S$700000

[sk0065]

find an instrument that pays guaranteed more than 3% annually

then live the extra $21K per year lifestyle indefinity

 

[windwaver]

What should I do with $700000? Invest in Property or Shares? If invest in property, should I go for bank loan to make it into 1.4m?

If it's me; property

 

[sweetyethandsome]

I am over 30yo and im single. I hope to generate passive income from either rental or dividends. In term of investment, 700k is peanut.. That is why I must be careful on how I use these money.

Objective is to generate monthly passive income of not less than 5k. So that I can be confident enuff to quit my day job.

Initially was thinking of getting loan from bank to leverage. Invest in some smaller condo units and yields rental incomes..

or invest in bluechip like Smrt, singtel and many other stocks that pay good divided.

To answer your question.. No I do not have any plan to use these money other than investing it.

many good advices here.
if i am ur age with that cash, i would

1) invest in property to earn rental income
property returns is actually not as good as stocks, but leverage is very helpful at your age.
with leverage, say a 20% downpayment, and u get 5 times ur money worth.
but property market dont look rosy nowadays

2) invest in shares. go for dividends play and long term value investing.


remember! dont invest in scams. anything that sounds too good to be true are usually too good to be true!

 

[archcherub]

I am over 30yo and im single. I hope to generate passive income from either rental or dividends. In term of investment, 700k is peanut.. That is why I must be careful on how I use these money.

Objective is to generate monthly passive income of not less than 5k. So that I can be confident enuff to quit my day job.
.

with your age, pls take some money and spend on good courses to learn abt investing (or trading)
i personally suggest investing rather than trading.. lower returns, but more stable and better in the long term.
i learned from both.. burnt money. but the knowledge gained is useful (though expensive)

$700k is a big deal. maybe get some blue chips stocks that is currently undervalued, get a good stock broker and let him know u only want blue chip. a good reputed one.. not those young punks out to earn commissions.
keep till 2016 when property is geared to finally bottom out... when govt removed the cooling measures, go leverage and get urself 1 or 2 properties.

im assuming u are living in ur own home. remember ur own home does not pay u, and u can't sell it for capital gain (without buying a new one anywhere), so pls dont splurge on ur own home... lol
invest wisely.

and lastly, do more charity, help out more youngsters with their educational costs. education is their way to break out of their poverty. karma will help u.....

 

[Boorseye]

What I would do with 700k if I have it, invest about 30% to 40% in reits and the rest into blue chips..

 

[InterestingStuff]

buy apple and wait for US to increase interest rate then you can decide whether to sell or not

 

[archcherub]

buy apple and wait for US to increase interest rate then you can decide whether to sell or not

Apples to eat for good health?

actually i also think buying Apple stock seems wise, because they just did a stock split. 1 - for 7 stocks.

Normally companies only dare to do stock split if they are confident that they have better results coming up, so that the prices will rise. the reason for stock split is there are more room to appreciate, and they will only want these extra rooms if are confident. its the best self-selecting move.
Use interactive broker if u want to hold USA stocks. cheapest commission ever.

 

[wahkao3]

with your age, pls take some money and spend on good courses to learn abt investing (or trading)
i personally suggest investing rather than trading.. lower returns, but more stable and better in the long term.
i learned from both.. burnt money. but the knowledge gained is useful (though expensive)

which course good? Can recommend? Can give a bit of preview ?

 

[coloumbiaGames]

which course good? Can recommend? Can give a bit of preview ?

You FATA master need to go on course?

 

[Shiny Things]

I am over 30yo and im single. I hope to generate passive income from either rental or dividends. In term of investment, 700k is peanut.. That is why I must be careful on how I use these money.

To answer your question.. No I do not have any plan to use these money other than investing it.

Great, thanks mate, that clears a lot of things up. Let's have a look at what we can do.

Objective is to generate monthly passive income of not less than 5k. So that I can be confident enuff to quit my day job.

Righto, I can tell you right off the bat you're not going to be able to do that. $5k a month on $700k of cash is an 8.5% yield; you can't get that without taking some serious risk, and anyone who tells you you can is lying.

You can't get enough passive income to quit your job - but you can set yourself up to quit your job a few years down the road.

Also - you don't need to be so fixated on "passive income" and dividends. (In fact, "passive income" is always a red-flag phrase for me - I tend to hear it attached to real-estate scams and MLM organisations, so people offering me "passive income" make me run a mile in the other direction.)

Think about your total capital growth - capital gains and dividends - rather than just dividends. For example, US stocks have tripled off their lows since 2009; that's 200% in capital gains and about 10% in dividends. Nobody's been buying US stocks for passive income.

Initially was thinking of getting loan from bank to leverage. Invest in some smaller condo units and yields rental incomes or invest in bluechip like Smrt, singtel and many other stocks that pay good divided.

OK, these are good ideas! We can do better, though.

If you go out and get a mortgage to buy a shoebox condo somewhere, then you really won't be able to quit your job - you'll have to keep working for thirty years to service the mortgage.

Also rental yields in Singapore are deeply sh!tty: your gross yields have a 2 or a 3 in front of them, which is nowhere near your "$5,000 a month". After costs you'll be lucky to break even.

So let's rule out real estate for now. Let's look at stocks and bonds instead. (Also if you stick to stocks and bonds you don't have to deal with sleazy agents and pay the huge fees that come with buying and selling real estate. Leave real estate to the money launderers.)

So if you're somewhere between 30 and 35, you're basically exactly like me - in possession of a decent sum of cash and you want to invest it for the future (and if it happens to start throwing off fuçk-you money, then that's a bonus).

You want your money to be mostly in stocks - because this is money for the long term, and nothing (except maybe owning your own business, but that involves a lot of hard work and a big slug of luck) makes long-term money more reliably than stocks.

But you want some bonds as well. Bonds are like your boring bank-account money - it doesn't go up much, it doesn't go down much, it makes you a little bit of interest in the meantime. But most importantly, if stocks have a bad year, bonds are your ammo to go in and buy some more stocks when everyone else is panicking and selling. Good companies were going cheap in 2008, and the people who had spare money to buy those good companies are the people who made the most money in the ensuing five years.

At your age, you can afford to mostly be in stocks. You've got twenty or thirty years to retirement; you can afford to take some risk. My usual ratio is "100 minus your age in stocks", which would put you 70% stocks/30% bonds. I go a bit more toward stocks (80/20), because I think bonds are expensive right now; but if you care more about income than capital growth then 70/30's a good ratio for you.

Now: how do we do that? How do we build our 70/30 portfolio?

Let's look at the "bonds" bucket first, because that's pretty easy. First things first, you don't want to just rock down to the bank and say "I would like $210k of a Bond, please", firstly because that's not quite how bonds work, and also because if you do that they'll give you the crappiest thing in their portfolio. You don't want that. Banks are not your friends.

You'll want to build your portfolio using bond ETFs. If you don't know what an ETF is - basically, it's a fund that holds lots of stocks (or bonds), so it's like a unit trust, but it trades on the stock exchange like a stock, and you can buy and sell it whenever.

Let's pick some bond funds for you.

First one, and let's put 20% of your portfolio in this, is A35, the ABF SG Bond ETF. This is a bond ETF that invests in investment-grade SGD bonds - so it's rock-solid secure, it has no currency risk, this is "safe" money. It yields about 2.25%.

With the remaining 10 percentage points of your portfolio that's going into bonds, you can afford to take a bit more risk.

Let's put 5% of the portfolio in QL2, the iShares Asia USD Credit Bond Fund. This does what it says on the tin: it invests in USD-denominated debt of Asian governments. You have some credit risk from this, but you get well compensated for it, and some (very small) currency risk too because it's in USD. It yields about 4%.

And let's put another 5% in QL3, the iShares Asia High Yield Bond Fund. This one invests in higher-yielding debt from risky issuers; you have more credit risk from this, because some of the issuers will inevitably go under, but it yields nearly 7%, so you're being well compensated for the risk.

-------

Now, for stocks, you'll probably need to go offshore. The lineup of stock ETFs in Singapore is a bit limp unfortunately.

-------

You'll want to put a big chunk of your money into Singapore stocks, because that's what you know best. 50% of your portfolio is a good number.

Take that money and put it into ES3, the Straits Times ETF. This ETF owns all the stocks in the Straits Times - all 30 of them - so you get instant diversification (you never have to worry about one company doing badly) and a nice dividend stream. It also yields about 2.5%, which is nice.

Then let's go offshore: let's buy you all the rest of the stocks in the world. For this one, you'll want to open up an account with Interactive Brokers, because they let you trade overseas stocks very cheaply (unfortunately they don't let you trade Singaporean stocks, or I'd use them for everything). Fund your account with the remaining 20% of your portfolio, and then buy VWRD, listed on the LSE.

VWRD is an ETF that invests in every stock in the world. This gives you exposure to global stock markets, and helps you insure against the swings and roundabouts of individual markets.

-------------------

So, in summary: open up a Singapore trading account for most of your funds (for your size, I think the DBS Vickers cash-upfront account is the best bet).

Buy the following:

$140k of A35 (20%)
$35k of QL2 (5%)
$35k of QL3 (5%)
$350k of ES3 (50%)

(Why are we buying international bond ETFs in Singapore? Because when you buy them in Singapore you don't get taxed on the dividends - and that means more cash in your pocket.)

Then open up an Interactive Brokers account for your overseas funds.

Buy the following:

$140k of VWRD (listed on the LSE) (20%)

There you go: you've got a great, balanced portfolio that yields about 3-4% and will throw off some healthy capital gains as well.

------------------

There's one more thing you'll want to do, and that's a little thing called "rebalancing".

Sounds scary, but all it means is each year (I like to do it in mid-December), you look at your portfolio, and sell or buy your funds to bring them back to their original ratios.

Let's say stocks have a great year, and ES3 goes from 50% of your portfolio to 60%. What you'll do is sell down some ES3 so that it goes back to 50% of the portfolio, and buy the other funds in proportions to bring them back to their original weightings.

(Why do this? Because it forces you to not be greedy - you sell your winners and buy the losers, and that's a winning strategy over the long term.)

That's it. It takes ten minutes a year, and then when you're done you can go to the pub and treat yourself.

-----------

Hope that helps. If you've got any more questions, or if you want me to help with executing the trades, drop me a PM.

 

[Niaoson]

Borrow this thread to ask Shiny some stuff

Shiny, I'm considering using IB to leverage up and invest in bonds but am concerned about the withholding tax. Any advice on this situation? Is this even worth considering?

 

[Shiny Things]

Borrow this thread to ask Shiny some stuff

Shiny, I'm considering using IB to leverage up and invest in bonds but am concerned about the withholding tax. Any advice on this situation? Is this even worth considering?

Nope. Leveraged investing in bonds when yields are within shouting distance of all-time lows is not a good idea.

 

[bazingaman]

TS,

If you have just gotten the $700k.
Do nothing (no spending or investing) for 6 months and learn all you can about the various investment asset class and the different strategies within each.

Then you can make an informed decision.

And .. don't quit your job. If not, very hard to grow your money faster.

Oh.. and don't expect to be treated like royalty in a bank .. your money is a drop in the ocean .... Be humble and stay humble.

Good advice.

 

[RM2SSG]

So, in summary: open up a Singapore trading account for most of your funds (for your size, I think the DBS Vickers cash-upfront account is the best bet).

Buy the following:

$140k of A35 (20%)
$35k of QL2 (5%)
$35k of QL3 (5%)
$350k of ES3 (50%)

(Why are we buying international bond ETFs in Singapore? Because when you buy them in Singapore you don't get taxed on the dividends - and that means more cash in your pocket.)

Then open up an Interactive Brokers account for your overseas funds.

Buy the following:

$140k of VWRD (listed on the LSE) (20%)

There you go: you've got a great, balanced portfolio that yields about 3-4% and will throw off some healthy capital gains as well.

Shinny, you showed a lot of confidence and conviction on indexed ETF. Personally I have only recently started to look at STI ETF and have bought some.

I am keen to read your opinion, based on the above allocation, how would you execute the trade? Would it be over a period of time (if so, how long, how often) to take advantage of dollar-cost-average? Or you would do a lump-sum trade? and why? Thanks

 

[Mecisteus]

Borrow this thread to ask Shiny some stuff

Shiny, I'm considering using IB to leverage up and invest in bonds but am concerned about the withholding tax. Any advice on this situation? Is this even worth considering?

there are not much bonds without WHT that are available in IB. you may want to consider some preferreds instead. there are a couple without WHT ie aviva, idg, hsbc.

as you know, the spreads between IG and HY bonds are getting narrower so it will not be wise to dump all your capital one shot. same goes to equities.

 

[Niaoson]

there are not much bonds without WHT that are available in IB. you may want to consider some preferreds instead. there are a couple without WHT ie aviva, idg, hsbc.

as you know, the spreads between IG and HY bonds are getting narrower so it will not be wise to dump all your capital one shot. same goes to equities.

Are dividends from most preference shares exempted from the WHT?

How does one check?

 

[Mecisteus]

Are dividends from most preference shares exempted from the WHT?

How does one check?

it depends on the origin of the issuer. the ones i mentioned are non-US companies.

to check, you can open the prospectus or easier way is to ask IB. they dont have a list because of complications of tracking but IB can counter check for you.

 

[Niaoson]

it depends on the origin of the issuer. the ones i mentioned are non-US companies.

to check, you can open the prospectus or easier way is to ask IB. they dont have a list because of complications of tracking but IB can counter check for you.

Is the market scanner in TWS able to search for non-US companies?

Generally speaking, how do people know what preference shares are available in the market? Is there a list somewhere?

 

[___jeff]

dividend based portfolio will give you an annual passive income of 50, 000

 

[Shiny Things]

Shinny, you showed a lot of confidence and conviction on indexed ETF. Personally I have only recently started to look at STI ETF and have bought some.

I am keen to read your opinion, based on the above allocation, how would you execute the trade? Would it be over a period of time (if so, how long, how often) to take advantage of dollar-cost-average? Or you would do a lump-sum trade? and why? Thanks

OK, there are a couple of good answers to this question.

Answer 1: do it all in one hit. This should be fine, unless you're doing really large amounts of any given stock; in this case, the only one I'd think twice about is ES3, and you should still be able to do that in a couple of days tops without too much market impact.

Answer 2: do it in 3-4 monthly tranches. You'd probably do this if you're worried about buying high, and want to make yourself feel a little better if you buy it and it dips 1% the next day.

I'd personally go for answer 1, though if you're doing a million bucks in a not-particularly-liquid market like Singapore you might want to think about #2 (or get me to help you with executing the orders).