Does active management win passive management? What experts know but don’t want you to hear

Just last Sunday, the Straits Times published an article on the "7 habits of successful investors". In it, it lists down many characteristics, but the last one has caught my attention. It says that "go for active management". I am part angry and part disappointed. Angry because such an article could get published passing through editorial checks; disappointed because everyday, people fall prey … [Read more...]

Investment Guru or Scam: How to Spot a Fake One

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Money from investments or money from you? When I see the advertisements for Investing Courses and "How you can invest like Warren Buffett", I can't help but suspect the speakers make more money from you attending their courses than from their own investments. Fortunately, there is a very simple way to sniff out a scammer. Using the Warren Buffett test The legendary value investor Warren … [Read more...]

The question that everyone avoids – how much do I need so that I can retire?

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The question everyone avoids Most people want to retire. Even more want to retire early. But, not many know they can retire. Like running a race, the most important thing to know is where is the endpoint, and how long more you have before reaching the endpoint. Two ways of calculating the retirement sum There are basically two ways of calculating your retirement sum. The first is the … [Read more...]

Time management hacks – How I study one semester’s worth of lectures using one day

Time management hacks When my friends take five days to study for one subject, I take one day instead. This gives me 4 days free. With this 4 days, I can do other things. I read, and write, and dabble into something interesting. I don't compromise on the quality too. Even though I spent eighty percent less time, my results are always the same, if not better, than my peers. If I can … [Read more...]

Harnessing solar energy to reduce utility bills

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Solar energy in sunny Singapore Just that day, I happened to be on the topic of utility bills in Singapore. I stay in a HDB flat and my utility bills are around $150 every month. I was curious, and wanted to use an investment philosophy to deal with utility bills. Buying an asset and receiving dividends I went online to research, and solar energy came up as a viable solution. Basically, … [Read more...]

Portfolio update for the Singaporean 3-fund portfolio

Brexit did nothing to my portfolioEven though there was much sensation about the Brexit earlier this month, I was not at all concerned about my Singaporean 3-fund portfolio. Out of curiosity, I went to take a look at it.7.95%That's the half-year return on my portfolio having started it in February this year. There was still some dividends coming from the International Equities portion which will … [Read more...]

An alternative to Standard Chartered new brokerage fees

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Talk of the town The buzz term today is the new brokerage fees imposed by Standard Chartered bank for online trading. Standard Chartered used to be the saviour for retail investors, charging 0.20% brokerage fee for any trade for the Singapore market, without any minimum commission. A $1,000 purchase only costs me around $2 in commission. Comparing it to other brokerages, I would have needed … [Read more...]

Equity component of the Singaporean 3-fund portfolio – SPDR STI ETF and Vanguard FTSE All-World UCITS ETF

The Singaporean 3-fund portfolio is the Singapore version of the Boglehead 3-fund portfolio which is suitable for US citizens. The Boglehead 3-fund portfolio comprises of three components: - Vanguard Total Stock ETF (home equity; the name is misleading but it comprises only US stocks) - Vanguard Total World Stock ETF (global equity) - Vanguard Total Bond Market ETF (home bond; similarly, this … [Read more...]

The REAL Mathematics behind Early Retirement

My brain was feeling a little itchy for some Math yesterday. Math was my best subject in school, and my favourite subject when I tutor. So, I decided to try out to calculate and derive the formula for Early Retirement. After using this website (link), and MMM post (link) on how Early Retirement is only determined by the Savings Rate, I decided to try to derive the formula that calculates the … [Read more...]

Bonds component of the Singaporean 3-fund portfolio – ABF Singapore Bond Index Fund

The Singaporean 3-fund portfolio is the Singapore version of the Boglehead 3-fund portfolio which is suitable for US citizens. The Boglehead 3-fund portfolio comprises of three components: - Vanguard Total Stock ETF (home equity; the name is misleading but it comprises only US stocks) - Vanguard Total World Stock ETF (global equity) - Vanguard Total Bond Market ETF (home bond; similarly, this … [Read more...]

The case for index investing – a parable

Taken from John Bogle's book, The Little Book of Common Sense Investing.Once upon a timeA wealthy family named the Gotrocks, grown over the generations to include thousands of brothers, sisters, aunts, uncles, and cousins, owned 100 percent of every stock in the United States. Each year, they reaped the rewards of investing: all the earnings growth that those thousands of corporations generated … [Read more...]

Is the STI a good index?

I had previously written a post that 30 stocks is definitely not enough for diversification: here. However, many investors are currently putting money into the Straits Times Index (STI) fund regularly. As you may know, the STI is a basket of 30 stocks. The STI is actually not passively managed as there are reviews to choose the basket of stocks. In 2015 last year, there were changes to the … [Read more...]

Is the STI a good index?

I had previously written a post that 30 stocks is definitely not enough for diversification: here. However, many investors are currently putting money into the Straits Times Index (STI) fund regularly. As you may know, the STI is a basket of 30 stocks. The STI is actually not passively managed as there are reviews to choose the basket of stocks. In 2015 last year, there were changes to the … [Read more...]

Investing a windfall

Was browsing the Bogleheads forum today and had a look at a thread "Investing a windfall". I clicked on the link because I felt that it was useful to know what to do in the case of year end bonuses or performance bonuses. Investing a windfall The thread starter was already a seasoned investor and she dollar averages her monthly salary into a 60/40 portfolio. However, this time, she received … [Read more...]

Do you rebalance?

Many advocate keeping a portfolio of bonds and stocks, and rebalancing them regularly. While reading the Four Pillars of Investing, I discovered a very good example of diversification and rebalancing. I will replicate it here. Playing the long game (Chapter 14) In order to understand rebalancing, let’s consider a model consisting of two risky assets; call them A and B. In a given year, each … [Read more...]

The Gordon dividend growth model

Gordon dividend growth model part 1 The dividend growth model is one of the earliest, if not the earliest, ways of valuing a stock. I might do a post on the derivation of this formula, but I shall skip that for now. This is the formula: Market price (P) = d / (r - g) D is the current dividends or last dividends declared by the company. It is in dollar terms. R is the expected return … [Read more...]

Everyone investor should read this

Although this post is fully prose, please read it before you start investing. After reading it, you will be smarter than 95% of all investors. However, it is also my (albeit selfish) hope that after reading this, you should have no more need to want to read stock analysis and wanting to pick stocks. Let's start. Liabilities and equities When we invest, we are either investing into debt or … [Read more...]

How long do I need before I retire? Not very long actually

Let's have a thought experiment. How much do you think you need for retirement a month? $1,000 is a reasonable number if you live frugally. Assuming a withdrawal rate of 4% (more on this later), you would need $300,00 for retirement. Working: $1,000 a month gives $12,000 a year, which means $300,000 in retirement sum because 4% x $300,000 = $12,000. How long do you need to save up to … [Read more...]

Forget dollar cost averaging. This is value averaging

Chanced upon this term called value averaging while reading The Four Pillars of Investing by William Bernstein. The man credited with value averaging Michael Edleson, introduced in his book with the same name. Dollar cost averaging helps you buy more when price is low, and less when the price is high. Value cost averaging claims to be able to do it even better. Suppose I have $1,200 to invest … [Read more...]

Why does bond price and interest rate move in opposite directions?

Many people usually have this question but somehow, the many resources online can't answer it well. I shall try my best to explain it in this post. Time Value of Money The first thing to understand, is this concept called the Time Value of Money. In other words, $1 today is worth more than $1 in the future. Or, $1 in the future is worth less than $1 now. So, how much is $1 now worth in … [Read more...]