All posts by Mickey J

I’m going to play the 30-day Minimalism Game

Joshua Fields Millburn & Ryan Nicodemus from The Minimalists created this game called the 30-Day Minimalism Game that helped thousands of people worldwide declutter their homes.

How to play the 30-Day Minimalism Game

The game is a way of getting rid of the excess, the stuff that no longer adds value to one’s life.

Here’s how it works.

On the first day of the month, you get rid of 1 thing. On the second day of the month, you get rid of 2 things. You get the picture. Anything can go! Clothes, furniture, electronics, tools, etc. By the end of the month, you will have gotten rid of 465 items (in a 30-day month).

There are a few ways to get rid of things. You can choose to donate, sell, or trash them. Whatever you do, each material possession must be out of your house and out of your life within 24 hours.

It’s an easy game at first, but it will start getting challenging by week 2 when you’re throwing away more than a dozen items each day.

Here’s my game plan

I’m going to set aside 3 boxes to separate items for sale, donation or trash and items will be sorted accordingly.

While the game calls for things to be out of the house by midnight, I’m tweaking the rules slightly, by giving myself:

  • 30 days to sell the items that have some resale value (or they get trashed or donated)
  • 7 days to donate the items that don’t have resale value but could be useful to others
  • 24 hours to throw away the items that are of no value to anyone

My strategy is to spend 10 mins to an hour on this and not procrastinate because the number of items to get rid of can pile up really quickly as the days go by.

Will I win?

I’ll write another post to update everyone on my progress with the game.

Let’s declutter our homes!

Why I chose AutoWealth to set up my first Robo-Advisor investment account

A number of robo-advisory startups have sprouted in Singapore in the last 2 years. They provide financial advice or portfolio management online with moderate to minimal human intervention in exchange for lower management fees. Most of the decision making is based on mathematical rules or algorithms.

I’ve been monitoring startups like AutoWealth, StashAway and Smartly who are competing in this space since they started and now, they have all obtained their respective MAS licences to operate (except Smartly who collaborated with VCG Partners Pte. Ltd. a MAS licensed fund manager in Singapore to manage your money).

With the right regulations in place, it’s a good opportunity to consider using robo-advisors to manage my investments.

Why am I investing through robo-advisors?

If you’ve been following my blog, you would know that I’m a passive investor. I prefer to automate my investment workflow and have the investment portion of my monthly income go into investment without my involvement.

Unlike many others who like to monitor the stock market and read about global news, I prefer to focus on what I’m good at (my day job and side hustles) and grow my income.

While, I’m going to incur some expenses using robo-advisors, I’ve grown accustomed to the reality that if I will have to spend some money in order to save some time.

How much do you have to pay to invest?

The most cost-effective way to invest is to purchase stocks and ETFs off the stock market on my own. By doing so, I can pay a one-time transaction fee that costs between $10-$40, and hold on to my investments for as long as  I want. I only have to pay a final round of transaction fee when I decide to sell.

The most expensive way to depend on investment professionals like Financial Advisers and Investment Bankers to invest on your behalf because they will charge you at least 2-3% annual management fees each year to manage your portfolio.

Robo-advisors have a sweet spot in the middle where you pay for a small 0.2-1% Asset Under Management (AUM) fee each year to manage your portfolio. You get to enjoy that cost saving because robo-advisors have automated most of the investment activities and performs trades on your behalf based on mathematical rules or algorithms.

Why did I choose AutoWealth for as the robo-advisor of choice?

With a growing number of robo-advisory startups in Singapore, I went through all the websites of the key players in Singapore, namely Stashaway, Smartly and AutoWealth before making the decision to invest through AutoWealth’s robo-advisor platform.

In the end, I decided to start my robo-advisor investment journey with AutoWealth. Here’s why.

Low fees for small portfolios

I intend to start investing through robo-advisors with a small investment capital ($5,000) and make monthly fund injections over the next few years, In my research, AutoWealth offered the lowest AUM fee (0.5% AUM + US$18 per year) among all the key players for my small investment portfolio.

If I were to invest a cool $100,000, the AUM fees of all the key players would be pretty much on par with one another.

For me, AutoWealth definitely wins this round easily!

Easy to understand investment options

This is going to be a long one so please bear with me here.

Both AutoWealth and Smartly have a investment quiz on their website that allows me to generate an investment portfolio by answering some questions.

Here’s the investment portfolio that AutoWealth recommended me when I opted for an aggressive retirement investment strategy.

When it comes to ETFs outside of Singapore, I consider myself as a rookie and I had to google to understand what the 6 ETFs were about. What I liked about AutoWealth’s portfolio recommendation is that they kept things really simple for rookies like me to understand by recommending just one ETF for each region.

For equities we have:

  • Vanguard Total Stock Market ETF (VTI) for US market
    • The fund employs an indexing investment approach designed to track the performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market and includes large-, mid-, small-, and micro-cap stocks regularly traded on the New York Stock Exchange and Nasdaq.
    • It invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full index in terms of key characteristics.
  • Vanguard FTSE Europe ETF (VGK) for European market
    • The fund employs an indexing investment approach by investing all, or substantially all, of its assets in the common stocks included in the FTSE Developed Europe All Cap Index.
    • The FTSE Developed Europe All Cap Index is a market-capitalization-weighted index that is made up of approximately 1,223 common stocks of large-, mid-, and small-cap companies located in 16 European countries-mostly companies in the United Kingdom, France, Switzerland, and Germany.
  • Vanguard FTSE Pacific ETF (VPL) for Asian markets
    • The fund employs an indexing investment approach by investing all, or substantially all, of its assets in the common stocks included in the FTSE Developed Asia Pacific All Cap Index.
    • The FTSE Developed Asia Pacific All Cap Index is a market-capitalization-weighted index that is made up of approximately 2,237 common stocks of large-, mid-, and small-cap companies located in Japan, Australia, South Korea, Hong Kong, and Singapore.
  • Vanguard FTSE Emerging Markets ETF (VWO) for emerging markets
    • The fund employs an indexing investment approach designed to track the performance of the FTSE Emerging Markets All Cap China A Inclusion Index.
    • The FTSE Emerging Markets All Cap China A Inclusion Index is a market-capitalization-weighted index that is made up of approximately 3,658 common stocks of large-, mid-, and small-cap companies located in emerging markets around the world.

As for bonds, it’s just:

  • iShares 7-10 Year Treasury Bond ETF (IEF) for US market
    • The fund generally invests at least 90% of its assets in the bonds of the underlying index and at least 95% of its assets in U.S. government bonds.
    • The underlying index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than seven years and less than or equal to ten years.
  • iShares International Treasury Bond ETF (IGOV) for everywhere else
    • The investment seeks to track the investment results of the S&P/Citigroup International Treasury Bond Index Ex-US which composed of non-U.S. developed market government bonds.
    • The fund generally will invest at least 90% of its assets in the component securities of the underlying index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents.
    • The underlying index is a broad, diverse, market value-weighted index designed to measure the performance of bonds denominated in local currencies and issued by foreign governments in developed market countries outside the United States. The fund is non-diversified.

I completed a similar quiz on Smartly’s website with the same answers I used for AutoWealth and here’s the investment portfolio they recommended me.

Off the bat, I noticed that 1% of the money remains as cash. I presume that’s used to paid the 1% AUM fees. Okay, I can bear with that.

For equities, we have:

  • Vanguard Dividend Appreciation ETF (VIG) for US market dividends
    • The fund employs an indexing investment approach designed to track the performance of the NASDAQ US Dividend Achievers Select Index, which consists of common stocks of companies that have a record of increasing dividends over time.
    • The adviser attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.
  • Vanguard Value ETF (VTV) for US market value stocks
    • The fund employs an indexing investment approach designed to track the performance of the CRSP US Large Cap Value Index, a broadly diversified index predominantly made up of value stocks of large U.S. companies.
    • The advisor attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.
  • Vanguard FTSE Developed Markets ETF (VEA) for Canada, European and Asia markets
    • The fund employs an indexing investment approach designed to track the performance of the FTSE Developed All Cap ex US Index, a market-capitalization-weighted index that is made up of approximately 3,700 common stocks of large-, mid-, and small-cap companies located in Canada and the major markets of Europe and the Pacific region.
    • The adviser attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.
  • Vanguard Total Stock Market ETF (VTI) for US market
    • The fund employs an indexing investment approach designed to track the performance of the CRSP US Total Market Index, which represents approximately 100% of the investable U.S. stock market and includes large-, mid-, small-, and micro-cap stocks regularly traded on the New York Stock Exchange and Nasdaq.
    • It invests by sampling the index, meaning that it holds a broadly diversified collection of securities that, in the aggregate, approximates the full index in terms of key characteristics.

For bonds, it’s only:

  • iShares iBoxx $ Invmt Grade Corp Bd ETF (LQD) for US bonds
    • The investment seeks to track the investment results of the Markit iBoxx® USD Liquid Investment Grade Index composed of U.S. dollar-denominated, investment-grade corporate bonds.
    • The fund generally invests at least 90% of its assets in securities of the underlying index and at least 95% of its assets in investment-grade corporate bonds. The underlying index is designed to provide a broad representation of the U.S. dollar-denominated liquid investment-grade corporate bond market.

I couldn’t find a similar investment quiz on Stashaway, so here’s a list of ETFs Stashaway have selected to invest for their clients. Because there wasn’t any investment portfolio recommendation that I could generate, I’m not going to comment much on Stashway in this article.

In a nutshell, we can see that:

  1. In terms of aggressiveness, AutoWealth can be considered less aggressive because no matter how you tweak the quiz answers, they will only recommend a 80-20 asset allocation between equities and bonds. Smartly was able to recommend an almost 90-10 asset allocation between equities and bonds for more aggressive investors.
  2. Smartly is too concentrated in the US market (73%), including bonds. Only 27% of the portfolio is outside of the US. In contrast, AutoWealth’s recommendation appears more balanced with 51% weightage of its portfolio in the US market including bonds.
  3. For investments in non-US markets, I like how AutoWealth clearly defines the weightage of the portfolio for Asia, Europe and emerging markets. Smartly only invests in VEA which consists of a basket of 24 counties (China isn’t one of them!) and also misses out on emerging markets.
  4. For better or worse, Smartly is only focusing on US market for bonds. With the upcoming changes to the Federal Reserve Board at the time of writing this article, I see it as a high risk move to not be diversified into non-US bonds.

Update: There were some typos in this article. I was referring to Smartly that was too concentrated in US and does not have exposure on emerging markets and China and not Stashaway.

Personally, I’m leaning towards AutoWealth in this aspect because I like clarity in what I’m investing in and I’d like some exposure to emerging markets.

Focus on transparency

I may be slightly biased here because I’ve only spoken to the folks from AutoWealth when I signed up for an account.

I was told that on top of getting the login details to my AutoWealth account, I would also receive login information to access my view-only Saxo Capital account. In a nutshell, AutoWealth is just the Money Manager and all the trading action takes place through Saxo Capital.

With my view-only account, I will also be able to see all the transactions that take place in my investment portfolio for that extra assurance. Therefore when AutoWealth tells me they invested my money into a specific portfolio, I can verify that it really did take place.

I’m not sure about you but I’m very comfortable with the level of transparency that AutoWealth is providing me with.

What’s next?

At this time of writing, I’ve already signed on the dotted line to open my account with AutoWealth and will be depositing my starting capital of $5,000 to start the account. I also intend to make regular monthly deposits into the account to continue to grow the portfolio.

The objective of this portfolio is to be able to provide long term care to my family in future. I’m going with a less aggressive 60-40 asset allocation for this portfolio and hopefully it will grow into a decent portfolio when I need to use the money.

To be honest, this new automated way of investing is quite refreshing because it takes another piece of investment task (rebalancing) away from my hands.

What do you think? I’d love to hear your thoughts in the comment section below.

Make saving money fun through gamification

Saving money can sometimes be tough.

I mean, it often means doing something less convenient. Like cooking a meal at home instead of eating out, or waking up earlier taking the train instead of rushing out of your home and taking a taxi.

To make money saving activities more interesting, I decided to add a gamification component to reward myself. Because we all love to play games, don’t we?

Gamification is the application of typical elements of game playing (e.g. point scoring, competition with others, rules of play) to other areas of activity, typically as an online marketing technique to encourage engagement with a product or service.

Gamification is not a new thing

The most popular case study that has been used to explain gamification is Dropbox’s rise to fame where they used gamification techniques to encourage its users to learn more about their product, use it and share with their friends. Dropbox currently has 500 million users around the world and a value of around $5-6 billion.

So how do we implement gamification with money saving activities?

If we break down gamification in its simplest form, there are only 2 components to this. Creating money saving challenges for yourself (and your family), and rewards for completing the challenges.

Simple enough? Let’s do this!

Creating challenges to save money

Let’s use public transport as a case study.

I pay a train fare of $1.16 to travel from my home to my workplace and incur the same cost going home after work. I give myself a money saving challenge to cycle to work instead of taking public transport. This could be challenging for some so you could also consider taking the train instead of taxi as a win too.

By cycling to work, I save some money in my transportation and food budget (because I would stop for a beer or snack along the way home occasionally).

Now that we have a challenge, let’s talk about rewards.

Give yourself appropriate rewards

Cycling to work is a very simple challenge I’m setting for myself so I’m keeping the reward fairly basic.

For every time I cycle to work and back (that’s 2 activities), I will reward myself by transferring $2.32 ($1.16 multipled by 2) into my Discretionary Fund. My Discretionary Fund is a savings bucket that I use to spend on things that are not considered a necessity. Like that relaxing weekend vacation in Bali or the spanking new Apple iPhone.

Well, you get the point.

I also created a stretch reward for cycling to work more often. For every 10 cycle to work activities (that’s 1 work week of cycling to work), I will reward myself with an additional $10 in my Discretionary Fund.

Will gamification work for me?

Here’s how my little money saving gamification activity looks like

With some reward, I think this will definitely incentivise me to cycle to work more often. I’ll keep you updated in a few months’ time to see if this works out.

I’d love to hear your thoughts on this. Please share your thoughts in the comment section below.

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