Category Archives for Investment

Making final payment for my Cambodia property investment – The Bridge

In December last year, I received a letter from Oxley WorldBridge, the property developer for The Bridge. In the letter, it was mentioned that my Cambodia property is completing ahead of time and they attached a payment notice for final payment.

That means it’s time for me to pay up the remaining 50% of the property purchase price before the end of January. As I did not take any bank loan for this purchase, everything is paid with cash.

It’s been such a long time in the making because if you’ve been following my blog, I made the purchase in 2014 and since then, I’ve been diligently saving a significant portion of my monthly salary to pay for this property.

Here’s a photo from Oxley WorldBridge’s website showing the status of construction of The Bridge in November 2017.

Minor financial adjustment needed, but all good

To be frank, I was expecting The Bridge to complete in June 2018 so I planned to set aside a portion of my monthly saving to have the final payment sum ready by June. For the property to complete ahead of schedule meant I had to make some adjustments to come up with the cash needed.

Firstly, I sold off my STI ETF and ABF Bond ETF portfolio that was accumulated monthly through my POSB Invest-Saver regular savings plan. Fortunately, the market was performing well and I netted around 3.3% gain after selling it.

Lastly, I liquidated my remaining bullion gold coins to top up the remainder of the final payment. The sale price did not yield me much gain as the gold rush was long over and I’ve made my profits a long time ago. In fact, I did not even record these gold coins in my portfolio as they were that insignificant.

What worked in my favour was the fact that the currency exchange rate between US Dollars and Singapore Dollars was down to $1.32 from a high of $1.37 in October 2017. Lucky me!

Mixed feelings about the property completion

While I didn’t like the fact that I had to liquidate my POSB Invest-Saver regular savings plan to finance the purchase, I’m grateful to be able to lock in the profits and pay off the property purchase at the start of 2018. I see this as an opportunity to revamp my investment portfolio. I have some ideas in mind to reduce my portfolio’s dependence on Singapore’s economy and instead, focus on global economies. But that’s another blog post for another time.

I wasn’t totally sure about where Cambodia property investments are headed when I made the deposit for a SOHO unit in The Bridge in 2014 and to be frank, I’m not 100% sure that I made the right call in this purchase today. We’ll probably find out in another 5-10 years time.

I’ve receive a few comments and emails about this investment and my advice remains the same. Go in with both eyes open, read everything twice, and only invest with money you can afford to lose.

My plans for my SOHO unit at The Bridge

As of now, I’m committed to paying off the full purchase price of the property (in fact, I’ve already done that before this article was posted) and I’m definitely in it for the long run. Let’s see how the property investment performs in 5-10 years time.

A few ideas that comes to mind right now are:

  1. If the rental works out for the next 3 years and the conditions of the extension in rental proposed by the property developer 3 years later are good, I’m contented to remain as a little landlord.
  2. If I find a buyer who can offer a hefty profit on top of my purchase price, I might consider selling off the property.
  3. Having travelled to Phnom Penh before, I am 50-50 on the living conditions. If the Cambodia economy blossoms and living conditions improve, I might also consider using the property as home base for retirement and rent out my HDB flat for passive retirement income.

The possibilities are endless and anything can happen. I’m going to keep my options open and see where life takes me.

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.

Automating the investing process with OCBC BCIP and POSB Invest-Saver

Do you believe in dollar cost averaging or lump sum investment?

Over the past few years, I’m a firm believer on the former. But do I practice what I preach? That’s a whole different story.

The ammunition is there but no bullets were fired

While I’m consistently socking money away in my investment war chest, I found that I’ve not made a single transaction in my online brokerage account at all this year. *The horror!*

It’s not that I don’t have money to invest in my portfolio but the reality is that I’m still a novice when it comes to investing in the stock markets and the number 1 problem with newbies like me is that I keep trying to time the market.

Now this is a flaw that I recognize that I have and unfortunately I just can’t seem to help it! *sad face*

Remove the human and automate the investing process

Because of the issues with the human (me), I decided to automate the investing process and take the human out of the process.

Automated investment is not a new thing in Singapore and 2 major banks, OCBC and DBS have already started offering this for some time now.

In fact, I’ve been using OCBC’s Blue Chip Investment Plan to invest my SRS monies in Nikko AM Singapore STI ETF for the past 2 years.

For my cash investments, I started using the POSB Invest-Saver to make monthly investments into SPDR Straits Times Index ETF Nikko AM Singapore STI ETF and ABF Singapore Bond Index Fund. The process of applying for the Invest-Saver through the POSB iBanking platform was very easy since I already have a savings account with the bank.

Planned automated monthly investments in 2017:

  • Nikko AM Singapore STI ETF (SRS and cash): $1,275 + $500
  • SPDR Straits Times Index ETF (cash): $500
  • ABF Singapore Bond Index Fund (cash): $500

Total automated investment in 2017: $27,300

Update: The comment from K is right. POSB Invest-Saver only invests in Nikko AM Singapore STI ETF and not SPDR Straits Times Index ETF. The article has been updated accordingly

Unfortunately, the monthly cash investment is still very small as bulk of my savings is still going towards funding my Cambodia SOHO property purchase.

Disadvantages of automating the investment process

Just because I’m doing it, doesn’t mean you should too.

If something can save you time, it’s probably going to cost you a little more money than doing it yourself.

I haven’t done the math but it’s very likely that using OCBC’s BCIP and POSB’s Invest-Saver to automate my investing process is most likely going to cost me a bit more than doing it manually on my online brokerage platform.

Weigh the pros and cons before making your decision. In my case, automating my investment process is definitely going to help align my investment portfolio with my investment objectives.

What are your thoughts on automating your investment process?

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