Optimal plan for my situation

[GottaCatchEmAll]

I'm 26 this year, just started working and have fixed a goal to save $100k by 30 yo.
Currently, I do not have commitment and is debt-free.
You may assume that my savings is $0 and I'm starting from there.

Using calculation, I would need to save $2000 a month and it is achievable due to my starting pay but I need to live frugally. I don't own a house or car and not intending to get one soon. I want to be cash rich ASAP and I realize I'm a very late starter. Everyone's future is unpredictable; my pay might drop or increase and my parents might stop working anytime soon. Plan will deviate but what I can do is to start now!

In the midst of my cash accumulation, I have thought of what I should do with my savings. For example, find ways to lock a portion of it away and make it grow. I'm not a big risk taker and I do not have time to monitor stocks. Reasonably low liquidity is fine for me now.

I have read dividend warrior and I want to do that too. However, a lot of blue chip stocks is easily $5000~$10000. I know POSB and OCBC offers blue chip investment plans for poorer people like me.

What's the cons of using this service? (High mgmt fee?)
Do you recommend that I accumulate enough for a lot and buy myself?
OR do you have other better recommendations?

Thanks!

 

[Lewis.T]

The cons is the time horizon is kinda low for investing if you want stable returns. Management fees are okay, but you can consider using Standard Chartered's platform too.

Are you able to stomach another 2008 if you are not willing to set aside for a longer term than 4 years?

If you're looking for something less risky and fits within your time horizon you could make use of OCBC360 at the moment, giving you up to 3.05% interest on your savings. Not sure how long it'll be around though.

Edit: Look into your insurance needs first lol, hospitalization + term plan should suffice if you have not already.

 

[GottaCatchEmAll]

u mean given my time horizon, its not optimal to do dividend investing (blue chip)?

 

[Lewis.T]

It's okay if you want to receive just the dividends, but if you're looking at capital appreciation it may be iffy.

If you want to be cash rich it means you have to realise your capital gains (if any), and you may be doing so at a wrong time.

 

[w1rbelw1nd]

Hi!

I am 25 this year, just started working. Can share some of my investment strategies.

I realize your projection of $2000 does not take into account growth from investments... If your investment can have an average of 7% growth per year, you only need to save $1000 a month.

As you have pointed out, there is a big issue with denomination when you invest in shares, especially in Singapore where most of the time each lot is 1000 shares.

What you can (or maybe you SHOULD) do is to invest in the Nikko AM STI index using the standard Chartered Platform ($300+ per lot). You will not have too much holdings in a single company, can invest when your pay comes in, and also not be too exposed to the interest rate risk high dividend companies are exposed to.

 

[GottaCatchEmAll]

It's okay if you want to receive just the dividends, but if you're looking at capital appreciation it may be iffy.

If you want to be cash rich it means you have to realise your capital gains (if any), and you may be doing so at a wrong time.

Sorry, what I meant by cash rich is that I have reasonably good liquidity for emergency purposes in the future. Not a heap of cash sitting in my bank earning measly rate. I want my money always invested in something with better rates than banks.

So yeah, I'm ok with just receiving dividends and have the options to liquidate my investment for cash flow when opportunities/needs arise.

 

[GottaCatchEmAll]

Hi!

I am 25 this year, just started working. Can share some of my investment strategies.

I realize your projection of $2000 does not take into account growth from investments... If your investment can have an average of 7% growth per year, you only need to save $1000 a month.

As you have pointed out, there is a big issue with denomination when you invest in shares, especially in Singapore where most of the time each lot is 1000 shares.

What you can (or maybe you SHOULD) do is to invest in the Nikko AM STI index using the standard Chartered Platform ($300+ per lot). You will not have too much holdings in a single company, can invest when your pay comes in, and also not be too exposed to the interest rate risk high dividend companies are exposed to.

I will check out Nikko AM STI index. I'm more of a buy-and-hold strategy now because I totally have no time to watch stocks.

 

[w1rbelw1nd]

I will check out Nikko AM STI index. I'm more of a buy-and-hold strategy now because I totally have no time to watch stocks.

you can just buy and hold using nikko AM right?? hahaha

Indexes are meant for people who has no time to keep abreast with market information, since it is generally well diversified enough. Cant say the same for any individual stock.

 

[kelvin_99]

I'm 26 this year, just started working and have fixed a goal to save $100k by 30 yo.
Currently, I do not have commitment and is debt-free.
You may assume that my savings is $0 and I'm starting from there.

Using calculation, I would need to save $2000 a month and it is achievable due to my starting pay but I need to live frugally. I don't own a house or car and not intending to get one soon. I want to be cash rich ASAP and I realize I'm a very late starter. Everyone's future is unpredictable; my pay might drop or increase and my parents might stop working anytime soon. Plan will deviate but what I can do is to start now!

In the midst of my cash accumulation, I have thought of what I should do with my savings. For example, find ways to lock a portion of it away and make it grow. I'm not a big risk taker and I do not have time to monitor stocks. Reasonably low liquidity is fine for me now.

I have read dividend warrior and I want to do that too. However, a lot of blue chip stocks is easily $5000~$10000. I know POSB and OCBC offers blue chip investment plans for poorer people like me.

What's the cons of using this service? (High mgmt fee?)
Do you recommend that I accumulate enough for a lot and buy myself?
OR do you have other better recommendations?

Thanks!

It is good that you have taken the first steps to plan financially for the future.

However, just keep this in mind -- a meltdown is looming on the horizon depending on how long things are holding up to maintain this "rosy" outlook in the economy. My personal view is that it could happen within the next 3 years which is well within your projected horizon.

If that day really comes, it is going to impact greatly on investors like yourselves if you do not have large cash reserves and have already heavily invested bulk of your savings in instruments like stocks. Though past events have shown that the market in general will eventual recover, but that will take years. If you have the holding power to hold on to the paper loss till recovery, then you would still be fine.

For me, if I were in your position, I would keep put the money in safer instrument with guaranteed but lower returns and wait for the big crash before I buy into the market. I do not think I can afford to lose $ in my early investment stages when I will need the money for marriage, buying house, renovation, kids, etc. etc. in coming years.

If you are optimistic about the future to invest, I suggest you keep 50% in cash and invest the remainder. For a start, you can try ETFs. I am suggesting you should keep a higher proportion (50%) in cash as you are starting from a 0 savings base and you will definitely need to put aside cash for emergency use.

At the end of day, the rule of thumb is NEVER invest using $ you are not prepared to lose. Good luck in your adventure

 

[greddy88]

Agreed. If u cannot afford to lose, better wait.
I only have around 10% still in equities.
Sitting on majority cash now. Waiting for the biggie.. though the temptation is still great to go back in.

 

[quirkyhill]

For me, if I were in your position, I would keep put the money in safer instrument with guaranteed but lower returns and wait for the big crash before I buy into the market. I do not think I can afford to lose $ in my early investment stages when I will need the money for marriage, buying house, renovation, kids, etc. etc. in coming years.

i just started dca investing (sti etf using poems share builder account). what are some other 'guaranteed but lower returns' that you recommend?

 

[kelvin_99]

i just started dca investing (sti etf using poems share builder account). what are some other 'guaranteed but lower returns' that you recommend?

Singapore Government Bonds is one option --> https://secure.sgs.gov.sg/fdanet/SgsBenchmarkIssuePrices.aspx

 

[iCuteCube]

STI ETF is the most common plain vanilla, risk adverse.

I wouldn't advice anything on bonds though, as we (I am 26) are young, our investment time frame is much longer then those in 30s 40s and 50s.

Go with the plain STI ETF would be the choice i would advice my friends, followed by stock pick based on risk appetite, time, industry, preferences.

For a start, dive in to STI ETF will be one of the best option as of now.

 

[GottaCatchEmAll]

any comments about the bear and bull market cycle as mentioned by kelvin_99?
i aware of it but not sure when it is coming..

and how do i determine my holding power of dropping share price?

From my understanding, as long as I do not need those money, I can always hold until the price rebounce right? (if it rebounce that is)

I once read an article that teaches the purchase of same shares every month, no matter it drops or rises. Over time, the risk is greatly diluted. Cannot really remember the details.