Isn't now the best time to load up STI when it is unloved? - Seedly
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STI ETF

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Anonymous

Asked 3d ago

Isn't now the best time to load up STI when it is unloved?

Taking a contrarian view

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Jan
Jan
Level 3. Wonderkid
Answered 3d ago

Yes if you enjoy stability and don’t mind slow price movement & have the captivity to hold in the long run.

On the other hand, many are betting on US stock because of its high volatility and are hoping for some quick gains.

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Jovan Lai
Jovan Lai

2d ago

Hi Jan, I would like to bring a different perspective about STI being more stable. I personally view it as a bad thing. If you would to compare STI vs S&P500, it is without a doubt the US market surpasses in capital gains. Calling an index that moves relatively sideways over many years stable is a little odd to me. I feel there isn't much point investing in something that appears stable if it barely even gives you much returns. Any movement during bear markets easily erases the little gains accumulated over the years. Whilst for the S&P500, even after bear markets, your shares have a much higher chance of still being significantly in profit. As shown with historical evidence. However, that being said, the 1 benefit of investing in SG market is dividends. We do not have tax on dividends from SG stocks unlike dividends from US markets. If dividend is your goal then yes STI seems better. Also on volatility, some books to read are... 1. One up on Wall Street -Peter Lynch 2. Intelligent investor - Benjamin Graham 3. The most important things - Howard Marks " Learn to love volatility" - Peter Lynch "An intelligent investor realises that when stock prices are high, the risk increases, not decreases. When stock prices are low, risk decreases, not increases." - Benjamin Graham Volatility gives great buying opportunity to the intelligent investor. Stock A and Stock B can both start at $100 and after 10 years end at $300 A can move up consistently without much fluctuations. B can fluctuate a lot but after 10 years get to the same share price. However, the fluctuation in prices offer many wonderful opportunities when prices are discounted. These are just to give a different perspective on volatility as the great investors themselves have shared and advised not to fear volatility or market crashes, but to view them as opportunities(: Of course, everyone has different risk tolerance and financial goals, I'm not saying STI is a bad investment, just giving a different perspective to everyone.
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Jovan Lai
Jovan Lai
Level 4. Prodigy
Answered 2d ago

Hi! That’s amazing that you’re taking a contrarian view, i’m hoping to find more that do! Keep it up with the learning!

STI surely seems attractive now. I Guess the main issue is whether it meets your financial goals.

My personal take; US & China for capital gains, Singapore for dividends. Most like the idea of passive income with dividends, but remember to do your calculations... we need close to a million dollars for sustainable passive income.

Going for capital gains first before cashing out and switching it to dividend Investing in the future is one way.

Happy investing!

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Aug)

Level 9. God of Wisdom
Updated 18h ago

A contrarian view is always right and important.

Historically - as compared to the SP500 or MSCI China or Europe stocks -

the STI is not unloved now, but rater on longterm.

See attached longterm chart for this index comparison (however distributed dividends not included)

​​​

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KM
Kim Meng Ng
Level 2. Rookie
Answered 22h ago

My opinion is depend on what you want, capital gain or dividend? If capital gain, go for US example S&P 500. However, the risk is say for example after holding 5 years, before realise your gain, a black swan event and all your gain all gone. Thus 5 years of holding wasted. As for STI, not much capital gain, but there is cash flow as you receive good dividend.

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J
Jackson
Level 3. Wonderkid
Answered 22h ago

I think you may consider look in deeply into what are the current equity holdings in the STI Index which may potentially give you an idea on what the prospect of STI ETF?

From what I understand, now STI Index currently have more REITs holdings as compared to the past. You may take that as a consideration. If you believe there is potential for the STI to recover back to its pre-COVID19, you may consider DCA it instead of throwing lump sum into it and look for other potential investment opportunity.

This is my personal view. Hope it helps.

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Biggo4

22h ago

Asides from STI ETF constituents, you may also want to consider whether you are bullish or bearish about the future of the largest Singapore companies. They form a good proxy of what the future local economy is going to be like. Hence, it would be good to take that into consideration as well.
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B
Biggo4
Level 3. Wonderkid
Answered 2d ago

I believe one would have to answer these 4 key questions to be able to reach a definitive answer to your question.

  1. What makes you think the STI is "unloved"?

  2. Is the timing right for yourself?

  3. Are there better opportunities out there?

  4. Are there any other stronger reasons to buy into STI ETF besides "being unloved"?​​​

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered 2d ago

As of now, it might have limited downside, but upside is also relatively limited also

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ST
Shawn Teo
Level 3. Wonderkid
Answered 2d ago

Hi,I assume you are refering to the STI ETF and if thats the case then certainly agree that it is a great time to pick up more units!

However you need consider a few factors:

  1. Your investment timeline. My view is that because there is not much price movement for STI ETF daily, it will be a long way to recovery before the STI ETF will be anywhere near the the 52 week high and push past that level. Hence if you are looking at captial returns, it will depend on how long you are willing to put your money into the STI ETF and certainly no one can gurantee that the STI ETF will trade at the pre-covid levels in the future

  2. Your investment strategy. Are you looking to incrase your portfolio value through dividends or captial returns? If you are looking for a stable dividend income then loading up on the STI ETF now may be a good option. The G3B gives about a 4.64% dividend a year while the ES3 gives about 4.71%. This are not fantastic returns but it is still considerably better high interest rate bank accounts. However you lose out on liquity in return for a higher return.

Lastly you still need to do your own due diligence and see what works for you and not go in blindly.

Cheers!

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D
Deedee
Level 4. Prodigy
Answered 3d ago

My partner is loading up his STI to bring down his average cost although I am against it. To put things in context, his ABF SG Bond investment is so much smaller and he has no other investments to grow his wealth! Really not sure what's his "game plan" lol. Although past performance does not indicate future performance but it gives a relatively good gauge, I personally really wouldn't pump so much money into it.

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