$1000 will go into an SSB bond ladder for 6 months, earning interest of 2-3% p.a.
Thereafter, the $1000 will go into DBS multiplier account, earning interest of 2% p.a.
I also have existing savings, also in DBS multiplier account, equivalent to 5 months of emergency funds.
$1200 to IWDA (as global developed equity)
$100 to EIMI (as global developing equity)
$500 to IUIT (as technology equity, because I believe in the growth potential in tech over the long run)
$600 to ES3 (as local equity)
$300 to individual stock picking/riskier investments
Additionally, I would have $1600 going into CPF.
This is pretty confusing to me. You seem to have said "I want a huge wide range of products", instead of starting with "I want x in stocks, y in bonds". Buying $100 or $500 clips of UK ETFs is going to cost you a truckload in fees - you're paying like $50-$60 a month just in transaction fees! And after a few months you’ll end up with a bunch of random little positions that you’ll end up getting bored with and sell because you want to chase the next big thing. I’ve seen it happen.
On top of that:
1) You want exposure to tech and China, which is fine, but you're already getting that exposure through your other ETFs;
2) You're putting money into a save-as-you-earn bank account that could get a lot more interest elsewhere.
I think you might be sort of missing the point. The point is not to jump into the deep end by buying EVERY SINGLE ETF and adding your own market views on top of that. The point is to start simple! Maybe even start with just ES3 and MBH, because that’s already a balanced portfolio by itself (though, as BBCW would be quick to remind us, it’s pretty insular).
I would just do the following, without even challenging your allocation percentages:
1) $1000 a month into either SSBs or the MBH corporate-bond ETF;
2) $2500 a month into either IWDA (don't overthink this; if you're just starting out, having a tiny allocation to EIMI or IUIT won't make any meaningful difference to your returns) or ES3. Since you want about a 2:5 ratio, buy IWDA for five months and then ES3 for two months.
Boom, you've just cut your monthly transaction costs to <$10. I've just saved you $600 a year.
$300 (prioritizing shield plan, followed by disability income insurance, then term insurance)
That seems like a lot. I know BBCW asked this already, but what on earth kind of goldplated insurance are you getting for this money?
I find that VEUD is listed as LSE instead of LSEETF and also IB margin is 100% for VEUD instead of 25%. I am afraid, when we try selling VEUD we will be hit with 0.5% stamp duty.
Firstly, UK stamp duty only gets applied on buy trades, not sell trades.
Secondly, why not just drop a ticket to IBKR and ask them?
It is just so convenient with the phone apps to log in and check and then read more finvis news, i know more about US politics in the past year than my whole life before, it is addicting to watch the numbers grow up green and red, and watch the news development on trades and crisis!
This being said, do you know why yesterday IWDA and EIMI spike up and down between 2.30-4.30pm london time, as i seen on google finance chart?
- I totally get that. I’m a news junkie myself. But you need to draw a line between your news consumption and what the news means to your portfolio. What you need to learn is that most news makes no difference. When Donny Two Scoops got elected, the S&P tanked 50-60 handles in a couple of hours, and then rallied 20%(!!) over the next year. The S&P is near its all-time highs this morning despite trade wars, Argentina and Turkey looking shaky, etc etc etc.
You have not learned this, and you need to learn it. The best thing you can do right now is to throw your portfolio out the window and start again; that will help you break the link between the news and your portfolio.
- No. And why does it matter to you anyway?
I need some advices regarding investing in S&P500 and China Index, I have been reading around online and such but the information is too overwhelming for me, thus I could not reach a conclusion on how it is best to invest in S&P500 and China Index.
OK, there’s a lot going on here.
Firstly: why do you want to specifically invest in the US and China in the first place? Which “China”—greater China, H-shares, A-shares? Why do you think they’ll do better than the rest of the world’s stock markets? And more importantly, why do you think you know something that the rest of the world doesn’t?
Anyway. If you’re not just investing based on what you read in the news:
[*]The right broker is Interactive Brokers;
[*]The right investment vehicles are CSPX, listed in London (for the S&P 500); or 2828 HK (for “China” - that’s an index fund of HK-listed Chinese stocks).
I’m gonna stop you right there. FX trading, and trading using CFDs and other leveraged instruments, is a flat NO. Do not do this. You will lose all your money.
1. Will this strategy of investing ever fail? I would imagine if it was time for me to drawdown but the market crashes badly and everything I've got would be withdrawn at a loss. Am i right?
So there’s no guarantee that this strategy will make money, no. It’s the most sensible way to invest, and over the long term, it lets you ride out swings and roundabouts in the markets. But you’re right, any investment strategy will have trouble if “the market” crashes just before you take your money out. That’s why this strategy diversifies between stocks and bonds, between local and global investments—so that if one market goes down, that won’t affect the rest of the portfolio as much.
2. What other broker would be recommended for trading the local etf other than scb as it is not an approved broker by my company.
DBSV’s cash upfront account is fine if you can’t use Stanchart.
Regarding Standard Chartered, or any brokerage that deals with foreign stocks, what will happen to one's stocks if the brokerage closes?
Why does everyone seem to think that brokerages can just run off with your money? What do you think will happen?
Anyway, the short answer is that probably nothing will happen; most likely is that your account’s going to be transferred over to another broker, and your positions will be intact. That’s what tends to happen if brokerages go bankrupt, because the brokerages don’t have access to your money. It’s held in segregated accounts; the broker can’t just raid them.
In the mean time, I wish to allocate a small amount of money monthly into REITs. I know your views on REITs but I really want regular dividend coming into my bank account (helps alleviate my anxiety about not having enough money).
I’m going to double down on what everyone else has said: if the problem is your anxiety about “not having enough money”, what does that mean? Not enough money in your brokerage accounts? Not enough income each month? If you tell us what you want, we can tell you how you can get it.
Looking to seek your advice on whether it is good to go ahead with an ILP which will use 100% of the monthly premiums into 2 unit trust funds that was handpicked by a wealth planner?
No. You’re going to be paying most of your first two years’ premiums in commissions to the planner, and the planner doesn’t have any bloody idea about what funds are going to do well; if he did, he’d be working at a hedge fund instead of a sleepy insurance company.
Tear it up while you still can.
I save $1000 in my bank account each month
- $500 CIMB
- $500 POSB SAYE
- $300 for ETF
- $500 give parent allowance
I earn $2800 (after CPF), so
Wow, yeah, like people are saying, you’re putting way too much into bank deposits. That’s overly conservative for your age; that’s not going to leave you enough to retire on.
Hi ST! Just finished reading your book and it is really an eye opener for someone who doesnt know personal finance at all. Thank you!
Hey - glad you liked the book! Let’s see if we can’t help you with these questions…
1) I'm 23 this year. Just in case, 20/30 years down the road, the global ETF is delisted from the exchange (is it actually possible for ETF to be delisted like stock?). What should we do in that situation? Do we sell everything and lump sum to new global ETF? Or just add the lump sum to local ETF since we are nearing retirement?
When an ETF gets delisted, it sells all of the shares that it holds, and hands the cash back to the shareholders. You could just take that cash and reinvest it into a similar ETF. It’s a pretty minor headache.
2) I still couldn't get the logic behind why IWDA as an accumulating ETF is better than VWRD. Let's say both unit price and dividend yield is the same.
Because when you’re still working, you don’t need—or want!—dividends. If you have an ETF that’s throwing off a stream of dividends, you’re going to have to take those dividends and pay money each month to reinvest them. If you own an accumulating ETF, they reinvest the dividends for you.
When you reach your retirement, more of your portfolio’s going to be in bond ETFs, which tend to pay out dividends anyway, so that solves part 1 of the issue. And part 2: it’s totally OK to sell some shares! The point of retirement saving is to save for
you, you’ve spent your whole life working to save that money so that you can use it when you retire and you’re not earning money. If there’s some left over for the kids, that’s fine, but support yourself first.