New to investing? Read the following articles for a crash course in investing!
If you want something more in depth, check out the Complete Guide to Investing for Singapore Investors + REITs Investing Masterclass!
Introduction to Investing
Ask Financial Horse
Check out the Ask Financial Horse series to check out sample portfolios from other investors!
I’m in my early 20s and new to investing, where should I start?
Play it safe. Focus on the basics, pick a company with a strong business model that generates cashflow, pays out decent dividends, isn’t too hyped up by the market, and hold these stocks with a long-term horizon. For me personally, I target to hit about a 6% to 7% return a year with my investments, so when I buy a 6% yielding REIT, as long as I don’t suffer capital losses I’m good. And concurrently, I’ll focus on earning more at my day job, continuing to invest new money, and over time it really adds up. Full post here.
The most important determinant of your investment returns, and the easiest thing to control, is actually your asset allocation. That’s the split in your asset portfolio, ie. how much you put into stocks, how much into REITs, how much into bonds, cash, property etc. The ideal asset allocation depends on your age, risk appetite etc, and you can have a look at the All Weather Portfolio for the thought process. Full post here.
I am young and ambitious and want to be a millionaire!
Now there are small goals, and there are big goals. Some people write in to Financial Horse with the goal of financial independence and retiring early, or just to have peace of mind in their old age. For those guys, the traditional route of working hard at their day job, investing in an all weather portfolio (or a variant of that), is usually the best answer.
And then we have questions like yours. You’re 25, just started work, and want to be a multi-millionaire. Now I don’t know much about you beyond that, neither do I know whether your multi-millionare refers to $10 million or $100 million. I don’t even think it matters that much. What I do know, is that you’re an ambitious guy, who is unlikely to be satisfied by the more “traditional” routes to success. So here is what I would do, if I have similar goals… Full post here.
StashAway Referral Link (50% off your fees for the first SGD 50,000 invested for 6 months.)
ETFs/ STI / World Indexes
A lot of people out there bash the STI ETF (myself included – see a previous post), but if you just want to buy 1 ETF to get broad exposure to the Singapore economy and be done with it, there’s really no good replacement to the STI. So it works, but again when you become more familiar with investments, you can consider replacing it with direct investments into the individual stocks that make up the STI, which gives you greater control over what goes into your portfolio. Full post here.
More information on the world index / S&P 500 here.
When should I rebalance my portfolio?
Rebalancing is overrated (mostly). Rebalancing too often can actually hurt your performance, because it cuts exposure to an asset class just when it is about to go on a big runup in price. Sometimes in investing you just have to be patient and let the market do its thing. I would say annual rebalancing is good enough for most purposes. Read more here.
Investing in Overseas Markets
There’s no need to constrain ourselves to only Singapore based investments. The SGX is still the market leader in Asia ex Japan for REITs, and is strong for the 3 local banks and certain property developers. For everything else though, there’s always Hong Kong or New York. Read more here.
Day-trading and short-term investing
Day trading is incredibly hard. A UCLA Berkeley study showed that 40% of traders quit within a month, 87% of traders quit within 3 years and 93% of traders quit within 5 years. If you want to do day trading, chances are you’ll lose money, grow disillusioned, and quit eventually. If you want to day trade your way to financial freedom, well, that sounds like the start of every good bankruptcy story. But I cannot in good conscience tell you to stop day trading. You may well turn out to be the remaining 7% and go on to make a career out of it, eventually heading the Goldman Sachs trading desk and looking after an army of machine learning algorithms. If I tell you to quit day trading, I could well be depriving you of that chance.
So my advice is this. There are many ways to make money in this world. You can make money through short term trading, buying and holding, and multi-decade value investing. There’s no right or wrong here, only what works for you. Read more here.
A worthwhile read from a reader who shared his experience on day trading (scroll to the end!).
CPF and SRS funds
SRS is amazing for tax planning, but the range of investments is less than ideal. Read more here.