[NEED HELP] Investment Advices

[charel_ong]

Hi all, I would like to have some feedback from you guys as I am interested to start investing.

Actually I have been interested way back in 2011/2012, but that time I was still studying in University, has no money for investing. When I started working in 2013, I sort of procrastinated to do investment because it was too complicated for me and my priority was not there.

Fast forward to 2016, I actually took up some financial qualifications and have set aside my 6 months emergency funds. For insurance wise, I have covered my mum and I with Integrated Shield Plan (up to private plan) and got a term till 70 years old with coverage $500,000 (death, tpd) and $250,000 (critical illness) which I am paying about $108/m.

Some basic profile of me:
- I am 26 years old this year
- Have a BTO which is around $300,000 (believe to be able to finance through me and my partner's CPF) to be ready around last qtr of 2018 or 1st qtr of 2019
- Budget for house renovation at $30,000 and simple wedding + honeymoon (within $10,000) in 2019 to 2020
- Planning to save $550-600/month/person for next 36 months
- Planning to invest another $500/month

My investment goal is to collect dividends consistently and semi-retirement as early as I can which continue to work just to generate income.

Honestly, I have minimum knowledge on investing even though I have been reading up on the basics recently. Hence, I have came across many forumers suggesting to invest in STI ETF for people like me. Therefore, I would like to ask a few questions here, and hope kind people like you could help me to achieve my financial freedom goal one day.

Difference between automated purchase vs manual purchase

1) Have read about Standard Chartered Trading Account, but the difference between this with other brokerage like POSB, OCBC, POEM and MAY BANK.. I understand that automated means they will reinvest in companies that are the strongest, while the weakest will be eliminated out. Therefore, if I am more inclined towards SCB account because of minimum commission fee, does it mean I need to evaluate and choose those I think are stronger instead of the bank choosing for me?

Difference between SPDR Straits Times Index ETF (ES3) and Nikko AM Singapore STI ETF (G3B)

2) I have read that SPDR Straits Times Index ETF is the first locally created ETD, while Nikko AM Singapore STI ETF is to replicate as closely as possible... After reading a blogger's opinion, I am more inclined towards SPDR Straits Times Index ETF (anyway they allow per lot at 100 instead of 1000 now), because Nikko can only "try to replicate".. Though not much difference in them, but honestly, which one do you guys will choose?
Bonds vs Equities

3) I have read about 70% Bonds/30% Equities, which I understand that since we are young, we should try to take a little bit higher risk in equities, when we are older.. We should focus more on bonds. My risk appetite is still relatively small since I am just starting out, hence I am more keen to know more on bonds at the moment. What kind of bonds should I go for? I heard retail bonds quite attractive...

Thanks in advance, and bear with me if I have more questions =X

 

[blurpandasg2014]

Hi. Welcome to the world of investment I will try to answer ur qns to the best of my knowledge.


1) I am unsure what you mean by auto/manual but if u are talking about Regular Savings Plan (RSP), every month, a fixed sum of money will be deducted via giro from ur bank account and invested into your stock of choice. This actually saves you trouble and also eliminates the urge to time the market. This strategy is usually applied to Index Funds aka ETFs and is rarely used for a single company stock

2) There is little difference between Nikko AM (G3B) and SPDR (ES3). Both tracks the STI and replicates its movement. SPDR mimics the index more accurately than Nikko (G3B). However, you should take note that minimum amount to purchase G3B is $100 via POSB invest savers while for SPDR, u need to buy minimum 1lot which cost about $300 at one go

3) Rule of thumb: Bond/equity ratio should be (100-age). Based on your age, u should roughly invest 80% Equity and 20% bonds. Having said that, it still depends on your preference and risk appetite. No two persons are made equal.

For Bonds, you can consider ABF Bond ETF (A35), which tracks the iBoxx ABF Singapore Bond Index. Dividend is about 2.5%. You can also consider getting retail bonds which payout higher interest and redeemable at $1/share upon maturity (minimum lot is 1000shares).

To name a few in the market:
Fraser Centerpoint Limited Retail Bond (3.65%)
Perennial Real Estate Holdings (4.65%)
Aspial Retail Bond (5.30%)

 

[wahkao3]

looking for gd advice

 

[icicic]

looking for gd advice

For you is easy. As long low risk high return eh sai liao right.

Sent from Sony D6653 using GAGT

 

[wahkao3]

For you is easy. As long low risk high return eh sai liao right.

Sent from Sony D6653 using GAGT

yes i agree. go for low risk, high return investments

 

[charel_ong]

Hi. Welcome to the world of investment I will try to answer ur qns to the best of my knowledge.


1) I am unsure what you mean by auto/manual but if u are talking about Regular Savings Plan (RSP), every month, a fixed sum of money will be deducted via giro from ur bank account and invested into your stock of choice. This actually saves you trouble and also eliminates the urge to time the market. This strategy is usually applied to Index Funds aka ETFs and is rarely used for a single company stock

2) There is little difference between Nikko AM (G3B) and SPDR (ES3). Both tracks the STI and replicates its movement. SPDR mimics the index more accurately than Nikko (G3B). However, you should take note that minimum amount to purchase G3B is $100 via POSB invest savers while for SPDR, u need to buy minimum 1lot which cost about $300 at one go

3) Rule of thumb: Bond/equity ratio should be (100-age). Based on your age, u should roughly invest 80% Equity and 20% bonds. Having said that, it still depends on your preference and risk appetite. No two persons are made equal.

For Bonds, you can consider ABF Bond ETF (A35), which tracks the iBoxx ABF Singapore Bond Index. Dividend is about 2.5%. You can also consider getting retail bonds which payout higher interest and redeemable at $1/share upon maturity (minimum lot is 1000shares).

To name a few in the market:
Fraser Centerpoint Limited Retail Bond (3.65%)
Perennial Real Estate Holdings (4.65%)
Aspial Retail Bond (5.30%)

Thanks for your feedback.

I am interested in opening SCB trading account, but the downside of this is manual purchase unlike others like POSB, OCBC, POEM that are automatic purchase as I read it from here http://www.moneydigest.sg/how-to-invest-in-sti-etf/.

May I know you are using which bank for your regular saving plan?

 

[Mecisteus]

I strongly recommend you go for an automated purchase plan. Unless you are really a very disciplined person.

 

[makav31i]

2) There is little difference between Nikko AM (G3B) and SPDR (ES3). Both tracks the STI and replicates its movement. SPDR mimics the index more accurately than Nikko (G3B). However, you should take note that minimum amount to purchase G3B is $100 via POSB invest savers while for SPDR, u need to buy minimum 1lot which cost about $300 at one go

Some correction, POSB InvestSaver and OCBC BCIP offers G3B whereas POEMS SBP offers ES3...All can be started with minimum $100/month...You can also buy G3B at minimum 1 lot using SCB just like ES3...

 

[Shiny Things]

Fast forward to 2016, I actually took up some financial qualifications and have set aside my 6 months emergency funds. For insurance wise, I have covered my mum and I with Integrated Shield Plan (up to private plan) and got a term till 70 years old with coverage $500,000 (death, tpd) and $250,000 (critical illness) which I am paying about $108/m.

Coolio - you've got the right idea here. I think the term insurance to 70 is a bit excessive if you don't have anyone depending on you, but I think you're on the right track!

I understand that automated means they will reinvest in companies that are the strongest, while the weakest will be eliminated out.

Nope, that's not how it works. Automated investment just means they put the money wherever you tell them to put it; the bank doesn't magically choose investments for you.

The "automated" bit is that they withdraw the money from your account and invest it without you having to think about it. This is nice, but the extra fees that these accounts charge are a bit too high for what you get.

Difference between SPDR Straits Times Index ETF (ES3) and Nikko AM Singapore STI ETF (G3B)

2) I have read that SPDR Straits Times Index ETF is the first locally created ETD, while Nikko AM Singapore STI ETF is to replicate as closely as possible... A

That's just marketing. The two are basically identical, except that the SPDR one (ES3) has slightly lower fees; so that's the one you want to invest in.

3) I have read about 70% Bonds/30% Equities, which I understand that since we are young, we should try to take a little bit higher risk in equities, when we are older.. We should focus more on bonds.

Whooooooo, 70/30 bonds/equities is completely upside-down. That's the sort of portfolio you should have when you're aged eighty. If you're in your mid-20s, you should have something like 80/20 equities/bonds, completely the other way up from what you're talking about.

My risk appetite is still relatively small since I am just starting out, hence I am more keen to know more on bonds at the moment. What kind of bonds should I go for? I heard retail bonds quite attractive...

So here's the thing about those retail bonds. The only "attractive" thing about them is that they yield slightly more than sticking your money in the bank.

When you buy a bond, you're lending money to the company or the government that sold you the bond. Riskier companies - the ones that are less likely to give you your money back - usually have to pay a significantly higher interest rate in return for that money.

When you buy a single retail bond, you're lending all your money to one company, and if that company goes bust, you're going to lose nearly all your money. It's better to diversify your bond holdings (in the same way that owning ES3 diversifies your stocks amongst the entire Straits Times index). That's why people look at bond ETFs like A35 - which owns a bunch of Singapore Government bonds (for stability) and a few GLC bonds.

 

[akwl88]

As usual, solid advice from Shiny. Thumbs up brother!