a pretty aggressive portfolio if you'd like, which would still be diversified across sectors to give you a high net return beyond the STI ETF or the SNP500.

You can always PM me here: https://www.facebook.com/luke.ho.54

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Qing Wong
Qing Wong
Level 2. Rookie
Answered on 13 Mar 2019

Yes, I think it's a good strategy, because of your age, you have the capacity to take on risk and equities as a whole gives much better risk-adjusted returns than on bonds. Take your time on bonds, probably you can start adding bonds when you approach 45.

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