If someone were to follow the suggestion here on portfolio allocation, a typical allocation would be 70% stocks 30% bonds for a 40 year old.
80:20 is the more popular conventional wisdom.
35% = 100k USD which makes the SG portion 186k USD or 250k SGD.
No, you’ve got several problems there:
1. The stock allocation is a bit too low for a 40 year old, as mentioned;
2. The stock allocation ought not be split 50-50 local/global. It ought to be more global (views differ on this, but if you split only stocks exactly 50-50 you’re actually well over the 50-50 total portfolio split that some people favor);
3. It’s
reasonable to forecast that local stocks will have a lower long-term average total yield than global stocks;
4. Standard Chartered isn’t going to be the home for your SSB or CPF assets, which do count toward your bond allocation — and would prudently represent ALL of your bond allocation at the beginning of an accumulation phase, since SSBs double as emergency reserve.
You’ve also forgotten the sale side costs, I would note. Exactly how you handle those costs is “interesting,” but there are such costs.
And you’ve also picked a rather arbitrary US$1,000/month investment pace. Increase that amount — as would be likely as somebody advances in a career and accumulates wealth — and that alleged S$2 cost advantage disappears and reverses. Decrease that amount and you don’t get to SCB Priority Banking status any time soon, and IB wins the cost contest again. And even if it’s exactly US$1,000/month, you’ve ignored the fact that IB has a cost advantage all along the way until you accumulate enough to get to SCB Priority Banking status. So, in the US$1,000/month scenario, you save a lot on your global stock purchases at IB until you get to SCB Priority Banking, then maybe you save S$2/month until you get to IB’s US$100K clip level, then IB wins again. What does that total journey look like — not just the part in the middle? The total journey is what matters from a cost point of view.
AND you’re also assuming one global stock trade per month (IWDA presumably), but at some point a lot of investors will want to add EIMI to their portfolio mix. That’s highly likely before they get to 6 figures. As soon as they do, IB wins.
There’s also some reasonable concern that you should divide your loyalties across brokers in order to protect against the small but non-zero probability that a specific broker could have impactful financial problems. If you’ve got all stocks at SCB (and eventually some bonds), there’d be that concern. You cannot have all stocks at IB if you’re buying any ES3 (and eventually MBH) and if you’re a resident of Singapore.
And I think you’ve missed IB’s greater opportunities for security lending, if you’re interested in doing that.
SCB *is* clearly relatively attractive for global stocks if you’re below US$100K and your global stock purchases are less frequent than once per month — if you’re “batching up” IWDA purchases, which would be at lower dollar investing levels. Delaying entry has a cost, so you wouldn’t do it at US$1,000/month sort of levels, but you would “batch up” well below that. Also, if SCB Priority Banking is straightforwardly attainable and has other benefits you value besides the occasionally competitive brokerage commission, that might be a stronger argument in favor of SCB.
Some might also be concerned that this means that their peers will get promoted while don't, but these are the small concerns of cubicle dwellers...
