[Ask FH] How to build a balanced stock portfolio for Singaporeans – Part IV


[Ask FH] is an ongoing initiative to respond to readers’ queries on portfolio building, investment advice, or anything finance related at all.

If you have any burning questions on investing at all, drop me an email at [email protected] with the subject title [Ask FH], and I’ll respond to you personally via an article.

Note: I’ve tweaked/omitted some of the information below to protect the privacy of the readers. Accordingly, any resemblance with a person you know is purely coincidental. Please note that this article should not be construed as formal investment advice. If you are uncertain as to the steps you should take, please consult your stockbroker or a financial advisor. ?


I’m currently 26 this year and feeling stuck to what kind of investment I should delve into.

I’m fairly new to the investment scene and I don’t earn much as a salaried employee.

These are a few of my qns for you:

Firstly, I have about 3k in my NIKKO AM ETF via POSB $99-100/month since 4 years ago.

Should I take it out and invest it into S&P500 instead? Or do I just leave it there?

Secondly, is it a good time for me to buy REITS in singapore? Or should I buy stocks that are not REITS instead?

Thirdly, I have about 10K in my SSB. Is this a good allocation of funds for me?

Would really appreciate your insight!



Hi there! Welcome to Financial Horse, and congratulations on starting your investment journey!

It’s always hard to advise without knowing more about your financial situation, your spending needs, and your income, but I’ll try to provide some general tips:

STI ETF – If you’ve been averaging into the STI for 4 years, chances are that you’re sitting on a pretty decent gain, so I really don’t see a reason to sell it. The S&P500 is near its record highs now, and selling your STI and moving to the S&P500 may not be a great choice. I’m not a huge fan of the STI as detailed in a previous article, but for beginner investors who can only invest small amounts each quarter, there’s really no other alternative to get a broad equity exposure to the Singapore economy. So yeah, unless you hit the point there you’re able to commit about S$5,000 per quarter to buy stocks, I don’t see a reason to stop your dollar cost averaging into the STI ETF.

Singapore REITs – That’s a tricky question. If you had asked me this 3 months ago in November, I would have said absolutely, go for it. However, a lot of the high quality, Singapore focussed REITs have had a huge run up in January 2019, to the point where I’m a lot less bullish on them. I think you really need to look at your investment timeframe here:

  • If you’re buying with a 10 to 20 year perspective, then go for it. Buy a little now, and if the prices drop, just buy more, and keep holding for the long term.
  • If you think you may need the money in the coming years (eg. you’re 26, you may need the funds in a few years to buy a BTO, get married etc), then I would be a bit more wary of buying REITs now. It’s quite a tricky time for the global macro environment, there’s a lot of uncertainty over interest rates over the next 12 months, so if you buy REITs now, there’s no way of knowing for certain if you’ll be able to get your money out in 2 to 3 years without taking a loss.

SSBs – Absolutely. I love SSBs because they provide decent returns, are completely risk free, and can be withdrawn any time with pro-rata interest. There’s just no comparable product like this out there.

However, it’s hard to advise on asset allocation without a rough idea of what your total net worth looks like. Here are some guidelines for constructing your investment portfolio:

  1. Always maintain about 6 months; worth of expenses in a liquid, emergency fund (eg. DBS Multiplier, SSBs)
  2. I like to have about 30 to 40% of my remaining net worth (excluding your primary dwelling) in bonds. This can be CPF-OA, SSBs, or excess cash in a high yielding savings account. I find this helpful because the equity portion of the portfolio can experience wild swings (up to 50% in a financial crisis), and it helps a lot for my financial and mental health to have some assets in bonds where they are risk free.
  3. The remaining 60 to 70% will be deployed in stocks and REITs, and should be diversified geographically, and across industries.

That’s the base template for a diversified portfolio. Once you get more familiar with investments, you can mix it up a little by doing things like market timing, concentrated bets, or opportunistic buying. But you really should start with a diversified portfolio, and work your way up from there. It’s important to get the basics right before you move on to more complex stuff. 🙂



I chanced across your website recently and I am fairly new to investing. I am currently 26 this year and I really think that the compounding effect is great for my age which I wanna make full use of it for my future retirement plan 🙂

I have read some financial books about personal finance and also on financing but I still find myself with lack of knowledge of truly how to identify a good stocks to invest it but I have already purchased some STI ETF, Singtel, Capitaland Mall and SPH Reit on my own.

Any suggestion on any books or what should I look out for to fill up this “gap”? I am still quite lost at this stage.

I am also thinking if I should start investing in those robot advisers like AutoWealth to gain global exposure but not really sure if I can.

As I have also started working full time upon graduation from NUS, I prefer to monitor my portfolio once in a while knowing that there is a need for rebalancing at some point of time and have been closely monitoring some of the blue chips and REIT everyday to see if I can buy in any.

However, I still find myself not good at any things related to that but I am also worrying for my own as I came from a average-poor family and I am the only child which I will need to support my 2 parents (divorced) and my stepfather in the future which they don’t save up and have no essential insurance which I can’t buy for them anymore right now due to their existing illness. With so much pressure coming in especially in the future, I will really like to gain more passive income while working on my full time job as well but I am not really sure how I can achieve it since I am not yet good at stock picking.

Can you kindly advise?

Thank you so much ?


Hi there! Great questions! Let’s run through them individually


There are a lot of people out there who recommend “The Intelligent Investor”, while others like “Rich Dad Poor Dad”. Unfortunately I’ve read most of the basic books out there, and a lot of them are either too basic, or are simply out of date with prevailing market realities.

One that I quite like is Ray Dalio’s Template for understanding Big Debt Crises (there’s a free copy available on the website, otherwise you can get it on my Facebook Group under files). It talks generally about the debt cycles, but it’s an important topic that all investors need to understand. Unfortunately it’s pitched at a semi-advanced level, so it may be harder to pick up right away.

Unfortunately there really isn’t any book that can teach you all that you need to know to start investing. Investing is just too diverse, and requires a broad understanding of business models, financials, global macro environment, geopolitics etc to do well. I’m looking at building a financial course to guide investors, so do check it out once its up (it’s a couple of months away).

Otherwise, my advice to you would be to read broadly about the business world, via newspapers internet, or blogs like Financial Horse. Not only will this come in handy later on in your investment career, it also helps hugely in your professional career.


I’ve written a lot about robo advisors in the past, so I won’t dwell on it too much. Bottom line, if you want global exposure, just create a StashAway/Autowealth account, take a look at the portfolio they recommend for you, and you can replicate it yourself with a Saxo brokerage account and save the 0.7% fees that they charge you annually.

If you think the portfolio they recommend is too complex, you can just buy the S&P500 or a global stock ETF, and be done with it.

Passive Income

Stock picking is actually incredibly hard. I don’t know of many people who manage to pick stocks and outperform a diversified stock index over a multiyear period.

I also wanted to caution you that investing shouldn’t be viewed as a silver bullet to solve your financial issues. Sure, it’s possible to invest your way to riches, but that usually requires taking on significant risk in your portfolio. It’s a lot easier to make big money through your career or business, and once you have that first pot of gold, you then invest it to allow it to compound.

Given your age, my advice is to focus on progressing in your career, so increase your annual income. There’s still a lot to be learnt at your age, and by working hard, networking with people in your industry, picking up additional skills beyond your jobscope, you can easily increase your current income drastically. In your free time, try starting a side business for additional income. The internet has created literally limitless opportunities for starting a new business, be it starting an online store, a financial blog, becoming an influencer etc. Don’t be afraid to try, you never know how something will turn out until you do it.

Once you increase your monthly income drastically, you can literally take everything that you’ve earned and throw it into the STI ETF, and you’ll still be able to make decent returns. For a more diversified portfolio, do also take a look at the base template that I used to respond to the reader above.

Good luck with your future! 🙂


Dear FH

I wish to check if it is better to buy Chinese tech stocks such as Tencent, Baidu etc. on their original/home stock exchange (i.e. the Hong Kong stock exchange, etc.) or through their American Depository receipts (ADR)  listed on NASDAQ.

I already have a USD account thus, I am leaning towards the ADR. However, I wish to check if there are any benefits of directly investing in the home market. I currently do not have a HKD account and I am evaluating which way is better. I could not find any comparative info online, thus, I appreciate it if you could provide some advice.

Thank you!  


It’s all about liquidity. Go with the exchange that offers better liquidity, as that allows you to buy in at a better price (better bid-ask spread), and it is easier to exit your investment (better bid-ask spread again).

As a general rule, the primary listing exchange will usually have the best liquidity, so for Tencent etc, it will be the Hang Seng.

Using Tencent as an example, the primary listed stock on the Hang Seng has 19,566,951 average daily volume, while the NASDAQ ADR has 4,471,704 daily volume. So yeah… go with the Hang Seng.


Hi FH,

Thanks for your informative articles on various topics. Like to check if you have any recommendations for DBS Treasures account, specifically the Wealth Management Account where DBS becomes the custodian agent for shares/ unit trusts bought with DBS. Is this any different from buying shares using DBS pre-funded account where it goes straight into my CDP?

Thanks in advance.

Hi there!

I wrote on the differences between CDP vs custodian before, and I’ve extracted it below for easy reading:

“CDP vs Custodian

For Singapore stocks, it’s important to first discuss the difference between a Central Depository (CDP) and a custodian system. With a CDP system, all stocks you buy will go into your CDP account, and you are viewed as the legal owner of the shares. The advantage is that because you’re the legal owner of the shares, the company views you as a shareholder, and you get benefits such as access to AGMs/EGMs, annual reports or circulars delivered to your home, timely receipt of other company notices etc.

With a custodian account, the stock broker owns the shares. So if you’re using UOB Kay Hian’s custodian service, the shares will be legally owned by UOB Kay Hian, and they hold the shares on trust for you. Advantages are usually lower fees.

I’m going to simplify things for you. Unless you have a very very strong reason why you need to use custodian services, and I really can’t think of one, do yourself a huge favour and just always pick a CDP service. I’ve been at many AGMs where shareholders from a custodian service have huge trouble trying to get in, simply because the company didn’t have records of them being a legal shareholder. It’s also tricky when you’re trying to receive company notices (eg. Notice of EGM, Distribution Reinvestment Plans, general offers etc), because sometimes there’s a delay in your custodian service sending these notices to you (sometimes you just don’t even get them).”

DBS is never going to go bust, so the risk of insolvency with them is negligible. However, custodian accounts are annoying when it comes to dealing with corporate actions like rights issues, preferential offerings etc because you’ll need to wait for your custodian to forward the forms to you, and it’s annoying when you want to attend an AGM/EGM.

The best thing to do may be to check with your Relationship Manager on the fees and charges associated with the Wealth Management Account. If they are significantly lower than that of a usual brokerage account, you can decide whether the lower fees would outweigh the hassle of a custodian account. If the fees are the same, well, that makes the decision an easy one. 🙂


Hi FH,

Good day to you. Would like to get your opinion of securities lending by SGX (or anything you might hear of !!).


If I am not mistaken, it offers 4% interest per year to you while you loan the securities to SGX/borrowers, but technically you are still considered as the rightful owner of these stocks. And in this case, would this be a good deal to consider especially for those blue chips dividend shares that we have not plan to sell off? For instance, collecting those 3-4% dividend on top of another 4% lending interest?

Anything to take note? Or you might know something that are too good to be true? According to SGX, lenders do not have to inform SGX or recall loans, and I personally believe that whole lending/borrowing process are not that complicated per se. How about corporate issues (voting rights, dividend complication etc)?

Thanks in advance and have a great weekend.

There’s actually no trick here, securities lending to short sellers is a legitimate trade. Dollars and Sense wrote an article on it previously, so you can check it out for more information.

The problem with securities lending, is that you only get paid the 4% per annum for the duration when someone borrows your shares. So if your shares are borrowed only 1 month out of the year, you’re only getting 1 / 12 * 4% per annum, which isn’t all that great.

So the returns depend a lot on how much short interest there is on the stock, and how many people are willing to lend the stock.

For a big and highly liquid counter like DBS, there’s going to be lots of people who are willing to lend, and very few people who are willing to short (DBS has a high dividend yield, which makes it expensive to short).

You may have better luck with the smaller counters with thin trading liquidity, limited public ownership, and dodgy financials, but then again, do you really want to be holding a stock like that long term?

That said, it really doesn’t hurt to do it, so you can just give it a shot, you wouldn’t lose anything. Do let me know how the returns are like! 🙂


Hi FH,

Thank you for replying to my queries. Can I seek your view on perpetual corp bonds  of these banks -UBS at 5.8 percent , DBS Per at 3.9 percent and HSBC Perp at 5percent with credit rating of BB – investable grade … I am aware that by Perp it means that the bonds can be subjected to an extension from callable dates with xx points above sibor.

Reasons I am keen on these bonds are because these are banks bonds which I think are generally safer and at the same time can provide passive income to retirees.

I Looking fwd to your kind advices as usual.


I need to caveat this answer, because I haven’t taken a detailed look at the offering documents of these perpetuals.

As a general note, I am not a fan of perpetuals. There are 3 things you need to take note of:

1. Liquidity – Trading liquidity of perpetuals are typically quite poor, so the ability to exit your investment ahead of time is usually quite limited. This means that the best bet to get your money back without taking a loss is to wait for it to be redeemed by the issuer, which is ultimately in the issuer’s discretion (given that these are perpetuals, the duration is potentially forever, and you will need to look at the offer documents to understand when they are likely to be redeemed, if at all – check the terms and mechanics of the coupon step up to determine the duration and likelihood of redemption).

If you think there is a chance that you may need to access the money before the issuer redeems the perpetuals, it’s best to deploy them in an asset class with better liquidity.

2. Credit risk – Technically speaking, as long as the issuer doesn’t run into solvency issues, they will continue to pay the coupon regularly. So the ultimate question here, is whether the bank issuing the perpetuals will run into financial troubles before the perpetuals are redeemed.

The way I see it, the ranking of the 3 in terms of credit risk are (from most risky to least risky): UBS, HSBC, DBS, which coincidentally ties in with the yield.

3. Returns – If you compare the returns to what you get on a high quality REIT like Mapletree Commercial Trust (about 5.0% now), I would say the risk-reward ratio on a high quality REIT is much better than that of the UBS perpetual at 5.8%. Sure, the 5.8% coupon looks sexy now, but what happens in 3 years’ time when we’re looking at another Euro Debt crisis, the Italian banks are getting bailed out, and the Eurozone is deep in negative interest rates?

Of the 3 that you mentioned, the only one I would be comfortable holding as a retiree would be the DBS Perp, and even then, I still think the coupon is way too low to justify buying into a perp, unless you need it for diversification purposes.

If you already have S$20 million spread over a diversified stock bond portfolio, and another S$20 million in real estate, I can actually see why perpetuals would be a good way to diversify. Otherwise, I would think it’s better to stick to a diversified portfolio of REIT/dividend stocks for the higher returns, and risk free investments like Singapore Savings Bonds and CPF to offset the volatility.


Hi Financial Horse,

Good Day to you.

Just a short background on myself. I am a Singaporean, and just started working for around 1.5 years after graduating from university. And just last year, I started to read up and research on my own about investing, and I chanced upon your site. Your site is greatly informative, and has helped me greatly to understand better about investing in general.

My girlfriend in Malaysia mentioned to me that in Malaysia, there are fixed deposit for 1 year duration, up to 4%+ interest rate, during promotion period. Even during non-promotion period. the interest rate also go as high as 3.25% for one year duration. I believe this is much much higher than what any banks in Singapore can offer. I tried to google around and check whether it is possible for Singaporeans to have FD in Malaysia to make use of such high interest rates, with short duration.  But there was nothing much that I can find regarding this. Not sure if you have any experience regarding this. Just for info, the bank she put in is Public Bank in Malaysia.



Of course, there are risks involved such as the depreciating Ringgit, but with a 1 year FD duration, i doubt the exchange rate will change to such an extent that we will suffer losses. Also, not sure if we need to pay taxes for putting FD in Malaysia.

Just wondering, whether as Singaporeans, we can make use of the higher interest rates with relatively short duration in our neighbour country.

Thanks for reading.


Hi there! Interestingly enough, the situation you described is known as Interest Rate Carry, and you can check out this article for more information.

It works exactly like you mentioned, you borrow in a low yielding currency (SGD), you lend in a higher yielding currency (MYR), and you earn the spread.

Unfortunately this is one of those cases where there’s no free lunch in this world. The risk that you are taking on, is forex risk.

If the MYR depreciates against the SGD by anything more than 2%, you’ve basically lose money on this trade (because the alternative is to place it in a Singapore Savings Bond yielding 1.95%). So the key question is whether the MYR would depreciate against the SGD by more than 2% over the next 12 months?

For reference, here’s the SGD MYR 5 year chart, which shows you how volatile this currency pair can be.

You can definitely make money this way if you’re right that the MYR doesn’t depreciate against the SGD, but unless you leverage up significantly, the amount you make usually wouldn’t be large enough to justify the effort. For reference, in the professional circles, these trades are usually done with big leverage, and they watch the currency movements incredibly closely, ready to close it if there are adverse movements.

I don’t follow the SGD-MYR currency pair close enough to comment intelligently on their movements over the next 12 months, but all it takes is another interest rate hike (or two) from Powell’s Federal Reserve and you could easily see the MYR move 5%. It’s a high risk trade for sure.

But to answer your question, there are no taxes or withholding tax that I am aware of, it’s just the hassle of setting up the accounts, and the risk of adverse currency investments.

Good luck!


Hey, big fan of your writings! (18 year old Beginner), just wondering why you would move with the relatively low interest SSB when stocks such as Netlink trust in particular (As mentioned in your latest article about Mapletree)  which you have previously gave glowing reviews for seem more attractive interest wise and seem very well insured regardless of the happenings of the finance market. Cheers!


Hey there! Thanks for the kind words!

It’s actually all about diversification. I really like Netlink Trust and Mapletree Commercial Trust, but I already have large positions in both of them. Nobody can get everything right all the time, so in the even that I am wrong about either of them and there is something I missed, I could end up taking a large loss, so it’s always wise to stay diversified.

The other issue, is actually one of market timing. My personal sensing is that we are nearing the end of the economic cycle. Unfortunately there’s no way of knowing for certain when it will be, so the next best alternative, is to continue to remain invested in the market, while gradually shifting into a more defensive portfolio. And that’s generally what I’ve been doing, with a gradual rotation into safer assets like Netlink Trust, and Singapore Savings Bonds. This way if the market crashes, I’ll have some cash to buy shares at depressed prices, and to tide me through my future spending. With SSBs yielding 1.95% risk free these days, I think it’s an acceptable return to move hold more cash, and watch the market over the next 12 months.

Of course, I could be wrong about this, which means that I’m losing out on the gains that I would have made had I invested in Netlink or MCT. But hey, every action has consequences!

Great question though, and I’m truly amazed that an 18 year old like yourself is picking up investing at such an early age. Keep it up, and before you know it you’ll know far more than me!

Till next time, Financial Horse, signing out!

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    • Well, the dividends for the QQQ are incredibly low so it’s only really a big point for the SPY. And yes, you should get the ETF on the LSE that tracks the S&P500, to enjoy the 15% withholding tax instead.

      Apologies for the lack of clarity.

  1. Hi FH

    I am in my late 20s and I just started working after graduation. I have read your articles, your response to readers questions and other investment blogs. I think your posts stand out a lot for its clarity and being informative.

    I am more keen on etf/index investing as I am not a sharp investor and I want to buy and hold for long term (at least 5 to 10 years).

    I have a few questions below:

    1. I don’t really want to get into STI etf as its returns are small. I was thinking more of building a portfolio of high yield / dividend stocks and reits and high growth stocks such as world index or US index. I understand you use SPY and QQQ. May I know why didn’t you use world index like IWDA or vanguard total world index? Aren’t they consider growth stocks?

    2. What is the your opinion on the returns of bogle3 funds strategy (World index, sti, bonds) vs the returns of, say, high growth and high dividend stocks and bonds portfolio?

    • Hi! Welcome to Financial Horse, and congratulations on the start of your investment journey!

      Really great questions, my thoughts below:

      1. I didn’t use the IWDA because I wanted to be more selective about my geographical exposure. So I didn’t want to get exposure to the whole world, but a concentrated bet on US, Singapore, and China. That said, IWDA is perfectly find though, it really depends on your objectives and risk appetite.

      2. The Bogle 3 Funds strategy is designed more as an all weather style portfolio. So it performs generally well in *most* economic climates, but of course it doesnt perform particularly well in any. Going into high growth and high dividend stocks etc, will do better in certain economic climates vs others. So it all goes back to what kind of investor you are. Do you want something safe with medium returns. Or are you prepared to take certain positions on how the global macro outlook will play out, and adjust your asset allocation to fit your macro outlook.

      Cheers, hope this has been helpful!


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