So I received this really interesting question.
It’s from a 35 year old, married with kids, and approximately $3 million in net worth.
Looking to invest to grow his wealth.
The question is very interesting and fleshes out his situation, so it’s worth reading in full (details have been edited to protect his privacy):
Hi FH,
First of all, thank you for all the articles over the years. Been a long time subscriber, and you’ll be pleased to hear I’ve never missed reading a single article of yours. My favourites are always the macro outlooks on patreon/premium. Keep them coming.
This is the first time I’m asking questions about my personal asset allocation. This is for 2 reasons:
- Firstly, I have a massive chunk of SSBs and CPF-OA T-Bills accumulated in 2023/24 that can be deployed into risk assets, with the T-Bills in particular about to mature and can no longer be renewed at the same yields again.
- Secondly and more importantly, I think Trump’s next term will be a pretty good opportunity for investors, particularly (semi-)active ones with relatively high risk appetite. Long story short, for the past 2 years I’ve been on 50% cash-like instruments and 50% risk assets, and well, simply put: I think it’s time.
In terms of my background, I’m mid 30s, likewise for my spouse. We have a young child and a second kid on the way. Together we make about S$400K/year base salary (gross), and bonuses range from $50-$150K on top of this. I manage my spouse’s finances fully, and everything outlined in this note refers to the family’s combined assets, not just mine. I’m a commodities trader by profession, specializing in really one specific physical commodity. I wouldn’t say my job is all that applicable for personal investments (unlike say traders in financial markets), but I would say I’m probably less emotional and have a higher risk appetite than the average person (I’m perfectly happy to put $50K into a 60/40 bet and lose).
I’ve been investing for about 5 years now (unfortunately didn’t start till my early 30s), and while I used to be quite active with stock picking, in recent years after kids, I’m pivoting more towards a semi-active approach – where I would still be quite active in terms of: 1) timing my purchases based on macro signals, and 2) picking out sectors, trends, and asset classes to invest in. But I’m not so much into individual small cap stock picking like I was in the past. It’s not that I don’t have the risk appetite but mainly due to the lack of time. I have no investment property nor do I ever plan to own one. I just don’t have the interest in that asset class, but other than that I have an open mind.
In terms of expenses, we still stay in our BTO HDB, and have no mortgage. Let’s call it $130K/year expenses for the household (and I think this is quite conservative – we don’t actually spend that much). We don’t plan to move in the next 3 years, although I do foresee us upgrading to say a $2-3M condo at some point 5-10 years from now, but only if conditions are right and we have the spare cash.
For us, early retirement takes priority over the 5Cs, if you will, which is why I’ve been careful not to take on new debt. Having said that, upgrading the house will bring up our expenses quite significantly, so it’s something to consider when talking about investing my CPF-OA and such.
We both plan to retire at 55. As we approach retirement I’ll obviously shift more towards income investing. In terms of horizon, it’s ultimately for life, and I don’t sell my holdings very often, but I would say I’m happy to re-position myself very differently with each cycle. It’s an asset allocation game.
With that out of the way, here’s a summary of our current assets, excluding our residence (worth about $1M) and our CPF-MA (about $150K).
Risk Assets (~$850K)
- US S&P 500 index (SRS, via Endowus) – $130K
- US Large Cap Tech (specifically Google, MSFT, Nvidia, AMD, Netflix) – $130K
- US Small Cap Tech (mostly cloud/cybersecurity stocks acquired in 2020-21; trying now to pick up some AI names, but as I said, less time for stock picking nowadays) – $85K
- Commodities (Oil stocks; about $50K here are RSUs and can’t be sold) – $100K
- Commodities (COPX) – $18K
- SG Banks – $40K
- Netlink Trust – $40K
- SG/Global REITs (Blue chips only, excluding their China exposure) – $135K
- China REITs (basically CLCT and 35% of MPACT) – $20K
- China Tech (Tencent, Alibaba, Meituan) – $35K
- China Banks (ICBC, Ping An) – $25K
- Gold ETF – $25K
- Crypto (75% Btc, 15% Eth, 10% Sol) – $65K
(charted generated by me – more on this later)
Cash/CPF (~$990k)
- SSBs (weighted average yield 3.2%, all maturing in 2033/34) – $400K
- Cash (minimal yield, basically rainy day money and recently credited income) – $50K
- CPF-OA (mostly parked in 1-yr T-Bills, maturing 28 Jan and 29 July) – $300K
- CPF-SA (I don’t intend to invest this) – $240K
With this, my key questions are as follows:
- What are your thoughts on my allocation amongst the risk assets, given my profile, and looking at the next 2-4 years? Guessing I should increase US Tech and Crypto?
- In terms of overall allocation, I know I’m very cash/CPF-heavy. But I think if I pile all my SSBs and CPF-OA into US Tech and Crypto, it’s probably a little too much. I’m thinking the OA should be deployed first before the SSBs as they yield lower (after the T-Bills mature). Would that be your approach as well? (btw you can imagine that without a mortgage, and with our incomes, our OAs accumulate quite quickly, and if I don’t foresee myself buying a house in at least 3 years, I do think I can take on some risk with it).
If you agree with this, what would you invest in with the OA? It’s a bit of a hassle because they can only be used for SGX stocks, and even then there’s the 35% cap. I can obviously just shift around my cash portfolio to maintain the same overall allocation to get around this, but it’s troublesome (kinda like changing brokers). One way I can think of is to use Endowus to buy the MSCI World Index with the OA (https://endowus.com/investment-funds-list/amundi-index-msci-world-LU2420245917), like what I’ve done with my SRS into the S&P500. Keen to hear your thoughts.
- Curious to hear your views on broad market timing for 2025. Would you front load 1H25, or lean a bit more cautiously and average in throughout the year?
Details have been amended for privacy reasons
Now for obvious reasons, I have tweaked some of the details above to protect the FH Premium subscriber’s privacy.
So nothing in this article should be taken as financial advice.
35 year old with $3 million net worth – How to invest to grow wealth?
My Biggest Thought? For this kind of cash flow, having no debt is playing it very safe…
Even before we dive into the questions though.
The biggest thought that I had was that – for the kind of cash flow this reader has (almost $400,000 a year even after setting off expenses).
And given the age of the reader.
The asset allocation is actually highly conservative.
You can see the split below:
| Overall Portfolio Split | ||
| Risk Assets | 858,000.00 | 30.1% |
| Cash/CPF | 990,000.00 | 34.8% |
| HDB BTO | 1,000,000.00 | 35.1% |
| 2,848,000.00 |
Yes I know that if you look at it like that, it doesn’t look all that bad as almost 66% of the portfolio is invested, and only 37% is in cash.
But what stands out to me is that the HDB is fully paid off with no mortgage.
Most of the time an asset allocation like the above will be okay if there is another million or two in debt behind the equity in the property, but in this case the property is fully paid off.
This means that the allocation above is a lot more conservative than it would otherwise appear.
What would I do in this situation?
Okay I know the reader says he doesn’t want to buy an investment property and he doesn’t like debt.
I get that.
But I’m just going to put it out there that if I were in a similar situation – with >$500,000 household income a year, approx. 3 million net worth, in my mid 30s.
Boy I would be taking on a lot more mortgage debt.
The way I see it, it’s not that I think Singapore residential property is an amazing investment.
I think at current prices, it probably just holds its value / tracks inflation over the longer term.
What I really like about a property purchase, is the ability to finance it with 75% borrowings today.
One of my biggest fears is that this decade will be a decade of higher structural inflation, and yet interest rates are suppressed to keep government financing cost down.
To put it simply, a 6-month T-Bill may continue to yield 3%, but inflation may average 3.5%.
How to benefit in such a scenario?
Well – borrowing a lot of money at low interest rates (relative to inflation), and using it to buy hard assets, comes to mind.
Which coincidentally, is exactly that buying residential real estate is about.
Looking at latest interest rates – you can get a loan to buy private residential property at 2.45% fixed for 2 years, and in my view that’s a pretty good deal.
But… ultimately for each investor to decide for himself
But again, I completely get that the reader wants to retire early, and doesn’t like debt.
That’s perfectly fine, as each investor needs to decide what is right for himself.
But I would say it’s a question of how aggressive you want to be at wealth building vs being comfortable.
There is a balance between the two.
If you play it too safe / comfortable, you won’t grow wealth aggressively.
But if you play it too aggressive and you can’t sleep at night, that’s not great too.
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What are your thoughts on my allocation amongst the risk assets, given my profile, and looking at the next 2-4 years?
Diving deeper into the asset allocation for the risk assets.
I’ve broadly split them up into different buckets below.
| Risk Assets | ||
| Asset Class | Amount | Percentage |
| US Stocks | 345,000.00 | 40.2% |
| Commodities | 118,000.00 | 13.8% |
| Singapore Banks | 40,000.00 | 4.7% |
| REITs | 175,000.00 | 20.4% |
| China | 90,000.00 | 10.5% |
| Gold | 25,000.00 | 2.9% |
| Crypto | 65,000.00 | 7.6% |
| 858,000.00 |
Visualised below:
And you can see the more detailed breakdown below:
Risk Assets (~$850K)
- US S&P 500 index (SRS, via Endowus) – $130K
- US Large Cap Tech (specifically Google, MSFT, Nvidia, AMD, Netflix) – $130K
- US Small Cap Tech (mostly cloud/cybersecurity stocks acquired in 2020-21; trying now to pick up some AI names, but as I said, less time for stock picking nowadays) – $85K
- Commodities (Oil stocks; about $50K here are RSUs and can’t be sold) – $100K
- Commodities (COPX) – $18K
- SG Banks – $40K
- Netlink Trust – $40K
- SG/Global REITs (Blue chips only, excluding their China exposure) – $135K
- China REITs (basically CLCT and 35% of MPACT) – $20K
- China Tech (Tencent, Alibaba, Meituan) – $35K
- China Banks (ICBC, Ping An) – $25K
- Gold ETF – $25K
- Crypto (75% Btc, 15% Eth, 10% Sol) – $65K
You know frankly looking at this asset allocation.
I didn’t really have major comments.
Sure you could argue that more exposure to US stocks / crypto may make sense for more capital gains potential give the age.
And that you want to dial back on REITs and up the Singapore banks / stocks exposure given the risk for higher structural inflation this decade.
But I think that’s nitpicking already.
Big picture wise, almost 50% of the risk portfolio is in a mix of US stocks and crypto.
With the rest in a mix of commodities, China, REITs and stocks.
I would hardly say that is too conservative.
In terms of overall allocation, I know I’m very cash/CPF-heavy. But I think if I pile all my SSBs and CPF-OA into US Tech and Crypto, it’s probably a little too much.
The way I see it, the bigger problem is the cash position.
Cash/CPF makes up almost 37% of the net worth, which is actually higher than the risk assets.
For someone in their mid 30s with solid cash flow / earning potential, this looks slightly on the conservative side.
Especially when you throw in the fact that there is no mortgage debt.
How much of the remaining cash / CPF to invest?
Which brings us to the bigger question – how much of the remaining cash / CPF to deploy?
If you really break down the cash / CPF positions.
You’ll realise that actually it’s somewhat deceptive.
In the sense that only 45% of it is actually “cash”.
The rest is CPF-SA (which is locked up), and CPF-OA (which has quite extensive restrictions around how much and what you can invest in).
| Cash Assets | ||
| Asset Class | Amount | Percentage |
| Singapore Savings Bonds | 400,000.00 | 40.4% |
| Cash Assets | 50,000.00 | 5.1% |
| CPF-OA | 300,000.00 | 30.3% |
| CPF-SA | 240,000.00 | 24.2% |
| 990,000.00 |
Gun to my head, I would say probably another half of the cash / CPF-OA position can be invested.
This leaves about $200,000 in cash, and $150,000 in CPF-OA, which should be sufficient to cover expenses.
But I mean ultimately – this is not for me to decide.
The reader needs to make the call for himself.
What to invest with the CPF-OA?
According to the reader:
I’m thinking the OA should be deployed first before the SSBs as they yield lower (after the T-Bills mature). Would that be your approach as well?
You know what, actually I would invest the cash (SSBs) first.
The problem with CPF-OA is that it’s very hard to invest, and there are a lot of restrictions, as the reader himself astutely pointed out:
It’s a bit of a hassle because they can only be used for SGX stocks, and even then there’s the 35% cap. I can obviously just shift around my cash portfolio to maintain the same overall allocation to get around this, but it’s troublesome (kinda like changing brokers). One way I can think of is to use Endowus to buy the MSCI World Index with the OA (https://endowus.com/investment-funds-list/amundi-index-msci-world-LU2420245917), like what I’ve done with my SRS into the S&P500. Keen to hear your thoughts.
The more I think about it the more I find the best investment use case for CPF-OA is really to just use it to (a) pay your mortgage or (b) buy a property.
And then buy stocks / REITs with your cash.
CPF-OA is very easily used for property, and this way you have full flexibility over how to invest your cash.
But of course, this assumes you have a mortgage / property, which does not apply to this reader.
For those who don’t, then actually I agree with the reader that the next best thing is probably to just buy a broad stock ETF via Endowus.
| Cash Assets | ||
| Asset Class | Amount | Percentage |
| Singapore Savings Bonds | 400,000.00 | 40.4% |
| Cash Assets | 50,000.00 | 5.1% |
| CPF-OA | 300,000.00 | 30.3% |
| CPF-SA | 240,000.00 | 24.2% |
| 990,000.00 |
Curious to hear your views on broad market timing for 2025. Would you front load 1H25, or lean a bit more cautiously and average in throughout the year?
On this last question.
To be absolutely honest.
After the post-Trump rally, I’m a lot more nervous about valuations where we are today.
I added quite heavily in the weeks leading up to the elections, and once Trump’s win was clear on the night itself I added to positions further.
But today, I’m a lot more cautious with going out and adding a huge chunk of risk exposure today.
The way I see it though, I want to watch Dec / Jan’s price action very closely.
I’ve shared with FH Premium subscribers that I’ve noticed that the Dec / Jan price action offers valuable insights as to how smart money will position for the next year.
So by looking at the price action, it give you valuable clues as to how the market may play out in 2025.
So for now I’m comfortable with my current risk exposure, and I won’t be adding in size until I watch the price signals.
But that said my risk exposure is definitely higher than what this reader is running.
So if one is underexposed, it could make sense to add some light exposure to bring it up (in case markets continue to march up), but with all that I’m seeing it probably doesn’t make sense to go all-in right here as there is risk.
That’s just how I’m seeing it though, and as you guys know when the facts (or price) changes, I change my mind on a dime.
My latest views on market timing / macro are shared on FH Premium as always.
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That teaches you the fundamentals on constructing a dividend portfolio – to achieve the cash flow you need to achieve financial freedom, while managing risk.
Whatever your stage of life, if you’ve ever wanted to build a dividend portfolio, this is the course for you.
We’re launching with a special launch promo – a huge discount from the official course price, and complimentary access to FH Premium thrown in!
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Hi FH,
I would have to disagree with you when you said that “CPF-SA (which is locked up)”. Besides the first $40K, one is free to invest the rest into CPF-SA included products, which includes balanced funds. And I think it makes sense for one to take some risk to invest some of their CPF-SA funds since your concern is high inflation, as CPF-SA interest rate had been around 4%pa for quite sometime, even during the years of high inflation after the Covid pandemic.
Thank you, appreciate the input very much! If it were me I would probably keep the CPF-SA intact and invest the rest, but I absolutely get your point.
At his age he would take on more good debt and invest more. FH has given some good and sound advices. He should have some vested interest on Spore property as well as up his exposure in Singapore banks if he prefer not to be too aggressive in his investment strategy. Looking at his profile he should be one that is very well versed in US stocks vis a vis property so I would advise him to deploy the monies to where he feel he is more comfortable and more well versed on.
That’s a fair point, appreciate the input.
at that kind of income and networth, he should be able to access alternative assets. private credit, private equity, hedge fund, private real estate etc. do you see a place for these in his asset allocation? which types and how much would be sensible?
+1 to this question. What might be some of the viable options for accredited investors?
Personal view is no. I think an investor today can replicate much of the private asset class exposure via public markets, at a fraction of the fees, and much better liquidity. Unless one is >100m net worth, I would say public markets is more than sufficient for all of one’s needs.
Maybe its my age and the number of restructurings I have gone through in my career, but a couple in their mid 30s making 500k+ doesnt look like sustainable to me. Unless of course you are in a very senior management position but it it clear to me he is being compensated for the bucks he brings in as a commodities trader. So easy come easy go. I would generally agree that having some form form of mortgage is not a bad thing but that has to be viewed against the type of job he is doing, and the financial security or lack thereoff that comes with it. Asking him to take on a 2-3m mortgage without this in mind is not quite complete advise i might say.
But thats just my thoughts, and my own personal journey. He may well have a different outcome
I completely agree with this. Hence the need for the investor to make the decision for himself. If not comfortable with any investment – the decision is very simple to skip.
Hi Financial horse!
Can I pick your brain more on the property route?
For a 35yr old, 30 yr loan is available, but the trade offs aren’t as clear as previous decades.
It will be a sizable concentration risk.
How should a 35 yr old pick between taking on leverage into property or deploying into the financial markets?
Not an easy answer. I would say it depends on familiarity with investments, risk appetite, stability of income and so on.
Really no one size fits all answer here.