Opening Up

Still on my POSB RSP on STI and ABF Bond. I am a regular reader of some local blogs as well as hardwarezone Money Mind forum. There has been two, or rather three group of believers, who are debating thoroughly on different investment beliefs.

1st and majority of believers - Index investors. Invest regular in STI ETF, Bonds and mix in global index (some didnt mention this) and buy term insurance. Your gain will be much better than leaving it in life insurance to mature or even endowment plan. Expectation of this is that this will be your ultimate retirement funds. Main pro - low cost.

2nd and minor believers - whole life insurance. Believes that term insurance is "donating" money to insurance companies. They believe regular savings in life insurance, till 20-30 yrs, the cash value would be > your cash outlays. and these monies alrdy covered your insurance premiums with earnings. Pro - returns is fine, guaranteed capital, straightfwd force-saving, no diy needed

3rd group - insurance agents. They believe in selling. Naturally, they will be very incline to make endowment plans sound good. so they can drop the readers a pm and see got sales or not. i hv received quite a number after posting a couple of qns. I even ask an active forum agent what are his own allocation. he say one very small endowment, life insurance, the rest DIY in shares. Duh. these ppl r not even putting the money where their mouth is, how to trust them with your monies on investments?

I am an emotional trader/poker. thats why i do not diy shares, but i am still itchy hand buying many individual counters on top of my index investments. index investing shd be profitable in a perfect scenario - dollar cost average it, rebalance twice a year according to your age until old. but in reality, how manny of us got the discipline to do that?

that boils down to buy guaranteed returns tools, endowment? retirement annuity plans? the cost are high. the lockdown is long (if you diy invest long term, it shd be also quite similar timeline with this). u not sure agent r introducing the most suitable or highest commission product.

how many times u hv seen agent selling investment-linked policies, investing client monies into energy or emerging market WHOLE CHUNK and see how they fare for the last one year? then they start to sell your position at LOW, and buy something slightly more defensive, earning transaction fees in the process.

ultimately, retirement is in our own hands. even if u need force-saving products, do ur research and see what is suitable for yourself. u can close one-eye and pay ur agent car or condo. i myself hv surrender two blood investment-link policies at depressing loss.

so all the reading hv give me second thoughts on investing everything in STI. what if u r a japanese, born in 1957, age 30 in 1987... and started buying in ur country's index and age 59 now and trying to retire?? u wld be holding on to a loss for 3 decades..



nikkei is diversified with 225 companies... STI is only 30 companies, how diversified r we? so what shd we do?

i hv been buying in at current market and even eats into my savings. this is my current portfolio allocation. thanks to investmentmoats portfolio template excel.

my focus now is on my cashflow inside high-yield bank account like ocbc360, maybank saveup, uobone, boc smartsaver.

will update when there r much changes!

International Index ETF

I have come to a cross-road. In my allocation of International Equities Index, my initial plan was to mix Vanguard All-World ETF(VWRD) and iShares World ETF (IWDA), but I realise it was a bad idea.

Main difference between the two ETF:
VWRD
- Pay out dividends quarterly
- Includes Emerging Market
- Slightly higher TER (Total Expense Ratio)

IWDA
- Reinvest dividends
- Only include developed world market
- If want to include emerging market, can buy EMIM (iShares Core Emerging Market)

Not that I hate dividend, but to be taxed on dividend (as the ETF is Irish-domiciled) seems like marginal loss. Accumulating dividend and later reinvest yourself also requires transactional cost. Anyway it might be better when you live off your dividend when you retired, instead of trying to sell some capital on your own.

To own international index, we usually wish to be as diversified as possible, in this case, VWRD seems like a more straightforward option as it includes EM. But how much does this affect your portfolio performance? I am not technically sure. But if you go for IWDA + EMIM, you definitely need to make your own allocation.

At the moment, I have a little of VWRD, more of IWDA, and a little of EMIM. It sounds exactly all over the place like 'rojak'. I still can't make up my mind. Obviously, both hv their pros and cons and I feel that their differences are negligible. It is down to personal choice now.

Maybe I will leave what I have already own, and pump in VWRD?