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!

2015 Review

2015 just flew by. I do not have much to review because I only started most of my investing in the second half of the year.

I have been working in a brokerage firm before June 2015 and we hv very strict procedures to trade the shares. Therefore, I was not active.. on top of that, I hv wiped out my savings for my house renovation. Everything from emergency cash, savings and investment starts from scratch.

My first major trade is a downfall.. entering Sembcorp Marine at 3.04. That began the major hole in my investment portfolio. Subsequent STI ETF positions, Suntec REIT, Mapletree Ind Trust, didn't hurt me that badly when the whole market is going down.. but Sembcorp Marine did tear my underwear a big hole from behind.

I need to maintain my discipline in focusing on index investing, but I am always tempted to meddle with many individual counters, especially when Standard Chartered Online Equities platform offers such an attractive fees - no minimum brokerage. Partly, I find that STI itself does not covers Healthcare, Technology industries. Nevertheless, I am always in for the long term.

I hv also started following a couple of local investors and traders blog in 2015. I like popular bloggers who take the time to reply every comment in their blog post, they are humble and respect their readers. They inspire me a lot. My goal in life, is to achieve financial freedom.

What is your definition of financial freedom?

To me, I dont hv to be super rich, with savings that will not deplete. Rather, I am aiming to achieve passive income that is able to match my monthly expenses. That way, I do not hv to worry job loss, and I can even give my wife the freedom to be a full time housewife.

And how can I achieve that? High dividend shares? Dividend warrior, at my age, achieve about 2k monthly dividends with almost 300k value of shares. I am a peasant income earner for my age, I am not sure how long I will take to achieve this goal.

Anyway, 2016 will be a year I should complete my emergency cash portion and start building up my warchest. My overseas index r greatly under-proportion, therefore I will continue balancing my portfolio.

Have a great year!

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?

Talking to People on Index Investing

There two types of reaction when I tell people of index investing.

1) "Wow, I don't know how to invest! This is risky!"
2) "15-25 years horizon to build retirement fund? This is not fast enough."

I have managed to influence a couple of friends and family members to start this index investing journey. My sister started her POSB Invest Saver this month, after telling her about it one year ago. I recommend this for those who are not as savvy about investment, and wish to invest as passively as possible. My wife started it last month. Two of my ex-colleagues started this month (thru' buying over brokerage and POEMS ShareBuilder plan respectively).

I hv more second reactions though. It is true, most people, including me, wants to see "visible" money. That was why I started off as a forex trader. But life changes, and I am leaning towards a more passive investment style.

Ironically, after stepping into index investing world, one of my regrets is that I didn't build my career properly - my main source of income. I understand index investment are slow for risk takers, but if u hv a source of income from business or employment, where do you park your cash?

Many high income earners I know do not know where to park their cash after monthly big paycheck, most of them changed their lifestyle to higher standards because its useless parking these monies in 0.05% savings account. The other group would just save it inside and let inflation drawdown their savings value.

That is why we need to invest monies (after emergency funds and savings which u will need 5-10 yrs). It is an enjoyable process to build up a portfolio and see your money grow. Set a target allocation and work towards it. If you are not savvy about investing, just choose a posb invest saver, ocbc blue chip investment etc. to do the work for you. I believe POSB is the most passive among them, no need to pick any counters.

Have faith my friends.

What's Going on the Market?

I have no idea, and I do not care. I think I only see and feel like its a Great Singapore Sale going on!

I executed a couple of positions, my existing position got bad drawdowns, but I'm feeling no panic because I am in for the long run.

My 500 shares of Sembcorp Marine bought at 3.04 has been dropping ever since, partly due to fall in oil price, and now the panic seems to be spread from the China market. I have no intention to sell at the moment, probably leave it in the cold storage.

I have transacted STI ETF at 3.23, 3.10 and 2.90, at 100 shares each.

Suntec REITs at 1.51, Mapletree Industrial Trust at 1.40.

These should basically sum up the core of my local portfolio.

Current allocation:
Local Equities: Sembcorp + STI ETF (including POSB invest saver position) = 65%
Local REITs: 10%
Local Bonds: 15%
Foreign Equities: 10%

My target allocation:
Local Equities: 50% (STI ETF as core)
Local REITs: 10% (Suntec + Mapletree Industrial, as both are not tracked under STI)
Local Bonds: 20% (ABF Bond Index ETF as core + Cash warchest component)
Foreign Equities: 20% (Vanguard FTSE All-World ETF + iShares Core MSCI World ETF both under London Stock Exchange, as core)

Not sure if I should lower my REITs component to increase my foreign equities allocation, because I like the dividend yield on local REITs.

As for Bonds, I plan to put in place a small portion in it in future, namely these two:
1) iShares J.P. Morgan USD Asia Credit Bond Index ETF (SGD)
2) iShares Barclays USD Asia High Yield Bond Index ETF (SGD)

Local investors are sucker for yields, because we are not being taxed so heavily like in the US for capital gains or dividends.

I am saving hard, not hard enough though, to see my plan in place.

Monthly Investment

The following is a piece I got from an investment book calls "The Bogleheads' Guide to Investing".

John C. Bogle, founder and retired CEO of The Vanguard Group, received a letter from a Vanguard shareholder. The person wrote that he had been investing with Vanguard since the mid 1970s. Since then, the value of his portfolio has grown about $1,250,000. And the most fascinating part is, this shareholder never earned more than $25,000 a year in his life time!

Moral of the story is to be start investing early, so that you can make use of the magic of compounding. Set aside your monthly paycheck for fixed expenses, insurances, bills, donations and savings, before setting aside a fixed amount of the remaining to spend.

Reason why I suggest fixed amount to spend is that as your salary increases as years goes by, your misc expenses may unknowingly increase, even though you have already set aside the fixed expenditures.

Since 5 years ago, when I started out in the workforce a couple of years, my misc expenses such as dining & entertainment has always been allocated the same amount. Of course there are times when I overshot! Besides having more bills to pay after having my own house, I channel the additional salary (after these years) to my savings.

Once my emergency cash has been built, the time for investing comes!

My first step out was in POSB Invest-Saver, starting really small as I build up my emergency cash. Monthly dollar-cost averaging into investing Nikko AM STI ETF.

This is an exchange-traded fund that tracks the Straits Times Index (STI). By purchasing this, you technically own the top 30 blue chip companies ranked by market capitalisation on the Singapore Exchange.

Have been on it a year now, it is affordable and hassle-free as it deducts from your bank account on every 12th of the month. You do not have to time the market, you do not have to wait for your order to be filled.

I will share more on this next post.

New Journey

As the title suggests, this will be a boring investment blog. Then why create it? I just simply miss writing lol.

My reason for this to be an 'insipid' investment blog is that my current investment strategy will be very dull and straight forward. No more daily trades like in my forex days years ago. And notice the word investment instead of trading. I am now taking long term horizon instead of swing trading, and specifically, in equities, and sometimes bonds.

Online poker has been banned in Singapore. I did not top-up my busted forex account. As per my last update, I have moved into my own house, and there are many things to handle, especially household errands, relationship building etc. Life has been great and I hope to be more focused on career building, better relationships with family and friends, and passive wealth building. No more active trading and hours facing charts for me.

Let's fire & forget. Go grab a beer and enjoy life.

After going back to square one in terms of savings due to house renovation, I am aiming to slowly build up my investment portfolio and time goes, after setting aside emergency cash (6 months of expenses). I did a lot of self-research and forum surfing for the past one year, and moving forward, my insipid strategy will be investing in index ETF, equities and bonds mixed.

I will do occasional updates on my holdings and transactions. This blog will be updated non-regularly as I do not wish to Buy or Sell so I can write. I am learning how to display my puny portfolio into a page using google sheet for live update.

Finally, after all these while, I can be back !