Sunday, 24 August 2014

Index Investing in the Singapore Stock Market, What Do I Buy?

Passive Investment Strategy to Index Investing

When it comes to investing, most people are searching the web or mindlessly reading through blogpost after blogpost on a hundred different blogs in an attempt to search for the 1 Valuable Thing.

The Best Secret Classified Hi - Tech Powerful Technique Formula Strategy to Invest.

Ok I'm kidding. But, most people out there want the best, they want the fool proof strategy to investing, they want to learn the best technique and they want all the best "weapons" possible that they can carry in their "Arsenal".

Well I don't know if there's any fool proof strategy or the best technique to passively invest but I can share with you how I do it.

Let's take for example you want to begin with the Singapore Stock Market. As I mentioned before, Investing in the Index, effectively diversifies your portfolio to begin with. While not necessary to invest in individual companies, you can if you wish.

So, do you want to invest in just stocks alone? You can of course. But it would be safer to have bonds in your portfolio as well.

Think of it this way, you're in a war. Stocks are your machine guns, rocket launchers, bazookas whatever. Bonds are kind of like your knives, pistols, revolvers and maybe a few grenades.

Why is this relevant? Well, say you are fighting a battle with the Enemy Forces. You start off well, your machine guns and rocket launchers are effectively destroying 99.9% of their soldiers. Suddenly you run out of ammo. And you see maybe 1 or 2 soldiers left. Without your knives/grenades you'd be killed. But with them, you have a chance of saving yourself, and not losing the whole battle.

Same concept. If you invest fully in stocks, chances are you would stand to gain relatively high returns. But one stock market crash, and you're gone for good.

Thus, the all-important Asset Allocation.


Another thing, by investing passively you need only purchase a few ETFs and add to them every month. Once a year, rebalance it.

There's no point having a huge range of ETFs and maybe owning 1 or 2 lots. Doesn't make sense and not an economical way of spending your resources. Save up, purchase 1 lot of Nikko AM, or STI ETF. Restart. Save. Purchase.

It's the Mother of all Basics. Since you're young, you can start off with stocks. Save $300++ or $3000++ and buy your first lot. Done? Congrats you're a proud owner of your first stock. Now, restart the whole process. Save. Save. Buy 1 lot of ABF SG Bond ETF. Congrats! You now have 1 stock and 1 bond!

Rebalance once every year or 6 months it's up to you. You don't want your stocks overshadowing your bonds.

My plan? To invest more in stocks and lesser in bonds while I'm young and can afford a little more risk. 30-40 Years down the road, you would see that my portfolio has significantly more bonds than stocks as my risk appetite decreases. I simply cannot afford that much risk with my retirement funds as time is no longer on my side.

Fun Fact: Did you know that you can use your CPF to invest? Invest wisely, or you can leave it to earn guaranteed interest. It's your choice :) You're probably never going to see half of that $ anyway with the government being so weird about it.

Signing off,
Teenage Investor


  1. Interesting blog post for traders, to let them know about index trading in singapore, it needs some SGX Hot Stock Picks to trade profitably.

  2. Great Singapore financial market news and alerts provided by this investing blog, really helpful for new entrants.