What is a good assets allocation for a person in late 20s? - Seedly
 

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Asked by Anonymous

Asked on 26 Dec 2018

What is a good assets allocation for a person in late 20s?

My current allocation is 80% Cash and 20% ETF. Am I doing right? Single with no house but planning to be engaged soon..

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Loh Tat Tian
Loh Tat Tian
Level 8. Wizard
Answered on 26 Dec 2018

Well for starters. Need to understand yourself first.

1) please exclude all the cash required for wedding, Bto (if you are using it) and any other major expenses you foresee. Also, emergency funds should not be included (6 months emergency fund). Then recalculate the asset you have.

2) from there, you can see your investment allocation. Anything more than 50% cash is an overkill, because its better to invest in the markets.

3) for your age, consider high allocation into equities (but if you are still new, go for index etfs). Bonds (which I term it as CPF SA) gains 4% p.a, which is good enough (10-20% allocation).

4) Still, you need to know what you do not know, to find out more.

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After setting aside 6 months of your salary as an emergency fund, plus about 1-2 months for daily and lifestyle expenses, I would have a 75% Equity and 25% Bond allocation for my investment diversified through both geographies and industries.

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Nicholes Wong
Nicholes Wong
Level 8. Wizard
Answered on 26 Dec 2018

The rule of thumb is 110-Age=% of stocks. So it should be 80% stocks and 20% bond if you are close to 30 years old. But you can adjust it based on your risk tolerance. If you are not good at taking risk and volatility of stocks, you should reduce your stock. 80% Cash sitting there gaining 0.05% interest is bad, even if you are not comfortable with investing i hope that they are at least in a high interest savings account or you can move some to Singapore Savings Bonds.

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