Stocks Discussion

Historically, the traditional asset classes were equity, fixed income and money (money market/fixed deposits). In recent years, property, commodities, and even things like cryptocurrency have been added to the mix. Now, there's no right or wrong answer to how to structure your investment portfolio, a person adverse to risk might want to reduce or eliminate stocks completely, a person willing and able to take risk may skew the portfolio heavily in favour of stocks. What is important is to build a multi-asset portfolio with the flexibility to shift your allocation across the various asset classes in tandem with your evolving finances, age profile, risk appetites and lifestyle. Most young people often say that with time on their side, they start out with a portfolio that is high risk: I suggest an alternative viewpoint as such: Imagine that you have saved your first $50K after some time and you decided to purchase some shares. Now, due to lack of experience and knowledge, you end up buying something that doesn't really appreciate, or even worst, tanks 50%? How long do you need to save up another 25K to compensate for what you have lost? Hence I feel that there is a need to start cautiously when you begin your investment journey. If anything, the number one rule of investment is not to lose money, but by and large, most people suffer losses. I do advise my clients to ensure that there is sufficient diversification in their portfolio that if a bad investment decision was made, their portfolio should recover within a short amount of time. Once some experience is gained after your start, you'll be able to confidently take on more risk while minimizing your downside due to your newfound knowledge and experiences. On a personal note, I'm 40-50% in cash and 50%-60% into a diversified portfolio of UTs (regional equities, global bonds), shares, REITs and some SSB. The division between my UT, stock portfolio and SSBs is approximately 45/45/10. Adding on monthly to my UTs, I do DCA to ensure that I remain committed to growing my UT portfolio, for stocks, it is a matter of identifying opportunities when a good company becomes undervalued, which requires a lot of patience, I have a position in a local bank which I waited for more than a year to enter at a price I found acceptable. I don't intend to maintain a 1:1 ratio on UT/stocks forever, and I do see that a gradual shift to a 2:1 ratio as I age will most likely be the scenario. As we age, we will want to step down our risk, remembering that longevity is the multiplier of all risks when you are 70, you won't be able to handle your investments the way you did when you were 50. Topping that off, I have an annuity to complement CPF life when I retire, which I have not included in the figures. Hopefully, you will have gained some insight into my thought process, methods and philosophy, and incorporated the parts you found relevant into your own plans. Good luck!

Hi Adam. It helps to know what you are RSP-ing into, it could be UTs, or even shares/ETF. As I do not know what you have, my advice to diversify would be to consider looking at other asset classes. If you have been doing Share RSP, consider UT RSP, and vice versa. At the same time, take a look at your current portfolio that you have build, and see if there is a need to rebalance the portfolio. To hedge investment risk, consider setting aside money monthly into a riskless product such as an annuity. The process is similar to RSP, just that the asset class is different from what you have been doing. Ultimately we want to build a portfolio that has a good mix of safe, stable assets, and some assets that are exposed to market risk in order to have an element of growth. On the insurance aspect, if you have not had any major changes in your life, then the need to review your coverage is likely to be lower. However if there have been significant changes since you bought the policies, it would be prudent to get a second opinion. Also, in some cases, insurance premiums have come down over the years, especially on a term, so there might be a potential to retain your coverage but pay a lower premium, freeing up your cash flow to invest/save more. For SGS bonds, they are safe, so no problem holding on to them. Just be aware of the proportion of your investment portfolio that they take up. Based on your question, I am unable to give too specific advice due to the limited information provided. It would be helpful to know your portfolio so that more detailed advice may be given, so you may consider speaking to an independent advisor like myself to get advice on how to improve moving forward.

Cedric, thanks for your tips; I guess my situation is the other way around; I need to set up a bank account like your BAC account which you are holding; how did you manage to set up your BAC account?

DFA Funds via MoneyOwl is not a pure small cap value approach. It's a global portfolio benchmarking against MSCI World with tilts towards small cap and value. So, I'd probably skip on IWDA and just go with DFA because going for both is just overlap and you go against the DFA tilts. If you want large cap growth exposure, sure you can add NASDAQ 100 as a possible option. I suggest you speak to the MoneyOwl advisors for perspective.

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Hi anon, Yes, if you back-calculate the cost of investing in shares/ETF/REITs listed on SGX, it's around $8K to $9K per transaction to make it worth. Now I don't advocate just going into the market once you have accumulated $8K, it is actually more prudent to have a watch list, analyse the share first and then decide if it is a company you actually want to invest in. Watch for pullbacks in the share price, this represents an opportunity and a margin of safety for you, but be aware that the fundamentals of the company are still ok. On a side note, I do make sure that I do my transactions based on that size for the trade value. On the allocation, there is no one-size-fits-all solution, as some people prefer REITS, some people prefer shares, etc. What's important is to make sure you achieve sufficient diversification that a price swing in any one counter will not have an overly adverse impact on your portfolio. When I bought my first share many years ago, yes, it was 100% of my share portfolio, but buying into other shares has steadily reduced the proportion of that share in my portfolio. So you'll notice that it takes time to achieve this. Don't be disheartened. FYI no single share/REIT takes up more than 25% in my portfolio, and I'm aiming to eventually bring it down to 15% or less. My stock portfolio is also not more than 50% of my entire investment portfolio, which comprises of both bonds and UTs. And in that vein, I also have not included my CPF assets and the expected valuation of my private annuity.

Hi anon, as you look deeper into this topic, perhaps I can share more about Syfe's proprietary investment methodology ARI (Automated Risk-managed Investing). Simply put, ARI helps investors achieve better risk-adjusted returns by keeping their portfolio risk in line with their risk level. Your Syfe investing journey starts with you taking our Risk Assessment to better understand your risk profile. ARI then builds you a personalised investment portfolio, allocating assets which have shown the best return for your risk profile. Thereafter, ARI continually monitors your portfolio to keep your portfolio risk in line with your desired risk level. For instance, during periods where higher market volatility has been forecasted, ARI will adjust your portfolio allocation and reduce your exposure to higher-risk asset classes. This ensures your portfolio risk stays aligned to your desired risk level. Conversely, during periods of market calm, ARI will adjust your portfolio allocation to include more higher-risk assets. Your overall portfolio risk is still kept in line with your desired risk exposure, but you capture the market upside as well. What is truly distinctive about ARI is how it provides better risk-adjusted returns, no matter what market conditions may be. You may view our backtested returns during specific events such as the 2008 financial crisis here. Regarding Syfe's ETF investment universe, they include ETFs from multiple asset classes covering 20 sectors across more than 15 countries, as shown in the image below. You're also free to deposit and withdraw any amount you prefer – anytime – with no additional charges. So yes, investing $200 per month is definitely possible with Syfe. If you'd like to find out more, please feel free to join our weekly investing workshops! Our investment team will be happy to answer any other queries you may have.

Hi, as you applied during IPO, it will show up in your CDP statement. This is because Vickers is a platform that you use to purchase shares. Take for example POEMS, if the transaction does not happen via POEMS, it won't be reflected. So this is probably the same for other brokers as well. If you bought and sold shares on POEMS, Vickers won't know about it, hence it won't show up. The reverse is also true.

Hi there, if your $x was refunded in full, it means you didn't get any allocation. So it won't be showing up on your statements. You will have to buy from the stock market should you wish to get it.

Hi there Wilson, If you are using SRS to fund your robo-advisor account, should you liquidate, your funds will be returned to SRS. You will still have no access to it till 62 (discounting the 5% penalty, etc). Funding by cash is hence more 'liquid' as your liquidated proceeds go back to your bank account. I would ask if there is a need to contribute SRS for yourself. If there is, then, by all means, open an SRS account online, and fund it, and then use the SRS monies to invest. If not, you might be better off keeping it in cash. If you'd like a bit more insight on SRS and whether it might suit you, I am actually conducting a seminar on this topic next week. On your strategy to do a $10K lump sum and DCA $500/mth, if that is all you have, then I would definitely suggest holding back a portion (how much is up to you) in order to act as a warchest when opportunities come knocking. However, if you have the capacity to rebuild your funds and your warchest even if you do a $10K lump sum and $500/mth RSP, then, by all means, go ahead and invest in that manner. One last thing, do consider your investment profile, risk appetite, time horizon, and with that, look at all the asset classes available so that you would be able to construct a well-balanced and risk-managed portfolio for yourself. You might want to speak with an independent advisor who can offer you multiple asset classes to understand the options for yourself before deciding.