[Ask FH] Building a balanced portfolio for Singaporeans

Source: Today Online

Since my previous post on building a balanced stock portfolio for all ages, I’ve received a number of really great reader queries. Unfortunately I’ve been a bit late in responding to them, so this post is badly overdue.

As always, 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. 🙂

Hi FH,

I’ve been reading your blog for the past few months and have really enjoyed your articles (especially the ones on the telco comparisons) and I’m finally writing to you for some advice.

I am 26 years old and I decided to take a gap year after my university to travel a little. The interesting part (or not), is that I am in China with a RMB income of approximately 2.5k SGD a month. I have always considered investing my money from part time jobs during university but only went into the crypto craze last year, admittedly to greed.

Right now, I have about 10k SGD worth of crypto and 3-4k SGD worth of RMB. I don’t really care about the crypto to be honest as it was a fun thing to go into and I’m still in the green despite the market crash earlier this year. My question is what should I do or prepare when I eventually return to Singapore. I intend to stay here for another year or so before heading back.

Look forward to reading your post!


Financial Horse says:

Always a pleasure to hear from a fellow millennial! It’s such an open ended question that I couldn’t quite figure out whether it’s an investment related question, or a “what should I do with my life” question. So I’ll address both. 🙂

What should you do with your life:

At 26 and working in China, trust me when I tell you that you have your entire professional life ahead of you. Life is truly a marathon, not a sprint. I am absolutely certain that you have your reasons for working in China, and I am also sure that deep down, you actually know what you want to do with your professional career. I’ll share some personal advice that I use to guide my own life: David Beckham has a Chinese tattoo on his body that says “生死有命,富贵在天”. This means many things to many people, but to me, it means that many things in life are destined, so there is no point trying to control the things beyond our control. However, for everything that is within our control, we have to do everything in our power to fight for what we want. For example, if you want to build a career in China, or around blockchain tech, you have to do everything in your power to fight for it, and whether it turns out the way you want it to, that’s up to destiny, which is beyond our control. Once you stop controlling the things you can’t control, and focus on the things you can, you’ll find it an incredibly liberating experience.

The only thing you want to avoid is reading this post 20 years from now, and wondering what could have been had you tried harder to achieve your life goals. 🙂

Investment Related:

Personally I see crypto as a moonshot kind of bet, and not a hard investment. With RMB, the kinds of sums you’re holding is not significant enough to make it an investment, if you really wanted to bet on forex movements you’ll have to leverage up massively. So your current portfolio is basically all cash, and you’re free to start from scratch.

There are so many portfolios you can start with, and which one you pick depends on your financial objectives (do you need to build wealth aggressively or do you want to conserve wealth etc). For example, a 60 / 40 equity bond portfolio is generally viewed as the most balanced portfolio historically speaking. Ray Dalio has an all weather portfolio that is the closest to a buy and forget, as it’s designed to perform in all kinds of financial conditions. Or if you’re more aggressive, you can go 100% equities and ride out any downturn.

I really don’t know where to start for this one, but perhaps the other questions in this article, and the previous round, will give you some indication. Before you invest though, please please do build up an emergency buffer that will tide you through 6 to 12 months expenses. It helps massively psychologically, and removes the need of having to liquidate your investments in a downturn.

If I were in your personal situation, I’ll focus entirely on building my career and massively increasing my personal income. Once I get to that point, I’ll then start looking into investing in bonds (SSBs) and equities (via ETFs).

Hi FH,

I have only begun to get interested in investing and I’ve just past the half century mark, age-wise. So I’m definitely a very late investor wannabe.

Since I’m very much a novice, I’m beginning to read up on investing, your blog being one of them. And what interesting and simple ideas/views that you’ve shared. Thank you!

Over the years, I have left my extra money in the hands of insurers, by way of several endowment policies. But the interest for these policies have never gone above 3% per annum. And I’m not satisfied, obviously.

Just last year, I’ve channeled some of my extra cash to robos (Smartly 50%; Autowealth 25%; OCBC Robo 20%; Stashaway 5%) and Nikko-AIM Etf. The returns are not as satisfactory as I’ve expected. So I’m not satisfied, again.

So with $3000 per month to play with, what would you advise that I do? I have opened an account with Saxo Capital but am afraid to jump into the larger world of investment than SG.

Thanks for your views.

Financial Horse says:

A lot would depend on your personal finance situation. For example, do you plan on working till 62, or to retire before that? Are your current savings sufficient to tide you through retirement, or do you need to increase them aggressively?

I didn’t have sufficient information from the question to figure out all these points, but as a general comment, given your age, you should be adopting a more “capital preservation” strategy rather than attempting to grow wealth aggressively. Sometimes, financial markets are just volatile, and even though you may project that you “only” need a 4% return to achieve your financial goals, the markets may just refuse to achieve those returns for extended periods.

If I were you, here’s what I would do:

  1. I would maintain a minimum of 12 months expenses as emergency buffer. This would be kept in a high yield savings account such as DBS Multiplier.
  2. I would keep at least 60% of the money in risk free bonds or fixed deposit. Possible options SGS, SSBs, Fixed Deposit, Temasek Retail bonds etc.
  3. The remaining, being the amount that I do not need for the foreseeable future, would be invested broadly into ETFs. Personally, I quite like US, Singapore, China, so I would do a 40: 40: 20 split between the 3 geographies. For the US ETF I would use the S&P 500, for Singapore I would use the new Philip Sing Income ETF, for China I would use the Hang Seng.I note your comment that you’re wary of going beyond Singapore, which is perfectly understandable. It’s quite a common problem in investing and is known as home bias, but I still wouldn’t advise you to do something if you’re not fully comfortable with it. If you prefer to focus purely in Singapore stocks, you can just buy the Philip Sing Income ETF and the STI ETF if you don’t want to stock pick. If you do, I have many articles on the site that should get you started, or you could always get ideas from the other questions in this post! A good start will always be to pick up a bank counter and a blue chip REIT, and build your portfolio from there!

Hi Financial Horse,

I have been a keen reader of your blog for sometime now and I would like to thank you for sharing many invaluable insights into the world of investing.

A quick introduction on my profile, I am a 38 year old, working in the manufacturing industry. Although I have a keen interest in the areas of investing, personal finance, I consider myself as a novice with much to learn.

I am writing to you hoping that you could look at my current portfolio and give me some of your views on any opportunities, gaps or risks that I am unaware of.

POSB Regular Saving Plan of S$100 per month (since May 2017), for Nikko STI ETF

SingTel – 1000 shares (S$3180)

ST Engineering – 500 shares (S$1700)

Singapore Savings Bond – S$11000

Gold – 125 grams (about SS$6750 at current prices)

Silver – 95 oz (about S$2000 at current prices)

Australian Dollars – A$500

British Sterling Pound – $350

Available Cash For Investment – S$10000

Please give me some advise on how I can start my investment journey.

Thank You for your time.

Financial Horse says:

No problem at all, I consider myself an investing novice too. There is just so much to

The first thing that jumps out about your portfolio, is that you’re heavily overweight precious metals and bonds. Given that you’re still relatively young, you can afford to take a bit more risk via equities. Personally I find it incredibly hard to beat the market through stock picking, so even for my own portfolio I am primarily ETFs, save for Singapore stocks. You can look at the following:

  1. US Market: S&P500 (SPY), NASDAQ (QQQ)
  2. Singapore Market (I actually really like the new Philips Sing Income ETF, but please be aware of liquidity issues). Alternatively, you can stock pick, but please keep to bluechip stocks, and stay diversified unless you really know what you’re doing.
  3. China (my favourite way to play China is still via the Hang Seng Index)

Depending on your risk appetite, you can pick and choose between the 3 markets above as required. Or better still, just own all of them. Over a 10 to 20 year period, if you hold a balanced mix of all 3 of the above and don’t achieve decent returns, I think we’ve had a serious breakdown in how the global financial markets work. Or look at it this way, if you own a diversified mix of US, China and Singapore stocks over 20 years and don’t beat inflation, just think about what’s happening to the global hedge funds or sovereign wealth funds (not naming names 😉 out there. Contrary to popular belief, these guys very seldom outperform a diversified global stock portfolio over multi decade periods.

Dear FH

I would like to thank you personally for sharing your knowledge on your website. Your advice has been extremely helpful. I have been following your blog for quite a while and your opinion on robo-advisors cannot be any more true. Robo-advisors is really suitable for millennials as they are willing to trust a computer to do the “active” management for them, but are unwilling to do investment on their own.

I have been using Stashaway for a year now and recently, I happened to chance upon index investing via the following.

 https://jlcollinsnh.com/ – recommends VTSAX (sad that this trades in the US, which would subject Singaporeans to a 30% dividend withholding tax).

Joshua Giersh (aka ShinyThings in HWZ) – I often read HWZ and he recommends either VWRD or IWDA, both of which enjoys a 15% dividend tax rate due to a tax treaty between Ireland and US).

Other gurus like John Bogle

 Similar to you, both of them pushes for the idea that we should keep investment cost (brokerage, management fees, etc.) as low as possible so as to maximise our returns. This makes me rethink about my position in Stashaway (fees are charged AUM!!) and my current holdings (Cap Mall Trust, Keppel DC and Singtel). Hence, I have decided to start index investing, keep my current share holdings, and may swap out my Stashaway for ETFs in the future. I am still in my 20s and like most others, we may only be able to invest 1k++ per month. To keep the cost low, I quite like the idea of keeping things simple via passive investing, with perhaps 1 Equities Fund and 1 Bond Fund.

 It would be great to have your opinion on the following.

 What is your opinion on index investing?

  1. Should we go for VWRD/IWDA which tracks the world index, or VUSA (S&P500)?
  2. What would be the most efficient way to accumulate such ETFs? I am able to invest 1-1.5k SGD monthly. To maximise brokerage costs, I am looking at perhaps buying quarterly to keep brokerage costs at 0.25% via Standard Chartered Online Trading.
  3. What is your opinion of Berkshire Hathaway vs. buying the index funds? This has been an interesting topic to me, as they seem to be the only active investors who can outperform the index.

 Once again, I thank you for sharing your advice on your blog.

That aside, would you consider doing a “guide for newbies into the world of index investing” in the future? I see my friends buying into expensive ILPs or Unit trusts from banks which charge high fees. I often share my readings on index investing with them but they might be too much for them to swallow. I like to believe that if more people were educated on a simple strategy of Index investing, be willing to ride through the fluctuations and not sell on the panic, more people would not get ripped by the insane fees of unit trusts, mutual funds, ILPs. There is this saying, “actively managed funds rarely outperform the index”.

Financial Horse says:

Absolutely. I definitely need to get around to writing an article on how to invest in ETFs. Thanks for raising this.

Great point on the robo-advisors. I think the tricky thing about them is that their asset allocation makes certain bets on the way the world will shape out, and isn’t entirely consistent with the idea that it “automatically” invests to achieve your goals. Much like actively managed funds, the mix of the ETFs chosen by the CIO of the robo advisor has profound implications on the returns. In a way it’s a pseudo active management, for a lower fee, which to me is unnecessary, as an investor can just buy the S&P500 directly.

I’ll address your queries individually:

  1. Should we go for VWRD/IWDA which tracks the world index, or VUSA (S&P500)?

If you’re a indexing purist, you would go for the world index, because it gets you exposure to all the major (and developing) economies in the world. I for one, am not an indexing purist. I think the next 50 years will be fundamentally shaped by 2 countries: USA and China. Europe will still be around, but as an economic force they have many issues to resolve before they can truly compete with US and China. South America still hasn’t reached that level of stability to achieve a prolonged and sustained economic boom.

And I put my money where my mouth is. My personal investment is primarily in US, China and Singapore. So the answer would be to go for the VUSA, and eventually mix in some China and Singapore exposure.

But hey, that’s just my view. The beauty about investing is that everyone has their own opinion, but once the future comes around it is absolutely clear who was right. The IWDA is by no means a bad choice, and who knows, may even outperform my selection.

  1. What would be the most efficient way to accumulate such ETFs? I am able to invest 1-1.5k SGD monthly. To maximise brokerage costs, I am looking at perhaps buying quarterly to keep brokerage costs at 0.25% via Standard Chartered Online Trading.

You’re absolutely right. Stick to quarterly purchases to keep transactions costs down.

  1. What is your opinion of Berkshire Hathaway vs. buying the index funds? This has been an interesting topic to me, as they seem to be the only active investors who can outperform the index.

I’m a fan of Warren Buffett, but the whole point of index investing is diversification. An investment in Berkshire Hathaway is ultimately still betting on the investment nous of one man. An investment in the S&P500 on the other hand, is betting on the 500 largest companies in US.

Personally, I think that Warren Buffet is great at old world investments, but less familiar with new world tech, which is why Berkshire Hathaway does not take positions in tech companies such as Google, Amazon, or Facebook (only things like apple). The way I see it, the next 30 years is going to bring unprecedented change to the way the world functions, as the next wave of technological innovation hits us (we’re only about 20 years in from the internet revolution). This is going to bring about profound changes to the way old world industries function. Warren Buffet may not be around for this period of change (he is 88 after all), and it remains to be seen if his lieutenants will be able to step up accordingly, and adapt to this changing world. So as much as I like Warren Buffet, from a pure investment standpoint, my money is on the S&P500 and the NASDAQ.

Hi FH,

I am 62 years old and recently retired from overseas, the main purpose for writting to you is to hope that you are able to advise me on how can I be able to generate enough passive income for my retirement.

My financial situation is as follow:

  1. 6 structure deposit(S$100000 each, total $600000) with a local bank earning 2.25% annually
  2. $300000 Income trust fund earning 0.44% per month
  3. $200000 fixed deposit earning 1.75% annually
  4. $230000 in E-saver earning a very little interest
  5. About $80000 in local shares (banks and Reits)
  6. My HDB EA flat fully paid up
  7. No other financial debts
  8. Monthly household expenese $5000
  9. CPF account near zero, medi-save account $52k (because I have been working oversea and received salary locally with no CPF contribution)

 Financial Horse says:

I did up some rough numbers of your portfolio split below:

Asset Class Amount Yield Percentage of portfolio
Bond S$600,000 fixed deposit


2.25% 41%
$200,000 fixed deposit


1.75% 14%
Equity $300,000 Income trust fund


5.28% a year (What fund is this, I want in too 😉 21%
About $80,000 in local shares (banks and Reits) 5.5%
Property HDB EA Flat Personal Residence (Fully Paid) Personal Residence
Emergency Fund $230,000 in E-saver earning a very little interest 16%
S$52,000 in CPF Medisave 3.5%


Given your age, I would generally recommend a far more conservative approach to portfolio construction, along the lines of an 80:20 bond equity split.

And looking at your portfolio above, it seems that you’re already generally structured it in this way. There are a couple of quick fixes to juice the returns:

  1. S$230,000 in E-saver: Even though this is your emergency fund, there’s no reason why it should not be generating decent interest in this era of rising interest rates. Put S$100,000 into SSBs, the 1st year interest is now a cool 1.89%, and goes up to 2.57% if you hold for 10 years
  2. Temasek Retail Bonds: Temasek just released a set of 2.7% 5 year retail bonds, which I discussed here. That would have been an absolutely fantastic choice for you to increase your returns. I am absolutely certain there will be more of such bond offerings coming in the years ahead (I’ll discuss them on Financial Horse so you can just follow the site), so unlocking some of your fixed deposit money to place into one of these higher yield bonds would be a great choice.
  3. Equity Component: I have a huge question, and that is what income trust fund is this? What are the underlying assets invested in, what are the annual fees, and what are the risks associated with this product? Does it pay dividends, or is it primarily capital appreciation. Given that about 20% of your portfolio is in this fund, I think you should be very clear what is going on with this money. However if they’re achieving an average 5.28% returns regularly for more than 10 years (counting the 2008 GFC), that’s probably pretty decent. Personally I never like being at the mercy of someone else’s investing acumen for my personal savings, which is why I’m always wary when it comes to such funds.

    As an alternative, you can always consider moving the money into higher yielding dividend stocks. The recent Philips Sing Income ETF is a good option that I personally liked. Alternatively, you can construct a personal portfolio of dividend stocks / REITs that would generate higher returns. Off the top of my head, if I had to build something like that, I would be using Netlink Trust, Mapletree Commercial Trust, Mapletree Logistics Trust, DBS Bank, and Ascott REIT/CDL H-Trust. The blended yield for a portfolio like that should be in the 5% to 6% range, depending on the price at which you buy in, and of course economic conditions (in severe recessions the yield will dip, but it should be a temporary thing).


Till next time, Financial Horse, signing out!

Financial Horse has a set of 7 Commandments for Successful Investing, that I ask myself before making every investment, and that I will never break regardless of the situation. Enter your email below to receive a copy in your inbox!

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  1. Thank you FH for answer my question sent to you via email. Appreciate much! I’m interested in Philips Sing Income ETF but the liquidity is quite an issue. So with 3k at hand as extra money, I’m considering REITs as a regular passive income source, and making it a significant % of my total retirement portfolio.

    I’m not going for early retirement. Love the job and will probably go beyond 65 with it. Plus, this job already gives me lots of freedom in terms of time flexibility, and not demanding more than 30 hours from me per week.

    Just to say it again, I really appreciate what you’ve done here on your site. Keep up the good work! Cheers.

    • Thanks for reaching out! Yes I agree, the main problem with the Philips Sing Income ETF is the liquidity, and the high fees. If you’re willing to, it makes much more sense to just buy pick a few key constituents and buy them directly.

      Congratulations on your job! It sounds absolutely fantastic, and I’m truly happy for you. Cheers!

  2. Hi FH, between VUSA and SPY, which one do you prefer? I notice that investment in VUSA gets 15% tax withholding VS 30% from SPY. This is likely my first move to overseas investment so I would like to hear your thought on this. Thanks!

    • Go with the VUSA. It has lower liquidity, but I think it’s a worthwhile trade-off because of the withholding tax you save. 🙂

    • I try to go for growth stocks for the US, to play the capital gains rather than the dividend. In any case, the S&P500 dividend these days is about 1.9% because their companies like to prioritise share buybacks over dividends, so it does address this issue somewhat. At the end of the day, there’s no way to build a globally diversified portfolio without US stocks, so it’s about trying to manage the downside.


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