[Ask FH] Investment Advice for Singaporean Investors – Part II


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 huge apologies to all.

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. 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. 🙂

Dear FH,

 I chanced upon your website when I was reading up on roboadvisors, and I must say that your articles have been an immense help for my understanding of how they work. 

 A little bit about myself: 

My wife and I understand the importance of investing early and the value of compounding interest, and so we began to set aside around $2.8k collectively a month since we started dating around 4 years ago. Following a book I read about bogglehead investment, every month that amount (sometimes less, when our expenses are higher) would go into the STI and SG bonds, and so far it has only realized 3% interest. According to the strategy we were also supposed to also put some money in a US etf (we were looking at some of the Vanguard ones), but never actually got around to it just because we were so busy with work. At some point in time there was an opportunity to invest in the Phillip SING Income ETF, and we invested the money we had saved for the US  ETF  into the Phillip one. 

 So the situation now is that, now we are properly married and settled in, we are looking to properly learn about investment and start afresh. This is a good time to do so also because my wife is a SCB employee, and she just opened a trading account with special rates just for employees. In view of our situation I have a number of questions for you, if you don’t mind: 

 1) We are both around 30, earning a collectively income of ~250k after cpf. We are looking to actually increase our monthly investment contribution to about 3k. We don’t have the time to regularly track stocks so an as passive as possible strategy (ie buy and forget) would be preferred.  What would be an ideal portfolio for this? 

 2) How often do I need to rebalance this portfolio, and what does this exercise entail? So what should I look at and do in general? E.g should I just shift the allocation among the same stocks, buy new assets etc.

 3) What should I do about the 50 odd k investments that we have now? Should we take them all out and invest them based on our new portfolio or leave them as they are?

 Think it’s pretty obvious I’m a complete newbie at this, so any direction would help. Even referrals to links or books would be very helpful! 

Financial Horse says:

Great questions! The first step to successful investing is asking the right questions, and you’re definitely well on your way:

1) We are both around 30, earning a collectively income of ~250k after cpf. We are looking to actually increase our monthly investment contribution to about 3k. We don’t have the time to regularly track stocks so an as passive as possible strategy (ie buy and forget) would be preferred.  What would be an ideal portfolio for this? 

FH: The All Weather Portfolio that I wrote about a few weeks back is a great starting point you can take a look at. It’s designed to perform well in all types of economic regimes, so as a buy and hold strategy, it’s unparalleled. If you do use an all weather portfolio, literally the only thing you need to do is to add new money every year, and do yearly rebalancing.

I’ve found that in reality, the hardest part really is doing nothing, and trusting in your asset allocation strategy. Take the current market correction for example. Do you think you are the type of investor to buy more stocks now, or to sell your existing stocks, or to just hold? What if stocks fall another 20% from here?

Successful market timing requires timing both the exit point, and the re-entry point, and getting one correct is incredibly hard, let alone both. I’ve found that for retail investors who can afford to hold, the best strategy across a lifetime is simply to just keep buying stocks in all economic conditions.

2) How often do I need to rebalance this portfolio, and what does this exercise entail? So what should I look at and do in general? E.g should I just shift the allocation among the same stocks, buy new assets etc.

FH: A lot of people talk about monthly or quarterly rebalancing, but to me there’s really no need to rebalance that often. Each time you rebalance, you incur transaction costs, and waste precious time that could be better spent on other pursuits. I would say annual rebalancing is sufficient for most investors out there.

Just pick your favourite month of the year, or when you are less busy (perhaps December), and every year you login to your stock brokerage account in December to add new money, and sell existing assets such that your overall asset allocation matches what you had intended. So if your intended portfolio is 60:40 equity bonds, and it’s now 65:35 due to appreciation in stock prices, you’ll be adding more new money into bonds rather than equities (you may also need to buy/sell equities). It’s really as simple as that.

3) What should I do about the 50 odd k investments that we have now? Should we take them all out and invest them based on our new portfolio or leave them as they are?

FH: There’s really no reason to sell them and incur transaction costs, especially if your existing holdings are ETFs such as the STI and Philips Sing Income ETF (which I actually quite like, save for the expense ratio). You can just work your existing holdings to form the initial part of your equity allocation. So if you plan to diversify geographically, then you can allocate new money to Asia or US stocks, and over time you’ll be able to build up the diversified portfolio you’re looking for.

Investing is truly a lifelong journey, and like all journeys, it begins with a single step. Don’t overthink it, and just get started. Good luck!

Hi Financial Horse,

I came across your site and started to read up with great interest. Your article is easy to understand and also have details for non-professional investor like me. 

I am 45 yrs and started my portfolio 3 years ago and not very active due to busy work schedules. My portfolio mainly in savings 100,000, insurance savings policy 150,000 and stocks 300,000. 

My equity portfolio consist of mix including SingTel/M1, Keppel/Frasers/UOL, OCBC, UE and DiaryFarm- which amount is 255,000 but current mkt value at 237,000 SGD. I also hold HK stocks with Tencent, CCB and PetroChina- amount of 303,000 but mkt value at 280,000 HKD. Yield is about -8%. 

I have a Condo Loan of 600,000 at 2.2% interest.

My annual current income about 150-200,000. 

My investment is more of Dividend Yield and Mid-Term appreciation. 

 My question as below:

– is the portfolio a good spread and healthy? 

– should I release some in Telco or Property and put into others like REITs or Bank shares? 

– what other investment should I look into? 

– what is considered a good dividend %, do one compare against interest rate or inflation

Financial Horse says:

Let’s go through your questions individually:

– is the portfolio a good spread and healthy? 

Your equity allocation is tilted towards Asia. That’s not necessarily a bad thing, since personally I am very bullish on Asia in the next 10 to 20 years.

But of course, the whole point of diversification is to reduce the impact of any one event on your portfolio (eg. Trump going crazy and creating a prolonged cold war with Asia), and if you do want to diversify, you should probably be adding in some US exposure. If so, the S&P500 would be a great choice.

– should I release some in Telco or Property and put into others like REITs or Bank shares? 

It generally looks like you have telco exposure (Singtel/M1), Real estate developers (Frasers, UOL, Keppel, UE) and banks (OCBC). So you do have exposure to the main sectors of the STI, being Banks, property and Telcos.

I do think REITs would be a great addition to your portfolio simply because of the further diversification, and their role as a yield play. They do differ from property developers in that REITs are more of a pure yield play, whereas with a developer you’re also “theoretically” enjoying the upside that comes with owning shares. There’s a lot of debate on whether it makes more sense to buy a property developer or a REIT, and the easiest way out is to buy both.

On REITs, check out my previous article on what to look out for when investing in REITs, and on some suggestions on REITs to buy.

– what other investment should I look into? 

If you don’t have any bonds, you really should allocate some there. In Singapore, this can be done via Singapore Savings Bonds, CPF (you can technically view CPF OA/SA as a bond given your age) or Singapore Government Securities.

These kinds of bonds are great because they are effectively risk free, so in the event of a recession or market crash, it gives you a psychological safety net to weather the storm.

– what is considered a good dividend %, do one compare against interest rate or inflation

The best benchmark is the risk free rate for SGD denominated assets, which will technically be the rate for Singapore Government Securities. However, to simplify matters, you can just use the rate on your CPF-OA (2.5%), because if you choose not to invest, you can always just top up your CPF to earn 2.5%.

When evaluating stocks, don’t be tempted by overly high dividends, because dividends are only one part of the equation. It’s important to look at sustainability of dividends as well, whether they are backed up by stable cash flows from the underlying business. A 20% fall in share price wipes out 3 years’ worth of 7% annual dividends, and can be painful to watch.

As a general rule of thumb, once the dividend starts crossing 7% territory, you’ll want to be on your guard. There are definitely exceptions to this rule, but if you’re a beginner investor, it’s best to stick to the blue chips with a 4 to 6% dividend yield, and slowly move into more risky plays when you build up your competency in stock picking.

Dear Financial Horse,

Came across your blog recently and was immediately drawn by your style of writing and topics covered, I’m a big fan now and I find myself camping for your articles regularly.

A bit more about myself, I’m 29 this year, working in healthcare, and only had started investing about 1.5 years ago. I have about 6 months of emergency fund saved up and no current debt so I’m quite risk tolerant and have a long investment horizon. I have a steady income and am able to continue to inject about $800-1000 into my portfolio monthly. I’m a fan of passive investing, but also enjoy reading up on finances and attempting to pick stocks. I’m more inclined to invest in the U.S. market due to its robust growth pattern and appreciation potential.  Here is my current asset allocation, given as a percentage of my entire portfolio.

Singapore stocks:

Nikko STI ETF – 4%

Dasin REIT – 3%

Sabana REIT – 3%


U.S. stocks:

Apple – 17%

VUSD – 4%

Baba – 2%


UOB ONE (2.44% EIR) – 52%

Cash – 14%

I don’t have a true bond position, and possibly not planning to get involved in view of imminent interest raises, so I’m making use of the UOB ONE saving’s account to act as a pseudo-bond component in my portfolio, at 2.44% EIR, it is fairly comparable to SSB (2.48% EIR) and the recently announced Temasek retail bond (2.7% EIR), and this is completely liquid. This, together with the cash from another saving’s account, makes up my warchest for market downturn. So effectively, I see it as:

Equity: 35%

Bond/cash: 52%

Cash: 14%

Currently I find myself in the conundrum of being really hesitant to invest due the overall bearish sentiments that an impending market crash is due in the near future. However I’m also a believer of the saying, time in the market beats timing the market. As such, my strategy right now is to only DCA in a US market index fund for this uncertain period.

I was wondering if you could comment on my asset allocation and kindly advise what/how I should adjust it in the current climate, and how I should continue to invest from here on.

Also, when it comes to US market ETFs, what do you recommend if I’m looking for something growth oriented but with low dividend payout, as I don’t want to be subjected to the 30% withholding tax.

Eager to hear from you!

Financial Horse says:

Hello my dear fellow millennial! I actually really like your asset allocation above, it looks a lot like my own personal split between Equity : Bonds.

As a general note, I do think we are nearing the end of this economic cycle. Depending on how much financial conditions tighten, we could be anywhere from 1 to 3 years away from the end of this cycle, so I have begun shifting to a more defensive position with higher allocations to bonds and blue chip dividend stocks.

On your Singapore equity allocation, your choices of REITs are quite high risk plays, and if it were me, I would want to move some allocation into more stable blue chip REITs. You can take a look at my previous article on how to evaluate them.

Your US stocks are heavily overweight Apple. This probably came into play when Apple got hit pretty badly recently with the lacklustre demand for iPhones, so it does illustrate the pros and cons of a lack of diversification (it’s a win big lose big strategy). If it were me, I would probably shift some allocation into a S&P500 or NASDAQ ETF, although given your buy in price for Apple, it’s up to you whether you want to do it now or wait until it recovers a bit.

I realised that while your asset allocation is great, you should spend some time picking good stocks/ETFs to fulfil that allocation. If you’re unsure, by far the easiest way to do this is to use a broad, diversified ETF. For example, you can use the S&P500 for US equities, STI for Singapore equities, and the Hang Seng for China exposure.

If you want US growth, the two best choices to me are the NASDAQ ETFs (Tech stocks) or Russell 2000 ETFs (Small Caps). Each has their own pros and cons which are beyond the scope of this article, but given where we are in the cycle, do be careful of overallocating into either.

Given your age, you pretty much have the rest of your life to earn money and invest, so whatever mistakes you’ve made in the past, just treat them as learning points and move on. Better to make mistakes when you’re playing with small sums, than when you’re throwing around hundreds of thousands each time.

Cheers! All the best on your investment journey!

Hi FH,

I am a 31 year old single and my current portfolio is not diversified, it is a pure REIT play as I wanted to build up a good dividend income to be financially free.

Recently I was thinking that I should set up another portfolio based on asset allocation to see how well it works and to better understand my own profile as an investor and which methods suit me best. I was reading online when I chanced upon your blog when searching for information with regards to withholding tax.

Thank you so much for being so forth coming with these information and sharing it with everyone as it is really difficult to dig and search for them.

I was intending to purchase IWDA and EIMI instead of VTI and VWO due to withholding tax.

I found out from my broker that there is a custody charge every month for each counter held in foreign exchange.

I intend to purchase only the IWDA and EIMI without a bond ETF as I consider my CPF the bond portion of my portfolio. However in this situation, I am unsure of how to carry out rebalancing as I wouldn’t need to “rebalance” but I would be consistently adding to my holdings.

I’ve also read your article on stashaway and it is precisely the administrative charges that I feel will eat away at the gains and have decided not to automate the purchase of the ETF through them. However, after understanding that there is an administrative charge every month I would like to find out from your experience;
1. Which would be the cheapest way to own the ETF in the long run
2. How should I ‘rebalance’ it.
3. How would you suggest that I should go about accumulating it and then cashing it out in the later stages of my life.

Thank you so much!

Financial Horse Says:

No problem, really glad that you found the guide helpful! Let’s go through your questions:

1. Which would be the cheapest way to own the ETF in the long run

I wrote an article recently on stock brokers primarily with this in mind. Which broker works for you depends a lot on which exchange you’re looking at, and the amounts you’re looking to invest. Do check out the article, it should address most of your concerns.

2. How should I ‘rebalance’ it.

I addressed this in an earlier question, and my answer will be the same here. For most investors, annual rebalancing is perfectly fine, and wouldn’t take up too much time and hassle throughout the year. If you want, quarterly or half yearly rebalancing works too, but over the long run it doesn’t necessarily outperform annual rebalancing by a large margin. Go with what works for you, based on how much you are able to put into the markets each time, and how much time you can spare each year to rebalance.

3. How would you suggest that I should go about accumulating it and then cashing it out in the later stages of my life.

A lot of retail investors try to market time, which I really don’t recommend. Market timing is best reserved for the professionals, and even then most of them get it wrong (check out all the big name hedge funds that are down 30% this year lol).

As a retail investor, I think the best thing that we can do is to just keep buying stocks throughout lifetime. As long as you maintain an emergency fund for expenses, and invest only money you don’t need in the short term, there’s really no reason why you would ever need to sell stocks. And if you keep buying stocks over a 30 year period, I can guarantee you that the chances of you losing money are incredibly slim.

When you’re older and in the wealth decumulation phase (retirement) there are rules such as the 3% withdrawal rate, which says that you can withdraw 3% indefinitely. The important thing to note about these rules is that they are largely dependent on the prevailing rate of returns across all asset classes, which in turn is highly linked to prevailing interest rates. As the past 10 years have shown, a lot of things can happen in global financial markets that affect the risk free interest rate, so it is anyone’s guess that the world will be like when we retire. But that’s not something we can control, so the key here is to just continue investing while we’re young, and as we get older we can make more educated decisions based on the information available then.

Hi there FH,

Good day to you. I have a few questions on investing I hope you could help me with.

Some personal background:  I began trading in stocks late 2017 and I currently have a lump sum of $10K to invest and $1K monthly for dollar cost averaging. 

1) My current portfolio is all on SGX comprising of 1800 DBS stocks (average price per stock $26.6), 1800 OCBC stocks (average price per stock$9.16) and 1000 Keppel stocks (average price per stock $8.07). The banks were chosen because of good dividends, especially DBS while Keppel was chosen due to its diversity in different industries and of course (much lol),  in hopes that the Oil and Gas Industry would gradually improve.  The stocks prices have in this year dropped quite a bit. Coupled with the belief that the next crisis will come in the next 1 to 2 years (given the long bull market we already enjoy since 2018), would my current portfolio be deemed too risky as it is 100% equity based in Singapore? How should i be diversifying such a portfolio? ie, to sell these holdings at a loss and move on to bonds/ equities in other geographic regions? 

2) Also in way related to question 1, in the light of the US/China Trade war, i am on the market to look for some good bargains. Counters such as SPDR® S&P 500 ETF (SPY) or PowerShares QQQ ETF (QQQ) have so far generated good returns, but the question is, for someone who just started investing in stocks and lacking capital, how can they afford these relatively expensive counters on the US market? 

Financial Horse says:

Question 1: It seems that your assets are primarily equity in nature, so an easy diversification is to throw in some bonds. You can check out the all weather portfolio for a rough idea what a diversified asset allocation will look like, and work from there based on your risk appetite.

Within your equity allocation, you are quite heavily overweight bank stocks, and Singapore stocks. So the easiest way out is to add exposure to other industries (eg. REITs, property stocks, telcos etc) and to other geographies (eg. China, US etc). Again, the easiest way to do this is via a cheap, low cost, diversified ETF.

I don’t see a need to sell your existing shares simply for diversification purposes. You can just hold on to your existing counters, and add new money into the other industries or geography, and slowly over time you’ll build up a diversified portfolio. Your 3 Singapore stocks are all blue chips that will likely be around 10 years from now, so you’re probably fine holding them long term.

Question 2: Do you mean expensive in terms of valuations or absolute amount? Valuations wise, I do agree that they are on the high side, especially given we are likely nearing the end of the economic cycle. But that’s not to say that they can’t go up another 20% before the next recession.

It really depends on your investment timeframe here. If you’re investing with a 30 year timeframe, your best bet is probably to just buy some right now, buy some next year, and when the recession comes around, buy even more. If you’re looking at a 2 to 3 year timeframe on the other hand, then that’s really tricky and you may be best off going with something risk free like the Singapore Savings Bonds (which actually has really attractive rates these days).


First I must let you know that I’ve only recently discovered your blog and am now a new (and big) fan – I like how your analysis is pitched at a sensible and completely accessible level for novice investors with the right amount of depth / details to make investing decisions.

So my brief details are as follows:- I’m a professional in my early 30s and I am now looking to construct a portfolio with $100,000 cash. It is safe to assume that I have already set aside “rainy day sums” in a savings account. I also have other business investments but these are fairly independent and so for current purposes we can ignore these.

Additionally, I expect to receive investable sums of about 6K a month (this is after mortgage payments, living expenses etc) and I intend to also divert these to the above portfolio.

I have quite a high risk appetite so I would to hear your thoughts on how you would construct a more aggressive portfolio based on the above parameters. I’m thinking of allocating 30% to bonds and 70% to equity stocks, and out of the equity pie, 60% to S-REITs and maybe Singapore bank stocks (which I view to be safer / less risky investments) and 40% to tech stocks. I have a small cryptocurrency portfolio but that’s not doing well and I don’t intend to subscribe for any more crypto currencies.

Happy to hear your thoughts.

Financial Horse says:

Spot on! I think your allocation is quite well done and well thought out actually. But do note that once you get asset allocation down, you still need to pick stocks. You can either do an ETF strategy (more diversification, although this caps the upside as well) or stock pick (higher risk, higher return), and there are pros and cons with each. The devil is in the details sometimes, and how you execute your plan can be as important (or more important) as your plan.

A couple of broad comments:

  1. For the 60% allocation to S-REITs, do ensure that you’re diversified across geographies and asset classes. My personal rule of thumb is to only buy REITs from strong sponsors such as Mapletree, CapitaLand, Frasers etc, to minimise the risk of sponsor abuse and poor corporate governance. You can take a look at my previous article for more discussion.
  2. I would want to add some China exposure into my personal portfolio. I think that the 21st Century will be defined by the rise of China and its interaction with the existing world order, so to not get some exposure to this absolute mammoth of a market early on seems strange. China is going through a rough patch now with their deleveraging process, and my gut feel is that a better entry point will present itself next year.
  3. I don’t think any portfolio today will be complete without some allocation to the US market, given their status as a premier superpower and the USD’s status as a reserve currency. All that may change in the future, but we have to invest in the world as it is, not as how we want it to be. You mentioned that you want to allocate 40% into tech stocks, so an easy way to get US exposure is to buy the NASDAQ ETF and view it as your tech/US play.

Till next time, Financial Horse, signing out!

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