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AMA The Fifth Person

This AMA will be held on 21st February 2019. Ask your questions here!

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AMA The Fifth Person

Investments

I am thinking of investing a sum of money monthly, but I am not sure where I should start. What are some recommendations for me to start investing?
Zann Chua
Zann Chua
Level 6. Master
Updated on 07 Jun 2019
Hello! Some of the available places to invest are SSB, STI ETF and Robo Advisors SSB involves the invesment in the future of Singapore by loaning the government some money. The minimum sum to start is $500. The risk level of this is rather low. STI ETF would be recommended to those with low commitment investing and for those taking a passive way for long term investment. It involves the betting on an index fund which tracks the top 30 companies in Singapore. The minimum sum to start is $100. This carries a rather moderate risk. Robo Advisors is similar to the purchase of the STI ETF but it is for those who wish to diversify globally. There are currently 3 players offering this service, StashAway,Autowealth and Smartly. The minimum investment can go as low as $1. This carries a moderate risk. It would be good to research more and see which type of investment that you are most comfortable in.
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Investments

AMA The Fifth Person

How do I start investing? What should I start investing in? How much to invest and how much capital should I have first before investing?
Hi Anonymous! Great question, I feel that besides asking how, what and how much, also consider WHEN to start investing. Investment, in terms of holistic personal finance, is for wealth accumulation which is crucial because you need lots of money to get married, pay off your house, buy a car, finance your children's education, and finally retirement (of course, this list of milestones is not exhaustive). The best time to start investing is after you have built up an emergency fund (3-6 mths of living expenses) and have cleared your debts (excluding mortgage), so this includes student loans if you have any. Paying off debt is not just good from a mathematical point of view, but being debt free gives you the freedom to invest without having to worry about whether your investment is more than your loan interest etc etc. Trust me, it feels a lot better to invest only after you cleared debts and all. Now, if you are debt free (no student loan) and have an emergency fund, than you might be ready. But remember, you still have to consider saving up for near term milestones like your engagement ring, wedding ceremony, house downpayment etc. But I would recommend learning more about investment and personal finance. Go around and talk with people in the industry but don't be pressured to buy anything! Just continue to learn, and of course be frank with whoever you are learning from. If you are learning from a banker or agent, just let them know you are just wanting to learn, some are generous enough to just share without pushing anything to you. This is important because you are unlikely ready to commit to a 20/30 year savings/investment plan just yet. So start learning first, if you want to trade, play small (10% or lower of your net worth) and learn from the best (Benjamin Graham, Warren Buffett, Dave Ramsey, just to name a few). All the best and have fun! Kee Kuan
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AMA The Fifth Person

Investments

Technical Analysis vs Fundamental Analysis - Which is better?
Leonard Tan
Leonard Tan
Level 6. Master
Updated on 19 Feb 2019
Breaking it down Technical Analysis - Relies on historical market data- price and volume - Record past price patterns in pictures, to deduce future price movements - No consideration of economy, industry, company - stock prices do not have a life of their own - Shorter term horizons Pros - not dependent on accounting data(avoid problems in comparison across standards)(avoid problems in misleading accounting details) - Need not know reason for new equillibrium - Not concerned with timing Cons - Inconsistent, past methods may not be repeated - test of trading rules- not all rules tested - self-fufilling prophecy - Sucessful rules lose power when popularized - subjective perception Fundamental Analysis - Looks at Earnings, Cashflows and growth - assumes market is information efficient with respect to past prices and trading info - Try to find firms that are better than everyone else’s estimate or try to find poorly run firms that are not as bad as the market thinks. - More of long term horizon Pros - Requires less monitoring once stock is bought- more long term horizon - Less modes of analysis- Discounted Cash Flow Model to derive stock instrinsic value Cons - Market sentiment might not agree, analysts have vastly different macroeconomic outlooks and opinions. - DCFs can yield very different instrinsic values- popular growth stocks usually trade way above instrinsic value(high forward P/E multiples) and is hard to justify buying in.
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S&P 500 Index

Investments

AMA The Fifth Person

SeedlyTV S2E04

If US domiciled S&P500 etf such as VOO has 30% dividend withholding tax and people advocate going for Ireland domiciled ones, then why do people still invest in individual US stocks?
Amanda Ong
Amanda Ong, Head Of Client Experience & PR at Stashaway
Level 5. Genius
Answered on 03 May 2020
Hi there, Thank you for this question! I've answered a similar one above but here is my answer to this: The short answer is yes. In fact, all dividends of US-listed securities are subject to 30% dividend withholding tax (WHT). These taxes are applicable as long as you own US listed assets, regardless of whether the assets were bought through StashAway, or via your own broker. The WHT is held at source and the rest of the dividends are redistributed back to your portfolio(s) and reinvested automatically. The dividends you see in the "Transactions" tab of your StashAway app would be the amount after deducting the WHT. Under the QII (Qualified Interest Income) rule, some of the dividend WHT from US domiciled funds (e.g. US government bonds) can be claimed back. Our broker will do this on your behalf and there is no involvement on the customer's part. We will do this once a year, and will notify you via email if you have any claimable WHT, which would be redistributed to your portfolio and automatically reinvested. For further illustration, you may like to view the iShares 2020 report on the QII percentages for their funds. Some examples of QII ETFs that StashAway invests in are 20+ Year Treasury Bond (TLT) and 10-20 Year Treasury Bond (TLH). Our investment team has given serious consideration to the 30% WHT and have considered other exchanges that have lower or no withholding tax. However, at the end of the day, we have decided to stay with US-listed securities despite the tax implications due to the its deep liquidity, reputable fund management and most importantly, the lower tracking error. If you're interested to see a comparison between US-listed securities and foreign securities, here is an article that presents its case.
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AMA The Fifth Person

Investments

Will you use a platform like Acorns (round up your spare change for investments) if it’s available in Singapore?
Kenneth Lou
Kenneth Lou
Level 9. God of Wisdom
Updated on 07 Oct 2019
Update: I just saw this in my Revolut email (7 October)! ! Looks like they are planning to do this as well here in SG: As someone who has been pretty active on Revolut lately, did you know that you could be putting away up to £5.00 everyday by setting up a Vault? It’s incredibly simple. Whenever you make a transaction with your Revolut card, we’ll round up your payment to the nearest whole number and place the difference into your Vault. Alternatively, you can even set up a recurring payment or make one-off payments into your Vault. Better yet, creating a Vault only takes a matter of seconds. So if you’re planning on booking a holiday or upgrading to a new car, Vaults are a simple way to effortlessly put away for your financial goals. 🌴 🚘 1. Make sure you’ve updated to the latest version of the app 2. Tap on the More tab in the app and then tap Vaults 3. Select Add new Vault and then give your Vault a name (e.g. Holiday Fund) 4. Select how much you’d like to save and in which currency 5. Tap spare change if you’d like to round up your spending or otherwise Create Vault Haha funny thing you ask. If you go to Macdonalds, there is a similar thing there. When you auto checkout at the machine they will ask if you would round to the nearest dollar and donate it to the mcdonald charity fund. If it was me i may use it if my original card gives me some cashback or miles (thats the current and main game in town still) RSPs from banks now are also pretty popular with the younger tech savvy generation.
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AMA The Fifth Person

Investments

Singapore Saving Bonds (SSB)

What are some benefits of investing in SSB?
Low risk, backed by the government, returns slightly above inflation and better than normal low interest savings account.
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S&P 500 Index

Investments

AMA The Fifth Person

NYSE (New York Stock Exchange)

Stocks Discussion

ETF

Dividends

For the S&P500 ETF VOO, does it makes sense to say that if I'm only interested in capital gains, I should not be bothered about the 30% dividend WHT?
Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jun)

Level 9. God of Wisdom
Answered on 30 Mar 2020
Not quite, but approximate. when the dividend was roughly about 2 % per year recently the capital appreciation was at least 10% per year over the last 10 years and possibly 7% per year over ultra-longterm, calculated. and yes VOO seems a very good choice generally ...
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AMA The Fifth Person

ETF

Robo-Advisors

Investments

Would it be a better choice to invest in robo advisors or ETFs?
Arpita Mukherjee
Arpita Mukherjee, Community Evangelist at Kristal.AI
Level 6. Master
Answered on 29 Oct 2019
Let's start with understanding both the concepts. Robo-advisories are platforms that help you assess your risk appetite, create your portfolio accordingly and then choose different strategies, assets and instruments that you can invest your money in. On the other hand, ETFs are instruments that you can invest in. You can go for different ETFs, and invest in them through a Robo-advisory. These are still not very different from your ordinary financial advisors as both options will still have a management fee incurred for users. The difference lies with the amount, as Robo-advisors have lower management fees. And the best part is that they give you the most unbiased advice. I work at Kristal.AI, and my mojo is to help people make the right financial decisions. If you think I helped you, do give me "Thumbs up". If you think my response was biased let me know, I will work on it. I hope this helps you make the right decision.
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ETF

Investments

AMA The Fifth Person

Stocks Discussion

If you have identified several stocks / ETFs. Could you also share more about how you would deploy funds using your deployment strategy, say with investment fund of about 10k? ?
Davin
Davin
Level 7. Grand Master
Answered on 09 Mar 2020
I will split the money into 10 portions and buy in every month. This is very useful in the downturn market like what we are experiencing now.
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REITs

ETF

Investments

AMA The Fifth Person

Stocks Discussion

After you have built a portfolio of dividend stocks and reits, how do you determine the exit strategy? What are your thoughts on purchasing ETFs? ?
Bjorn Ng
Bjorn Ng
Level 9. God of Wisdom
Answered on 16 Dec 2019
Hi there, The exit strategy for REITs for me is if it has become too overvalued (high P/B) for its industry, shift in fundamentals, or if I don't see a long runway ahead for it. If it is still overvalued but I still see a long runway for it, I will actually continue to hold and receive the dividends, and will add on more if it reaches a suitable valuation once again. ETFs are good as a starting point as it gives you auto-diversification. I actually started my investment journey with STI ETF. However, to be honest some stocks in the ETFs are not good stocks, but it all balanced out because of the basket of eggs. In the long term, I would slowly invest in individual businesses and sell off my ETF holdings.
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