I realised that such posts actually attract more viewership as compared to technical breakdowns. I get it that most people want a quick and fast way to read content and download views. The first 3 seconds of every post will most likely decide if the reader would like to continue reading, be skeptical or just scoff at it. In my earlier posts, I talked about having an emergency fund. It takes time to build such things so don’t forget, the little things count.
In this article, I’m going to discuss more about what to invest and why especially for folks who just got out of school. When I graduated, I remember vividly that it seemed to be pretty hard to save money. A few years on, I realised what constituted the bulk of my spending and why I could not save more. These life experiences cannot be bought so I would say the money spend networking and forging friendships are my human capital.
Going back in Time
Going back to 5 years ago, there wasn’t many choices to invest extra funds into. It was the standard brokerages, fund houses or at most bank/custodian brokerages. There wasn’t a lot of tools to invest in and let’s be honest, the retail bankers can’t be too bothered with a S$10,000 fund. It just isn’t worth their time. So, like many others who preaches, I shall say it again – If you do not care about your own money, no one will. I remember I used to buy funds via FundSupermart, trading some Forex with CMC Markets/Saxo Capital and used Standard Chartered Brokerages to buy US/SGD equities. Nothing fancy that you can really do though.
Moving forward 2020
With the current options we have available, traditional investments seems really cool. (At least it is for me) I really like the options out there for me to pick and choose. You can Insurance Tech, Robo Advisors, Cryptocurrency, Real Estate Block-chains, ETFs, Leveraged Equities/Indexes and many more. With the upcoming digital bank in Singapore, I think that this is going to be great for consumers. The key problem now is to get more people interested in their own personal finances.
What to do with S$10k?
We are going to take away the cash solutions for this since this is on the assumption that cash funds are kept away in a safe place. With the new funds, this is money that you can afford to lose. I used to know something who likes to take a punt, he would leverage and buy options on the same counter without considering the risk. Well, he wanted to win big but eventually his portfolio became pathetic and he lost his job while these options expired and markets dropped. The objective of sharing this story is to always abide by your investment discipline.
I am reminded of the rules:
- No one has the crystal ball and you will never know when the markets decide to be green or red.
- A small amount of leverage is fine but not when it is concentrated into one counter. Remember to diversify but not over diversify.
- Always use option to your advantage, not to speculate.
- When you lose to the market, blame no one but yourself because no one forced you to invest. You can keep cash and seek cash solutions but if your cash deflate, that’s on you and no one else.
With a S$10k portfolio, I would split it up into a few tranches.
- Robo Advisors are a great tool if you do not know what to buy or when to buy. The whole idea is to buy when markets go up or down. The entry level for robo investing is so low that anyone can invest. Let’s also be real, all platforms have a cost upkeep so fees are unavoidable. For this I would Assign at least S$6k (~60% – 70%) into such funds and this forms the Core part of the long term portfolio
- The first option can be Endowus (USD ETFs) which i discussed before here at Endowus
- The second option can be Stash Away (USD ETFs) which i discussed before here at Stash Away
- The third option can be Syfe (For SGD related equities or the Global Equity Portfolio) which i discussed before here at Syfe
Now, you must not forget to top up your investment on a monthly basis. Treat that as a form of savings. The earlier you save, the faster your will reach your retirement goals.
From the robo advisor portfolio construction, you can choose a partial bond|equity balanced fund. This is where your bond exposure comes in. Do not waste your time with SGS or SSB during this period because they returns are not great.
2. They say that trend is your friend. The trend now with all the hype is about Cryptocurrency. I can’t help but would add a small amount to the portfolio. They are supposed to act different as compared to fiat currencies. For this I would assign at least S$1k (~10%-15%) and i consider these as alternative asset class.
- The first option is to buy Bitcoins. They are by far the largest Cap in the Crypto World.
- The second option is to get a foot in to Crypto.com. I previously discussed about this as well here at Crypto.com App/
3. Personally, I like income or dividend equities or funds. If you are more risk adverse i would suggest to put some money into the PIMCO income funds. They are just the best in class for bonds. Depending on what you like, the average dividends is roughly around 3-4% p.a. For this, I would assign at least S$2.5k (~25%-35%) and these are supposed to be a stable source of dividend funds.
4. Finally, what fun is there if you leave everything in the Core Portfolio. The balance 15% of funds (~S$1.5k) can be use to buy in specific equity counters in the SGX. (for e.g. bank stocks or reits whenever there is a market pullback) If you really wish to fully invest these monies, just put them back into the Robos or ETFs.
What other options would you do or suggest to do? Feel free to comment. The whole idea of writing is to really share about opinions and you never know when an idea strikes you.
This is not a sponsored post. This is purely my own opinion after using their service and/or products. If you like what you are seeing, do remember to check they out and do your diligence. There is no one size fits all investment strategy.
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Images seen in this article were take off the relevant websites for illustration purposes only.