When To Sell A Stock? 6 Reasons To Do So

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When it comes to buying a stock, it is easy. Isn’t it?

After watching thousands of videos on which stocks to buy, evaluating its fundamentals and growth prospects, you click the BUY button and Voilà! You just bought your first stock.

So what do you do now?

No, you do not just sit back, relax and shake your leg. In fact, you need to put even more time and effort now that you own the stock. Stocks are not lottery tickets as there is a company behind every stock and by owning a stock you are essentially a shareholder of the company. You need to take note of news, keep track of its earnings and making sure growth prospects remain the same.

It is after you purchased the stock where the work becomes tedious, as you have to watch over your portfolio like a hawk and make sure you make sound investment choices which are in line with your risk profile, personality and time horizon. Although many finance blogs educate beginners on the importance of “Buy and Hold” and “Not timing the market,”these are fundamental principles that you should already ingrain in yourself the moment you chose to be a long term investor and not a speculator.

“Know what you own, and why you own it.”

-Peter Lynch

If you understand the stocks you own and done your due diligence, you should have no reason to panic sell when the market crashes. In fact, you should be even happier because now you can buy more of the stocks at a cheaper price.

If you know that a pen is worth $1 right now and suddenly it drops to $0.50, do you panic sell your pen? Nothing fundamentally changed with the pen, so instead of making irrational decisions that the news and market tell you, you should be happy to purchase more pens since its 50% cheaper now! That is the same for stocks.

News headwinds drive stock prices up and down based on sentiments. News and market noises drives up market volatility which traders and speculators both adore because they thrive and make profits from price fluctuations. This is why you should never confuse trading with investing, because trading is short-term and relies on technical analysis whereas investing is long-term and relies on fundamental analysis.

Without further ado, let’s talk about the 6 reasons you can adopt when it comes to selling a stock.

1. Why did you buy it- Did it change?

The first reason why it is time to sell your stock is if the growth story or fundamentals are no longer great and what you anticipated. There may be fraud accounting, dividend cuts, acquisition, takeovers or it no longer can fend off the competition. Whatever the reason, when the fundamentals are no longer the same, it may be time to sell the stock.

For example, Singapore Press Holdings (SPH) used to be a blue-chip dividend stock before the age of digitisation. It was a favourite among Moms and Pops investors in the early 2000s due to their dividend growth and consistent dividend payouts and stable share prices. However, as the internet proliferated, coupled with the rise of free news media and not needing to pay any money to read a newspaper, the company and the industry quickly dwindled and it is now a sunset, old world industry stock.

SPH Share Price for the past 5 years

If you did not sell the stock in the early 2010s when the internet and news were slowly replacing newspapers, you will be sitting at a -75% loss today. What’s worse is you continuing to believe it is a recovery play and you held on to it stubbornly, because you read online that the only way in investing is “Buy and Hold.”

Sometimes, it is far better to “cut the weeds and water the flowers” (sell the losers and hold the winners) but most people are “watering the weeds and cutting the flowers” (sell the winners and holding the losers) which is why most retail investor never ever beat the market.

So lesson 1: Sell if the story no longer remains or the fundamentals are not the same anymore.

Stocks I would consider to be this category and would avoid at all cost: SPH, SIA, Comfort Delgro, Singtel, Sembcorp

2. Check Risk-Reward

At what price did you buy? Did you buy at all-time highs or did you buy at all-time lows? If you are the former, good luck, you might not have any margin of safety because the higher the stock prices go, it means the higher the risk of it falling. Stock prices go up in the short run because of sentiments. Since the anticipation and expectation of a stock is high, therefore such stocks goes up quickly. However, if you do not understand and buy into the hottest stock at all time highs, you are spelling for trouble.

The moment earnings do not meet expectations, stocks prices will go down, and it will go down hard. An example of this would be Fastly.

What goes up fast, goes down fast as well. This is why stocks driven by sentiments can go up tenfold in 2 months, but can also crash tenfolds in 2 weeks. Always remember to weigh your risk-reward, your margin of safety and make sure your upside is greater than your downside. To do this you need to determine the intrinsic value of the stock through fundamental analysis.

There are many different ways you can determine intrinsic value, for myself, I usually evaluate stocks using DCF valuation (Discounted Cashflow), ROE valuation model or Sum of Parts Analysis for conglomerates such as Berkshire Hathaway or Tencent.

Lesson 2: Check Risk-Reward and sell when your upside is no longer attractive. The higher the stock prices go, the riskier it gets for a potential pullback.

3. Opportunity Cost

Now the 3rd reason why you should sell your holding is when there are better opportunity cost. I will give you my own experience: I was holding on to STI ETF for the longest time as I have been investing into it since 2019, and sitting at a loss, I did not bear to take the losses as it was pretty significant. However, I knew that by holding on to the loser (STI ETF) with many of the companies within the index losing its allure day after day, I decided I have to do something about it due to opportunity cost. I researched into US stocks such as Salesforce, Tesla and Alibaba ADR which had better growth prospects than STI ETF. I eventually sold off my stakes in STI ETF in tranches and redeployed them into better counters and ETFs. There are far better ETFs which offers superior returns than STI ETF which were counters like ARKK, ARKW and ARKF (I own all 3 ETFs) and all 3 are sitting at a +10% to +16% unrealised gains.

So opportunity cost plays a part in your decision to sell your stock holding. Of course, some may disagree with me here as before even thinking about selling, we should just hold on since we believe in what we bought.

But sometimes growth stories changes and we have to evaluate it critically. Changing a “dying horse to a younger stronger horse” is far better than holding on to a dying horse thinking it will be like its glory days. Life just don’t work that way.

Lesson 3: Understand the opportunity cost by constantly looking out for growth opportunities and knowing which of your holding no longer has the growth prospect it once had, and by substituting it for something better might be better for your overall portfolio in the long run.

4. Stop Losses

This applies mostly to traders and not investors. As a trader, it is important to set stop losses to limit your irrational brain from activating. Being disciplined about taking profits or losses can boost overall net positive trades if you are able to adopt stop-losses.

For investors, stop-losses may be bad because you will be forced to sell a holding due to short-term market sentiments. If you sold Apple during March due to Stop-Loss parameters, you will be crying now because the stock recovered and is even higher than it was.

Hence, stop-losses while beneficial for traders, does not have the same effect if you are an investor so understand which strategy you are adopting. Traders adopt a short-term view (days/weeks/months) while investors adopt a long-term view. (years)

Lesson 4: Setting Stop-Losses allows you to minimise your losses and to be disciplined when it comes to trading. It prevents our irrational brain from making dumb decisions and ruin a disciplined trading strategy.

5. When you hit your goal

The 5th reason you should sell your stock is when you attain your goal. For example, I planned to retire by age 50 with at least 2 million invested yielding 5% annually which should give me $100,000 ($8333/month) in passive income every year.

I would set milestones in my life to hit this final target of 2 million by 50 and along the way would sell away my growth stocks positions in the later stages of my life as I want stability and take an overall more defensive stance to investing. When I reach my mini goals/milestones, (eg. 200k portfolio by 32) I will start to take profits and transit to allocating dividend yielding stocks but again this depends on the situation in the future.

So once you hit your own specific goal, it may be time to sell some of your stocks to take profits and recycle the capital into defensive stock counters where you collect dividends and start to take in more passive income.

Lesson 5: Sell and take your profits on aggressive counters and recycle them into defensive counters which provides passive income in the form of dividends. You may or may not decide to do this and this is evaluated at an individual level and specified based on your own goals and situation.

6. Never Sell -Be like Warren Buffett

Another school of thought is to never sell your stock if you are extremely patient and extremely confident in your holdings. This has historically been the most effective since dividends reinvested coupled with holding on to to solid companies will allow you to compound your capital slowly but surely.

But nowadays, this is the hardest thing to do since we humans fall trap to “Instant Gratification” and the effects of FOMO which cause us to make irrational decisions. I am also a victim of this and part of it is inevitable since it is human nature to want to enjoy the pleasures immediately instead of waiting for it later. An example of this would be the question of whether to get 1 million now or to receive $4000 per month for the rest of your life. Most people would choose the first option including me.

If you decide to be like Warren Buffett and” hold-till-you-die,” then you will be duly rewarded. (provided you buy into the correct stocks) However, as none of us are actually Buffett and we do not have foresight and wisdom like he do, you can adopt any of the reason when it comes to selling but the important part is to know the reason for selling and why is it justified.

If you don’t even know what you are doing and panic sell, you are better off not touching the stock market at all and should avoid stock picking at all cost. Letting professionals help you and investing into a “Buy and Forget” fund through a mutual fund/unit trust may be way better, and just treat it as a form of forced saving for retirement.

Lesson 6: Never sell your stocks if you don’t have to, simply buy into companies you are extremely confident in with solid fundamentals, and stay convicted and not time the market.

Conclusion

It is easier said than done. Buying a stock is much easier as compared to the selling. If the stock you hold is doing extremely well and the growth stories continue, you may not find a reason to sell it. Likewise, if a stock you own is doing extremely badly, you may be fearful and hold on to it to avoid losses, but if there are better opportunities out there, it is better to let go of a loser (after evaluating it critically) than to hold on to it.

Take the 6 reasons as a guideline but also with a pinch of salt, because what I say may not be what you believing in. There is no right or wrong when it comes to investing as there are various ways and approach to grow your wealth. So at the end of the day, understand your risk profile, time horizon and personality so you can go about thinking of a game plan on your path towards financial freedom.

Everyone’s approach is different and even if similar, it may not be exactly the same as we all have our own circumstances and situations we are dealing with in life. If you are curious about how I invest, you can view my full portfolio on StocksCafe here.

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

The Importance of Paying Yourself First

How much do you have in your savings? How much did it increase/decrease over the past few months? If your savings remained stagnant or even decreased, there is something wrong with your money spending habit.

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If you don’t even have an emergency fund saved up to pay up your immediate expense (eg $2000), this mean that you don’t even have enough to cover future expense or luxuries. What can be done to solve this? By paying yourself first.

I am a victim of not abiding by this rule as well. During my days in army, I was a section commander (3SG) earning around 1k per month from my NSF allowance. Each month, I would spend regularly on food at the Canteen/Mess, avoiding cookhouse food and taking Grab to book in/ book out just because I was lazy to take public transport and also buying expensive items online.

I did not keep track of my expenses and kept spending aimlessly, not worrying as I would be supplemented with my allowance next month. It was only until the last 4 months of my service where I realise my money management habit had a huge problem. Left with only 4 months of pay, I started looking back at how much I have been spending monthly and why my bank account remained stagnant months over months, even though I am getting 1k allowance every month. The reason why we are still not getting wealthier is because of Parkinson’s Law.

Parkinson’s Law

The Parkinson’s Law says that our expenditures rise to meet our income. When we earn more money, our needs become more and we end up spending more money. In order to even make wealth, we need to break the Parkinson’s law by setting limits to ourselves.

What’s the point of earning $20,000 per month if your expenses are $19,000? This is the reason why most people are rich, but they are not actually wealthy.

What’s the difference between being rich and being wealthy?

The simple difference between a rich person and a wealthy person is that a wealthy person has sustainable wealth. Simply put, a wealthy person will always be wealthy, whereas someone who is merely rich will only be so for a short period of time until the money is gone.

Hence, if you have a salary of $8000 as a 24 years old for example, congratulations. You are earning more than the average of your peers, but what about the liabilities aspect of your cashflow? If you are earning $8000 but your expenses are $7500, you only have a spare $500 every month to try and grow your wealth.

On the other hand, if you earn $3000 per month, but you always pay yourself first, and saves up 50% of the money into a separate bank account purely for wealth growing purposes, you will be left with $1500 to pay your liabilities every month. (mortgage/phone bills/groceries etc) By making this habit a norm, you effectively have a spare $1500 every month to grow your wealth.

That said, salary alone is inaccurate to gauge whether someone is wealthy or not. But it is no doubt a higher salary can allow you to live a flexible lifestyle and make it easier to grow your wealth and reach financial freedom.

The reason why most poor/middle class people today are unable to get out of the Rat Race and having to continue to work every day until age 65 is because they don’t buy into assets and have poor money management skills.

Most of us go to school to learn and master the skills we need for our job next time and be a good employee, (Excel skills/Coding Skills/Passing BAR/Getting your medical license etc) but fail to learn how to manage money because schools did not teach us how to do that. We are brought up believing that the only way to have a good life is to study hard, get a degree and work at a good company and retire at 65.

While this is what we are brought up to believe in, we do not have to adhere to it or even abide by how our parents or predecessors grew their wealth. In order to reach financial freedom as early as possible, we need to cultivate good money habits and invest into assets which generates income for us in the long run and reduce liabilities as much as possible. The more money goes into our pocket and the less money goes out of our pocket, the wealthier we will be and the more sustainable we can remain rich for the long run.

Assets puts money in your pocket while liabilities takes money out of your pocket.

Each of us have different financial thermostats and mindset when it comes to money. Poor people do not have the financial thermostat to manage a large amount of money, that is why the moment they win a lottery of $1 million for example, they spend it away just as easily the way they obtain it.

A rich person on the other hand, has the financial thermostat to manage a large amount of money, thus, when they manage to make their first $1 million, they spend even more effort than before to try and preserve the money and grow it even further through the owning of assets such as stocks/mutual funds/real estate or businesses.

So how do I go about paying myself first?

How paying yourself looks like

When I get money inflows from my side hustles or dividends/capital gains from selling stocks, I separate the funds into 2 different accounts. My Standard Chartered Jumpstart is my spending account which I will allocate just a small amount each month for expenses purposes.

Right now as I’m currently schooling, I do not need thousands in my spending account so I only keep a minimal amount which is my average expenses per month. I am also using DBS Livefresh Student Credit Card to build up my credit score and managing a small amount of debt which helps to build up my financial thermostat to deal with larger amount of assets/liabilities in the future.

As for my savings/warchest fund for me to grow my wealth, I put it into Singlife to earn the 2.5% which is basically free money and it acts as a warchest for my investments. Although they are changing it to 2% in November, it is still higher than any other banks so this will be my main savings vehicle.

Currently, 85% of my net worth are allocated to stocks/ETFs to grow for the long term. The remain 15% is kept for short-term liquidity purposes. This allocation is specific to me and my own spending habits only so you may differ in terms of how much you require and how much you allocate to your wealth building. (through owning assets)

By doing this, you guarantee that money are being socked away from yourself and building this habit from young can help ensure that there will be no impulse buying tendencies since you are constraint by the amount you set up for yourself to spend.

The more you can free up your cash for wealth building purposes, the faster you can attain financial freedom. If you currently earn $10,000 per month, aim to save at least 50% and put it into a warchest purely for investments to grow your wealth in the long run.

People often give the excuse “I will invest when I earn more next time” are basically like an obese person saying “I will exercise once I lose some weight.” So stop giving yourself excuses not to start because time can either be working with you or against you.

Start Now

Take actions now and change your money management habits and pay yourself first. For me, adopting this habit has allowed me to increase my net worth over the past few months especially since the Circuit Breaker which allowed me to widen my savings rate and supplement my warchest to deploy into investing. The important lesson here for myself is that in order to grow my wealth in the long run, I have to remain disciplined in my spending habits and to always pay myself first before doing anything else.

Always keep in mind what are assets and what are liabilities, the more asset we own while we are young, the more the asset will return us in the long run. The more liabilities we own, the poorer we will be in the long run.

There is a reason why the rich keeps getting richer and the poor gets poorer and the fact is the rich holds assets while the poor holds liabilities. These are principles almost every personal finance book will mention.

Rich people don’t get rich by putting their money in the bank, instead, they buy assets such as stocks or real estate to compound their wealth in the long run. Out of Jeff Bezos’s multi billion net worth, only a small portion is actually in cash and the rest of his net worth are his shares in his own company Amazon as well as other assets.

So are you paying yourself first? If your bank account has remained stagnant over the past few months or years, it’s time to switch that bad habit away and start by paying yourself first.

If your pay increased to $5000 from $3500, don’t have the urge to spend more than before, instead, pay 50% (or more) to yourself first, so you limit the amount you have for your expenses and liabilities, while the rest are put into assets which pays you in the long run.

Seedly App (Expenses Tracker)

I currently use the Seedly app to track my monthly expenses, my inflows and outflows and my overall net worth since I can input my bank accounts, insurance and investments into the app to keep track and see the big picture. It is an effective way for me to manage my money and to have full control over money. Do check it out if you are interested.

Thank you for reading this long post which may be pretty whiny or sound like I’m nit picking at you. But paying yourself is a really powerful concept which I adopted and has helped me to improve my money management skills and keep more money and increase my net worth. I hope you take away something from this post and if you are curious to learn more, you can learn about these concepts in greater detail through books such as Rich Dad Poor Dad and Secrets of the Millionaire Mind. Both are extremely great at brining across the importance of personal finance and having a strong and powerful mindset.

The concepts I mentioned above are inspired by the 2 books and it always reminded me to be disciplined and stick to the long term. If you have any more questions, don’t hesitate to reach out to me here.

The Current State of The Stock Market and My Game Plan Ahead

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A lot has been going on in the stock market since the March Market Crash. With the ongoing pandemic and the upcoming US Presidential elections, the stock market has seen volatility levels going up once again. Whether the market goes up or goes down, it is up to the individual investors’ decision which should be based upon your own risk profile, time horizon and why you are investing in the first place.

“Know the enemy and know yourself; in a hundred battles you will never be in peril”

-Sun Tzu, Art of War

The past few weeks had been pretty busy and hectic as submissions and assignments piled up while CCAs and work commitments also started to make me squeeze out more time to commit, which is also why I am unable to update the blog as often. I sincerely apologise for the lack of updates which you precious readers have eagerly been waiting for. As always, if you have any questions, feel free to drop me a message here.

Updated 8 Oct 2020

Investor sentiments were largely neutral with a slightly bullish outlook based on the Fear and Greed Index which uses different metrics to determine the overall sentiments of the stock markets.

This metric also indicates that majority of investors are either nearly invested or still sitting on the sidelines waiting for a potential crash which may or may not come as no one has the crystal ball to tell the future. Personally, I am more than 80% invested into the market and have a mini warchest ready to be deployed should there be a 10% correction or more. I have a watchlist of stocks which I have done due diligence on and would gladly enter positions should the price target be favourable near the intrinsic value based on my own valuations.

S&P 500 as of 9 Oct 2020

The S&P 500 Index, which represents the 500 largest companies in the USA have seen a bull run from the March low, recovering fully from the crash and even went on to hit all time highs in the beginning of September.

Majority of these gains lie in the resilience and booming of tech stocks which were largely unaffected by the Covid-19 pandemic . The Work-From-Home phenomenon largely benefited tech stocks such as Amazon, Netflix, Zoom, DocuSign and many more. If you were to look at the NASDAQ-100 Composite Index, gains were even more impressive due to how heavily tilted it is towards tech stocks and the lack of financial stocks.

With the Fed maintaining interest rates near zero, and its push for inflation to maintain at a range of 2%-2.5%, it was a hit to the financial sector. Net interest margins are severely affected and this is good news to borrowers but a bad news to banks and savers. In the near term, the finance sector won’t be recovering any time soon due to the global interest rate environment. Even government bond yields are at an all time low. The most logical decision right now is truly to invest in the stock market provided you are putting this capital to work for the long term and not for any short-term liquidity purposes. You can gain exposure into the NASDAQ-100 Composite Index through the QQQ ETF which is one of my best performing ETF and best ETF out there.

You can gain exposure through the ETF through Syfe’s Equity100 as well and if you wish to find out more, you may want to check out the article here. I do monthly updates on my Equity100 portfolio, and should you be interested in Syfe, you can check out the article here as well. (Scroll to the bottom of the article for Syfe referral code which gives a free $10-$100 bonus when you invest with Syfe!)

Meanwhile, Singapore’s very own Straits Times Index has been lagging behind considerably which caused a lot of disappointments among retail investors including myself. Since the March Crash, the index was largely trading sideways, with substantially lower volume as compared to the US market which shows an overall disinterest in the Singapore Stock Market.

If you have not known already, Singapore’s stock market is largely known for its dividend/income portfolio style investment and not a place where you can find multi-bagger stocks like you do in the US market. While there are exceptions that are solid growth stocks in Singapore such as AEM or iFast, their prices have already hit overvalued territory and there may be limits to its growth due to Singapore’s limited market size.

Nonetheless, Singapore’s stock market do have its solid stock counters in the form of the Big 3 banks (DBS/OCBC/UOB) and S-REITs which are world famous for their dividend yield and resilient balance sheets.

Due to the lack of tech stocks and majority of the index filled with old world industry stocks such as SPH and Sembcorp and a tilt towards the big 3 banks, the index was lagging behind world indices and severely underperforming. With the current low interest rate environment, it makes the index even more unattractive due to its over-emphasis on bank stocks as mentioned above.

So what do I do now?

% SG Stocks % US Stocks
25%75%
Current Investing Beanstock Allocation (100% Equities inclusive of Syfe Equity100)

As of today, I have been shaving my allocations towards Singapore stocks by cutting my losses on STI ETF (ES3), sold off DBS (D05) for a decent +18% profit, added US counters with the recycled capital from the Singapore stocks and bought into counters such as Apple Inc, Slack Technologies, Alibaba, Salesforce and Pfizer. It was just astonishing to see US counters appreciate at a much faster speed as compared to Singapore counters due to the higher volumes and sentiments in the US market as compared to Singapore, and counters which were bought just 2 weeks ago such as Slack Technologies is already up +20% now… Insane!!

You can view my portfolio in greater details here.

Broker Used: Firstrade

Oh yes, for those who are wondering which broker I use to buy US stocks, I am currently using Firstrade which is a zero commissions broker and other benefits such as free Morningstar Premium for US stocks. It has a brokerage history in the US for over 40 years, hence it is even more credible if you compare to brokers such as FSM or Tiger which in fact still have commission fees incurred per trade which really eat into returns in the long run. If you wish to find out more, you can read an article I wrote on it here.

Portfolio Returns (Red) vs STI ETF (Yellow) Year-To-Date (12 October 2020)

For readers who are curious about how I decide whether to enter into a new position, I personally conduct fundamental analysis (value investing principles) and review growth trends before deciding whether I want to buy the stock. If the fundamentals are good, I then apply some technical analysis to enter the position at a favourable price to minimise my downside and maximise my upside. This is what Warren Buffett would call having a ‘Margin of Safety’ when it comes to value investing for the long term.

Some of my favourite technical analysis indicators are RSI, Stochastic Oscillators, MACD and Bollinger Bands, which I found to be mostly accurate when used together for my price entries. Technical indicators can not only be used exclusively by traders but long term investors as well, as long as you know what you own and why you own it, understand what you are doing, it will help to extend your margin of safety and take a calculated risk.

Price is what you pay, Value is what you get

-Warren Buffett

When I buy a stock, I aim to hold it for as long as possible and only sell if fundamentals or the growth stories were to change due to bad corporate governance or related reasons. If you only hold a stock for months or even just 1 year, that is not investing, that is either speculating (if you don’t know what you’re doing) or a trading play for quick profits. (make sure to set your stop losses if you trade)

Right now, I have a warchest ready to be deployed for any potential pullback in stock prices on the counters in my US watchlist. If stock market continues to climb, I will be glad to hold on to my counters and collect dividends as I wait for the opportunity to enter again. This will be the strategy for my DIY portfolio.

As for passive investment, I will continue to Dollar-Cost Average into Syfe Equity100 portfolio every month regardless of market movements. If markets were to crash, I will buy in more than average as it is a bargain for long term investors. View my latest Syfe portfolio update here.

TL;DR Syfe Promo Code

For people who are interested to invest into Syfe and wants to open an account, you can use the promo code below as a bonus.

Promo Code: SRPTH8LK3

$10 bonus for the first deposit of $500 (or more)!

$50 bonus for the first deposit of $10,000 (or more)!

$100 bonus for the first deposit to $20,000 (or more)!

Note: Bonus is applicable on the first deposit made only. The bonus will be automatically credited to your portfolio and invested along with your existing investments

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

Syfe Equity100 Portfolio Update (September 2020)

Hello readers!

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As promised, I will be keeping a record of my Syfe Equity100 performance on a monthly basis. As I’ve mentioned before in my  post, Syfe will become a “managed funds” portion of my entire portfolio. I have a long time horizon with Syfe going forward and will be investing into it for at least 10 years

Syfe as a Robo Advisor, is also an effective and affordable way for me to invest since I don’t need a huge upfront capital to invest and can just pump in any additional spare cash into it.

It helps me to diversify into US equities as well as international stocks exposure, which is always a good thing since I get more diversification aside from my DIY portfolio. I started the Equity100 portfolio on the 5th of July

Here’s my monthly Equity100 Summary:

Equity100 Portfolio (As of 30 September 2020)

Thank you readers who used my referral code! A good deal of returns thus far are a result of referral bonuses from readers so I’m really grateful for all your support and for having faith in me and my articles! 

SYFE EQUITY100

Total invested amount: $3500

Current Value: $4879.85

Portfolio Return: +39.42%

Total contribution this month: $1580

Fees Paid: $2.21

Previous Months Portfolio Updates

July 2020: S$1217.56 (+10.69%)

August 2020: S$2565.71 (+35.22%)

September has been a rather volatile month due to the build-up towards the US presidential election as well as fear of the tech bubble burst sending shockwaves through the stock market in the early weeks of September. While the stock market may look overvalued at the moment, I will still invest regardless of whether a crash/correction is on its way. Switching to a long time horizon and you will understand why a crash will be insignificant in the long run.

My strategy is to invest at least $200 into this portfolio monthly and more if I have extra cash from my side hustles/dividends of the month.

Current Composition (As of 30 September 2020)

I held steadily during the March Crash (-33%) and I will likewise do the same thing going forward and buy in aggressively if stock prices were to retreat. During the 10% market correction in early September when investors were fearful, I pumped in an additional capital up to $1580 this month instead of the average $200 I put in every month. The key is to always take advantage of market declines to buy in at a bargain but make sure you are using spare funds you can afford to invest for the long term (at least 5 years or more)

I will continue to value add and promote platforms I personally use and recommend going forward.

Past 180 Days Performance *30 Sept 2020 of Equity 100 vs S&P 500, Total World Market and Straits Times Index. (From my StocksCafe)

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks and track my portfolio performance against various indexes as shown above. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

Syfe Promo Code

For people who are interested to invest into Syfe and wants to open an account, you can use the promo code below as a bonus! 

Promo Code: SRPTH8LK3

$10 bonus for the first deposit of $500 (or more)!

$50 bonus for the first deposit of $10,000 (or more)!

$100 bonus for the first deposit to $20,000 (or more)!

Note: Bonus is applicable on the first deposit made only. The bonus will be automatically credited to your portfolio and invested along with your existing investments

Thank you for reading and happy investing!

Diversification: Are you truly diversifying or are you “diworsifying?”

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Do not put all your eggs in one basket.” We hear this phrase all the time when it comes to investing. Although diversification is a good thing for most investors since it reduces concentration risk and allow the investor to sleep soundly at night in most cases.

However, diversification and all the jargons that Business Schools teach today (eg. Capital Asset Pricing Model, Modern Portfolio Theory, Random Walk Theory, Portfolio Diversification etc) are some of the most misguided concepts in the real world of investing. That is not to say that what the professors are teaching are bullsh**t, but merely that these are concepts and theories which help students better understand the world of finance and investments.

Wide diversification is only required when investors do not understand what they are doing.

Warren Buffett

Most investment professionals would agree that although diversification is no guarantee against loss, it is a prudent strategy to adopt towards your long-term financial objectives. However, thinking further on the subject, I wonder if there isn’t such a thing as over-diversification or even diworsification?

Diworsification

This term was first coined by legendary investor Peter Lynch who managed the Fidelity Magellan Fund back in the 1980s, which earned an annualised return of 29.2% during his time running it where it returned more than twice what the S&P 500 earned during that time. In his book “One Up on Wall Street”, the term diworsification has morphed into an actual term used to describe inefficient diversification as it relates to the entire investment portfolio.

Owning too may investments can confuse you, increase your investment cost, add layers of required due diligence and lead to below average risk-adjusted returns.

Sometimes, it is simply better to focus fire on a few great investments and watch them like an eagle instead of spreading your positions too widely that it becomes counterproductive. This is something I am guilty of as well since every new position entered meant further due diligence and research on a consistent basis to make sure the investment remains sound and has good fundamentals.

For example, a retail investor may decide to diversify into a portfolio of different asset classes which includes: Equities, Bonds, Gold for example. Without first understanding the purpose of each asset class and how it affects portfolio performance, the investor faces the biggest risk of not understanding what he/she owns and instead blindly diversifying for the sake of it.

One needs to understand that in the long run, equities will offer the highest risk adjusted return out of any asset class due to its underlying being businesses and businesses grow over time. The purpose of bonds and gold then is act as a hedge and to reduce the downside risk involved with equities investing over the short to medium term horizon. (Which are often volatile and may fluctuate due to market sentiments in the short run.)

However, many beginner investors fail to realise that bonds and gold weigh down portfolio returns in the long run since bonds are highly dependent on interest rates as well as the underlying rating of the bonds while gold simply does not have any intrinsic value in the first place and is merely a safe haven asset that investors diversify to hedge against stock market uncertainty in the short run.

If you take a good look at the chart above, you will quickly realise that equities (stocks) have the most superior returns over the long run while other asset classes such as bonds, treasury bills and gold have mediocre and subpar returns. The worst case however is to hold 100% cash and let inflation eat into your purchasing power as you can see in the chart as well. The purpose of cash is to meet short term liquidity for expenses and setting up an emergency fund. Excess cash should always be put to better use and not be sitting in a bank collecting dust.

Most people do not look at the big picture and would often focus on the short term since it is part of human nature to derive pleasure from instant gratification. If you are still wondering why the rich are getting richer and why the poor are getting poorer, the quote below says it all:

Rich people acquire assetsPoor and middle class people acquire liabilities, but they think they are assets.

Robert Kiyosaki

The big mistake that poor and middle class people make, according to Kiyosaki (Author of Rich Dad Poor Dad), is spending their lives buying liabilities instead of assets.

That is not to say I am discriminating against anyone in particular, but instead, just referencing from the book and understanding the difference between what an affluent person’s cashflow pattern is like in contrast to that of an average person.

*Sidenote: Rich Dad Poor Dad is a really insightful book and is a highly recommended read. It is one of the best personal finance book I’ve read thus far.

Cashflow of different groups of individuals (Rich Dad Poor Dad)

Without diving into another topic, it is important to understand the purpose of why you are diversifying and the goal of doing such a diversification, if not, you are merely diversifying due to ignorance.

Another common misconception when it comes to diversification is this:

  1. Owning multiple ETFs which overlap each other. (Redundant) (eg QQQ + VGT or VOO+SPY)
  2. Have too many individual stock positions in the same industry (Concentration Risk)
  3. Diversifying due to lack of knowledge of what to do (Ignorance Risk)
  4. Diversifying because it is the “right thing to do” (Following the crowd)

All 4 misconception are due to the lack of understanding + lack of due diligence of the stock market.

Firstly, ETFs are in itself diversified in nature as they own a basket of stocks. Buying too many ETFs which serves the same purpose (eg as a core holding) does not improve overall efficiency and returns of the portfolio and may instead result in redundancy.

Second, if you buy into 5 different companies which focuses on Cloud Computing for example, (eg Snowflake, Salesforce, Slack, Netapp, Datadog) you are still facing the systemic risk of owning equities as well as concentration risk of owning tech stocks in general. Owning 5 different companies from the same industry can lead to enormous amounts of required due diligence, and performance that simply mimics an index, albeit at a higher cost, which means lower returns in the long run.

Regardless of an investor’s magic number of stocks, a diversified portfolio should be invested in companies across different industry groups and should match the investor’s overall investment philosophy, which means that everyone’s portfolio will be slightly different, even if one is of the same age group and risk profile. Hence it is important not to blindly copy another investors portfolio as you may not have the same objectives/capital/time horizon as the other person.

So ask yourself, do you fall into any of the category above? If you do, will you take the necessary actions to stop diworsifying and start diversifying with a clear purpose and goal? Personally, I am constantly reminding myself to only buy what I know and understand and not chasing after hot stocks even though I also fell victim into buying hyped up stocks. (Only a small percentage dedicated to speculative plays though.)

Conclusion

Diversify with a purpose, and avoid listening to the crowd over what to do. Your own wealth and money depends on you and your own due diligence alone. So ask yourself, are you diversified or diworsified? If you are the latter, what are you going to do to solve the problem? If you have any questions, feel free to leave a comment and I would be glad to help. As always, thank you for reading all the way to the end and I hope you are able to learn a thing or two from my blog.

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.

Changing Of Strategy After Outperformance of US Stocks

The past few weeks has been a roller coaster ride for the stock market. We saw the market hitting all time highs at the end of August and then a panic selloff which resulted in a market correction. The stock market is irrational and those who cannot control their emotions will lose out and fear investing for a long time.

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Is this a bubble bursting? Or is it just a healthy retracement of the stock market? No one knows. Instead of guessing what is the outcome (which is really pointless), just stay invested and avoid using your emotions to try and time the market, because you will fail 99.9% of the time if you do so.

Regardless, during the August bull run, I took profits and cut some losses of my Singapore positions such as DBS and Singtel based on my own due diligence. I was lucky to have exited some positions since you knew what happened next.

I bought into the correction using the fresh funds from the Singapore stocks, averaging in on the 2nd and 3rd red days respectively, switching from defensive Singapore counters to aggressive USA counters. On the red days, I bought in stocks aggressively which turns out to be a bargain.

Below are some counters which I entered during the decline as well as the entry price:

CountersEntry Price% of Portfolio
TeslaUSD417.410.05%
IntelUSD49.9555.32%
PfizerUSD36.1484.62%
Alibaba Group Holdings ADRUSD271.733.66%
ARK Innovation ETFUSD90.032.30%
ARK Fintech Innovation ETFUSD39.441.50%
Taiwan Semiconductor ADRUSD78.6271.59%
As of 12 September 2020

After adding some Tesla shares on my own due diligence , Tesla has risen to become my 3rd largest holding and the price fluctuations of the market has indeed been a roller coaster ride. (Went from +8% to -21% to now -10% in a matter of days.)

Although returns now may be great, I am totally fine with it since I am looking long term and I believe these positions are poised to grow exponentially in the long run. One needs to understand that price fluctuations and market volatility are part and parcel of investing in the stock market, and it is mostly driven by market sentiments in the short run.

I will not dive into the individual tickers as to why I invested into them, since I have done my own due diligence and researched thoroughly before making any investment decisions. I may write about individual tickers and why I invested into them such as the one I wrote on Berkshire Hathaway and Tencent.

For those who are curious, I am using Firstrade Securities as my US stocks broker since it offers free commissions trading and a myriad of other benefits which you can find out more in this article here. Definitely a great article to check out if you are interested to invest in the US stock market.

Overall, the US portion of my portfolio gained +23.39% this year while the SG portion of my portfolio is still sitting in an overall loss position of -3.19%. Not too bad considering STI is still down -15% this year. (Which means I am currently beating the market :b)

With significant outperformance of the US equities, (be it my own stock pick or Syfe Equity100) I decided to make a few adjustment regarding the allocation weightage between SG stocks (defensive) and US stocks (aggressive). I am shifting away from dividend investing and with the change of my portfolio, it is now more capital gains focused and overall dividend yield sits at 2.41%. (was 5.4%)

Singapore’s very own Strait Times Index is also underperforming compared to the rest of the market around the world.

Screenshot from my StocksCafe

As you can see here, while the S&P 500 ETF and Total World Stock ETF has already became positive, STI ETF (Singapore) is still negative and in fact still in bear market territory. Those that invested into the STI in March vs those that invested into S&P 500 in March will be sitting on very different returns respectively. (With the latter probably laughing at the former)

Moving forward, I will shift my focus more onto US stocks albeit the higher levels of volatility and forex risk involved when it comes to US stocks. In the long run, US stocks will most likely give me a higher return as compared to SG stocks.

On the Singapore side, I recently averaged up into Capitaland Mall Trust (C38U) given it’s good long term prospect as well as the incoming merger with CapitaLand Commercial Trust . With a strong parent backing the REIT (Capitaland), the newly merged entity Capitaland Integrated Commercial Trust will become the largest S-REIT by market capitalisation, overtaking Ascendas REIT and also to become Asia Pacific’s second largest REIT, it presents a good chance for potential opportunities to enter as this is good news for the REIT. So in this instance, I will still buy into SG stocks if a good opportunity arises as a recovery play, if not, my main focus will be on US stocks and emphasis on growth stocks.

Although there are a few SG counters which presents a good opportunity as growth stocks with good capital gains potential such as AEM, Micro Mechanics and iFast. Unfortunately, these counters have already been priced in and I believe that they are overvalued and may have limited upside potential. USA being a more mature and more sophisticated market have much greater room for growth given its size, economy and consumer base.

That being said, you still need to do your own due diligence and research properly on the stock tickers you are interested in. People spend so much time researching on which computer to buy, which potato chip to eat and which restaurant to go, but when it comes to stock, zero research is done and most people would rather pick what’s popular and hot right now in the matter of seconds.

Bonus segment

Investing Beanstock’s 10 Commandments of Value Investing
  1. Always look at fundamentals (Determines intrinsic value)
  2. Stay within your circle of competence (If you don’t know, don’t buy)
  3. Always have a margin of safety (Measure your upside potential and downside risk)
  4. Diversify but don’t do it for the sake of diversifying
  5. Don’t speculate based on price
  6. Have a long term horizon (5 Years or more would be great)
  7. Buy undervalued good business, not cheap and useless business
  8. Don’t develop feelings for your investments (Know when to sell)
  9. Ignore market noises
  10. Always stay invested

It is far better to buy a wonderful business at a fair price than to buy a fair business at a wonderful price

Warren Buffett

Just want to leave it here: Buy a fundamentally good business when it is fairly valued or undervalued. Don’t buy a stock just because it looks cheap. (eg SIA)

The price of a stock alone tells you nothing at all and only helps in speculating. If you buy stock X at $5/share when it was $10 a few months ago, does it mean it’s a good time to buy? What happens if it drops to $2/share after you went in? Then drop to $1/share, are you gonna sell it? Think about that.

If you understand how the business works, even if a good business drops to $2/share, you won’t be afraid to sell since you know it will eventually reach its intrinsic value but you will have to be patient.

Most times, investors do not have the holding power to hold on especially in times of high market volatility and would rather try and time the market. They exit the market during a 10% decline, sit on the sidelines and only buying back in when the market tells you that the next bull run is here. (Buy High Sell Low phenomenon)

Are you gonna let Mr Market decide when to enter and when to sell? Are you going to follow the crowd or go against the crowd? It is up to you to decide. If everyone buys the same stock, what are the chances it can still go up another 10%/20%/50% or even 100%? If every single investment banks and fund houses are buying into the same stock, what are the chances of a selloff when market conditions are bad?

Your goal here is to find your own undervalued stocks and hold them for the long term. If not, you are better off just buying into index ETFs and get market returns (before fees) and just do it at an automatic and consistent basis. (Dollar Cost Average)

This way, you can at least stay invested for the long run without ever trying to time the market. With technological advancement these days, you can do so at a very low cost through a Robo Advisor such as Syfe. I wrote a few articles regarding Syfe which you can check out here. I wrote an insight into Syfe’s Equity100 Portfolio here and the updated performance of the portfolio in August here. I also wrote an article comparing Syfe and Stashaway and cover which will be more suitable for you based on your capital, risk profile and time horizon and you may want to check it out here.

So my last question to you is: Are you invested? Are you going to buy into US stocks and take opportunity of the market correction/bubble/retracement? Or are you afraid of the market volatility and rather shy away from the market? I leave this question for you to think and decide for yourself.

TL;DR

Syfe Promo Code

For people who are interested to invest into Syfe and wants to open an account, you can use the promo code below as a bonus.

Promo Code: SRPTH8LK3

$10 bonus for the first deposit of $500 (or more)!

$50 bonus for the first deposit of $10,000 (or more)!

$100 bonus for the first deposit to $20,000 (or more)!

Note: Bonus is applicable on the first deposit made only. The bonus will be automatically credited to your portfolio and invested along with your existing investments

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

University workload is really piling up and it is becoming increasingly difficult to churn out articles on a weekly basis but I will still try my best to come up with interesting and insightful articles that can value add every single one of you.

As always, thank you for reading the article. I am sincerely thankful for the support and faith and trust in my articles and hopefully I can always value add to every single reader whether you are a beginner or an experienced trader/veteran in the stock market. If you have any questions, do reach out to me and I would love to talk with you.

What I Use To Purchase US Stocks: Introducing Firstrade

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I have been getting a lot of inquiries from readers lately about the brokerage platform I use to purchase US stocks, and I thought it would be great to address this topic here for easier future reference and not having to repeat over and over for friends or readers with similar questions.

The most common question asked is this: How do I purchase US stocks and how do I track my portfolio?

US Stocks Purchase

For purchasing of US stocks, I have used different platforms before when I first started, such as TD Ameritrade, Saxo, Tiger Brokers and now Firstrade.

So why Firstrade?

I first discovered Firstrade when I wanted a brokerage that can invest in US equities and a foreigner-friendly platform with easy to understand interface and a long brokerage history. (40 years)

Another reason why I was unsatisfied with the local brokers such as Saxo or Tiger Brokers is that they still charge commission fees per trade. This broker is also not widely known in Singapore since popular finance blogs like Seedly, Dr Wealth, Financial Horse etc have not covered this broker before (probably due to lack of marketing by the broker). This is really a hidden gem when it comes to investing in the US market which I regret not finding earlier.

Without diving too much into details, , let me illustrate the Pros and Cons of Firstrade and what enticed me to use it for long term investing.

Best ForProsCons
New Investors looking for simple user interfaceFree access to Morningstar trading reports and other news in both English and ChineseDoes not have sophisticated technical charting tools for in- depth technical analysis
Chinese users looking for research tools in ChineseSimple platform easy enough for even complete novicesNo access to other markets other than the US
Mobile traders/investors wanting a modern and secure app trading platformSecure mobile app with enhanced security and trading features
Cost-Conscious Investors (like me) wanting $0 commission fee tradingLightning Fast Trade Speed and Execution of Order. (I think it’s less than 0.5 second.)

1. Firstrade Brokerage Fees

There’s nothing better than free trades — and Firstrade specializes in offering some of the lowest rates of any broker online. You’ll pay $0 in commission when you buy or sell stocks, ETFs and mutual funds. Firstrade is also one of the only brokers to offer $0 commissions on options trades as well. The only close competitor I can think of is TD Ameritrade, and this is the closest platform to Robinhood that a Singaporean investor have access to.

Stocks and ETFs$0 commissions
Bonds$0 on most US Govt Bonds
Mutual FundsAccess to 11,000 Mutual Funds, All Commission Free
Options$0 commissions
Account Minimums$0

Firstrade Fees Rating:

Rating: 5 out of 5.

My personal experience so far: I have tried buying just 1 share of US stock and yes, it does not incur any fees. This gives me the flexibility of buying and selling shares and not incurring additional fees other than the stock itself. This saves me a lot of monies in the long run as many know that fees can eat into returns easily if you are not careful. Oh yes, and the trade execution is almost instant. The moment you click Buy/Sell for a Market Order, it executes almost immediately. (compare this to SG brokers, you will appreciate how fast a trade execution is)

2. Firstrade Usability

One area where Firstrade shines in my opinion is its organised and simple desktop trading platform, which is beginner-oriented and easy to master. When you log into your Firstrade account, you’ll see a summary of your current holdings, how your available balances currently perform and a quick summary of the market at large. 

From your desktop platform, you can search for stocks, ETFs and mutual funds by symbol, place orders and track prices. Though charting tools are pretty basic, casual traders and beginners will love the fact that the platform is not clustered with clunky tools and screeners which I won’t use, something I personally do not like on other platforms such as OCBC Securities which is too confusing in my opinion. You can also view tax documents, research, education tools and more straight from your home page.

Offering a one-stop-shop for everything an investor could need, Firstrade’s desktop trading platform is easy to navigate, intuitive and easy to use. 

Upon opening the account, I was able to navigate through the platform with ease and able to create a watchlist of stocks almost immediately. During market hours, the stocks prices are shown in real time which allows for proper execution of a trade on the desktop platform.

Firstrade Usability Rating:

Rating: 5 out of 5.

It is intuitive and easy to use. It is much easier to navigate when you compare to local brokers like DBS Vickers or FSMone. Tiger Brokers also has a pretty intuitive platform but their fees are not zero dollars like Firstrade. So in this aspect, Firstrade is still the best option out there.

3. Firstrade Research & Education

Firstrade also offers a wide range of education and research tools you can use to inform and improve your investing. One of the most prominent and huge pull factor is the fact that Firstrade offers investors who use their platform with permanent, free Morningstar reports for US stocks. (Yes, finally you can see the fair value estimates)

Actual Page from my Firstrade account

Morningstar Reports

For those who don’t know about Morningstar, it is basically a well-known stock and market analysis firm that produces asset reports detailing company characteristics, including changes in financial direction, market capitalisation, dividend yield and more. Morningstar reports are easy to read and understand — even for very new investors/traders and those still in the early stages of learning how to evaluate a stock or fund.

Firstrade offers premium Morningstar reports free of charge to all investors who have an active brokerage account. Market reports for major stocks are updated daily and are available in English, traditional Chinese and simplified Chinese.

When I first found out about this feature, I was hooked. I have been viewing free Morningstar reports for the longest time and contemplated paying for the full version just to see the entire report and fair value estimates. Well, now I don’t have to do that anymore, I can read any reports all I want on Firstrade.

Basic Education for Beginners

Are you a beginner investor trying to grasp basic concepts of investing in the stock market? If so, you may want to begin with Firstrade’s basic market education center. The education center includes introductory articles and videos on basic investing topics. Some topics include general information on stocks, the differences between order types and explanations of some common investing abbreviations you’ll see throughout the site. Though the information in the education center tab is a bit basic, brand-new investors will appreciate its simple language and easy-to-follow formatting.

All research and education tools from Firstrade are available in English, traditional Chinese and simplified Chinese. Research and education tools are free to Firstrade account holders.

Firstrade Research and Education Rating:

Rating: 5 out of 5.

Firstrade Mobile App

Firstrade’s mobile app mirrors the platform’s simple layout and intuitive design. Even new investors will quickly master Firstrade’s layout and make trades with ease.

Personally, I only discovered about the mobile app a few weeks after I used the desktop platform for investing. Little did I realise that the mobile app is so sleek and easy to use. I have since switched to the mobile app for all my trades wherever I am.

I can view the stock prices while on commute and even execute a trade if the price is right. Below are some of the key features of the mobile app:

Intuitive Order Placement

Placing orders on Firestrade’s app is fun and easy. Just search for the stock or fund you want to buy, enter the number of shares you’d like, select your order type and place your order. You can view a complete list of pending orders from your app home screen and you can quickly edit or cancel orders by swiping on your pending orders.

Simple Account Funding

Firstrade makes it easy to connect and transfer between your bank account and your brokerage account. Firstrade’s app offers native connectivity with over 2,000 banks, including HBIC, Santander, Bank of America, Chase and more. From my own experience, I remit my SGD to USD using Standard Chartered Bank ($0 remittance fees!) and it usually takes around 1 to 2 business days for the wire transfer to show on Firstrade.

*For foreign investors like us, we need to select International Transfers and then select Wire Transfer. Copy and paste all the information on Firstrade platform and remit it using Standard Chartered Bank Singapore. I don’t know about other banks, but Stan Chart has zero remittance fees when I do wire transfers to Firstrade.

Landscape mode. Want to view a longer price change history of a certain stock or fund? Flip your phone to landscape mode to view a longer candlestick chart with ease.

Firstrade’s mobile app also offers enhanced security features, including 2-factor authentication, facial recognition technology and thumbprint scanning to ensure that you’re the only one who can access your account — even if your phone is lost or stolen. 

Firstrade’s mobile app is available as a free download for both iOS and Android platforms. 

Firstrade Mobile App Rating:

Rating: 5 out of 5.

Overall really impressed with the app. It is pretty modern and very responsive compared to local broker apps such as OCBC Securities or DBS Vickers. Tiger Brokers is a close competitor when it comes to UI/UX but overall experience still goes to Firstrade. (Trade execution is blazing fast and zero fees incurred which I am still amazed about.)

Firstrade vs. The Competition

Although it is not as well known as competitors like Robinhood or Interactive Brokers, Firstrade is a powerful and affordable brokerage platform. The broker’s desktop trading platform is easy enough for even total beginners to use. Both new and veteran investors will appreciate Firstrade’s unbeatable $0 commissions, as well as its free access to research and Morningstar reports. The corresponding mobile app is also equally as comprehensive, with an intuitive and streamlined interface which I have grown to love and depend upon.

The only real competitor when it comes to zero fees is TD Ameritrade. But one con of TD Ameritrade is the sign up process is extremely troublesome with many forms to fill and too many jargons which can confuse beginners. When it comes to trading fees and usability, nothing really comes close to Firstrade right now.

I am not sure why not many investors in Singapore uses Firstrade but maybe it is due to the lack of marketing and presence into Singapore. They are a reputable broker in the US and have been in the industry for more than 40 years now. It is truly a hidden gem in the investing world.

Firstrade Overall Rating vs Other SG/Overseas Brokers for Singaporeans:

Rating: 5 out of 5.

Unless Robinhood comes to Singapore, I don’t think I will be ever be switching my brokerage platform when it comes to investing in US equities. There is simply nothing in the market that comes as close or as good as Firstrade. Zero commissions fee is really a blessing when it comes to investing and the Morningstar reports and trade execution speed are truly the icing on the cake here.

Sign-Up Process

Sign Up is really simple too: Just click on International Account (For Singaporeans), upload your passport for identification,NRIC (Foreign Tax Number), fill up the information, Sign and done! Your application + W8-BEN form will automatically be submitted.

Wire transfer Information to fill up is here

So there you have it! Firstrade is the only US stock broker I use and I am an extremely happy customer of the platform. I highly recommend this broker for US stocks investing/trading.

*Point to note: Firstrade being a broker transacting US equities, all equities will be subjected to the typical 30% dividend withholding tax for foreigners. (This is true for all brokering firms dealing with US-based equities.)

Also, do note that withdrawals out of Firstrade will be subjected to a $50 withdrawal fee and if you want to do margin trades, it will not be $0 commissions.

Investing Beanstock Broker Recommendation:

10/10

If you are not using Firstrade to invest into US equities, you are short changing yourself!

Interested in signing up Firstrade platform? Click on the banner below to sign up!

Open your account here

Customer Support Contact can be found below. If you have any questions, you can reach out to Firstrade and they will reply really quickly. So far they were able to get back to me in a few hours and around 1-2 business days for email.

Stocks and Portfolio Monitoring

Other than Firstrade, I am also using Stockscafe for a deeper analysis of my stock portfolio. Stockscafe is built locally in Singapore by a Singaporean investor, so it will be intuitive for a retail investor to navigate since it is built by a fellow retail investor.

Stockscafe shows you your performance in relative to the index, your portfolio’s beta, projected dividend yields, and a tonne of other useful features I cannot live without such as Risk Manager, Stock Screener and Price Alerts.

You can also view my portfolio as well as many others so you can compare your own performance with other investors as well. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

Bonus: Other tools/platforms I use:

SG Stocks: DBS Vickers CashUpfront (To Buy) and FSMone (To sell)
US Stocks: Firstrade (ZERO FEES BEAST)
Stock monitoring: Yahoo Finance
In-Depth stock monitoring: StocksCafe, Simply WallSt, Morningstar Premium via Firstrade
US stock news: Yahoo Finance/Bloomberg/Seeking Alpha
Expenses Tracking: Seedly App
Overall Personal Finance: Seedly App

Syfe Equity100 Portfolio Update (August 2020)

Hello readers!

As promised, I will be keeping a record of my Equity100 performance on a monthly basis. As I’ve mentioned before in my  post, Syfe will become a “managed funds” portion of my entire portfolio. I have a long time horizon with Syfe going forward and will be investing into it for at least 10 years

Syfe as a Robo Advisor, is also an effective and affordable way for me to invest since I don’t need a huge upfront capital to invest and can just pump in any additional capital into it.

It helps me to diversify into US equities as well as international stocks exposure, which is always a good thing since I get more diversification aside from my DIY portfolio. I started the portfolio on the 5th of July.

Here’s my monthly Equity100 Summary:

Equity100 Portfolio (As of 29 Aug 2020)

SYFE EQUITY100

Total invested amount: $1920

Current Value: $2565.71

Portfolio Return: +35.22%

Total contribution this month: $820

Fees Paid: $0.91

Previous Months Portfolio Updates

July 2020: S$1217.56 (+10.69%)

Returns are looking pretty amazing right now with the market indexes hitting all time highs and inching higher and higher over the past few weeks. While the stock market may look overvalued at the moment, I will still invest regardless of whether a crash/correction is on its way. Switching to a long time horizon and you will understand why a crash will be insignificant in the long run.

My strategy is to invest at least $200 into this portfolio monthly and more if I have extra cash from my side hustles/dividends of the month.

I held steadily during the March Crash (-30%) and I will likewise do the same thing going forward. If market were to dip or crash again, I will be glad to buy in even more aggressively to lock in the bargain prices. Holding power and having a long term horizon makes all the difference when it comes to investing.

Thank you readers who used my referral code! A good deal of returns thus far are a result of referral bonuses from readers so I’m really grateful for all your support and for having faith in me and my articles! 🙂

I will continue to value add and promote platforms I personally use and recommend going forward.

Current Composition (As of 29 Aug 2020)

It’s almost 2 months since I first started investing in the Equity100 portfolio and I am really amazed at the returns so far. Investing via this Robo allows me to broaden my view and I am currently thinking of changing my long term investing strategy to focus heavily on US equities and a lower emphasis on Singapore equities. (More on capital appreciation and less on dividends in a nutshell)

The upside potential and sophistication of the US stock market is truly amazing and it would be a huge opportunity cost to not invest into it.

Year-to-Date Performance *29th Aug 2020 of Equity 100 vs S&P 500, Total World Market and Straits Times Index. (From my StocksCafe)

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks and track my portfolio performance against various indexes as shown above. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

Syfe Promo Code

For people who are interested to invest into Syfe and wants to open an account, you can use the promo code below as a bonus! 

Promo Code: SRPTH8LK3

$10 bonus for the first deposit of $500 (or more)!

$50 bonus for the first deposit of $10,000 (or more)!

$100 bonus for the first deposit to $20,000 (or more)!

Note: Bonus is applicable on the first deposit made only. The bonus will be automatically credited to your portfolio and invested along with your existing investments

Thank you for reading and happy investing!

Syfe REIT+: A Great Way To Diversify Into Singapore REITs?

Looking to invest into Real Estate Investment Trusts (REITs) in Singapore but confused by the jargon and the many types of REITs out there? I know your pain.

Also, just hit 100 subscribers on my Tele Channel! If you don’t want to miss out any post, investment insights and personal finance tips + Quote of the Weeks, do join the channel! Thank you to all readers for your support thus far ❤️.

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In essence, when you invest in a REIT, you’re investing in the properties managed by that REIT. This means that you become part-owner of those shopping malls, business parks, or whatever it is the REIT manages.

Whatever the properties earn in rental income, some of that money is paid to you in dividends. The reason why REITs are effective as a passive income generator is because they are required to pay out 90% of their rental profit to shareholders like you and me so as to enjoy tax savings set by MAS. Now that you understand the basics of REIT, we can move on to talk about the type of REITs out there.

There are many different types of REITs in Singapore, each having slightly different characteristics and hence different returns overall. To make things simple, here are the different types of REITs out there and some examples for each:

  1. Industrial REITs eg: Ascendas REIT,MapleTree Industrial REIT, ESR REIT
  2. Retail REITs eg: CapitaLand Mall Trust, Frasers Centerpoint Trust
  3. Office (Commercial) REITs eg: Capitaland Commercial Trust, Keppel REIT
  4. Hospitality REITs eg: Ascott Residence Trust, Frasers Hospitality Trust
  5. Healthcare REITs eg: Parkway Life REIT, First REIT
  6. Hybrid REITs eg: Mapletree Commercial Trust, Frasers Logistics&Commercial Trust

So many REITs to choose from! How do I pick one that can give me the highest return and dividend yield?

Picking the right REIT not only requires knowledge in fundamental analysis, it also requires extensive research of each individual REIT, trying to figure out if they can sustain their dividend yields in the long run. This can easily take weeks and months of research before you commit to the investment!

Previously, investors who wanted to own REITs in their portfolio could only choose between cherry picking their own REIT portfolio (DIY), or invest into a REIT ETF. To many investor’s relief, there is now a third option: Syfe REIT+.

With the launch of the REIT+ portfolio for retail investors, it looks so attractive and I wish it was available back then when I first started. This portfolio was also mentioned in my article which talked about Dividend Income Portfolio for the Post-Covid World.

Syfe collaborated with SGX and crafted the Syfe REIT+ portfolio which tracks the 20 largest and most liquid REITs in Singapore via the iEdge S-REIT Leaders Index . This spans across all the different types of REITs mentioned above which are: retail, commercial, industrial, residential, hospitality and even data centres.

To put it simply, it is a low-cost, passive Robo solution for a portfolio of high-quality Singapore REITs and government bonds*.


*Only included in the “REITs with Risk Management” option for portfolio choices.

If you were to cherry pick REITs like me, spend countless hours reading reports and looking at financial statements, then you can stop reading. If not, this is really a great portfolio since you are investing directly into the underlying REITs in the portfolio rather than an ETF.

A REIT ETF is not cost efficient because firstly, it trades like stocks which means you are paying the same trading commissions as if you were to buy individual REITs which cost around S$10-S$25 per trade based on which broker you use. Secondly, REIT ETF incurs ETF expense ratio on top of the REIT manager fee you pay to each REIT. In essence you are paying fees on top of fees.

The most logical and rational way for a beginner investor to start investing into REITs is therefore through Syfe REIT+.

As you can see from the graph above, if you chose to include bonds in your portfolio, you will be able to adjust your downside risk and maximise your upside potential. If you were to do this on your own, not only will you incur hefty trading commissions, you may also underperform the broad market since you not only have to watch the market but also analyse technicals every single day.

There are already many articles out there which talked about this portfolio hence I will not be diving into the details but I will do a summary on what this portfolio offers.

Syfe REIT+ Summary

Syfe REIT+ Beanstock Rating:

Rating: 4.5 out of 5.

Rating: 4.5 out of 5.

Pros:

  1. Low Fees (0.4% – 0.65%), pretty much the lowest compared to your other options (DIY/ ETF)
  2. Portfolio Rebalancing (Optional)
  3. Dividends automatically reinvested
  4. Fuss-free and effortless investing

Cons:

  1. Cannot choose other REITs out of the index

If you’re not hung up about wanting to pick your own REITs to invest in, then Syfe REIT+ could be an easy and the most fuss-free way to give you that exposure. Aside from its low cost, the ability to automatically rebalance and reinvest your dividends is also extremely compelling. You can read up more on Syfe’s fee structure here.


As for the beginner investors, especially for those with limited capital and/or knowledge, then the Syfe REIT+ portfolio might just be the perfect tool for you to get started with. Of course if you have a bigger capital, you can still opt for REIT+ to further diversify your holdings.

The DIY approach just doesn’t make much sense when you don’t have a sizeable investment capital, because you get eaten up by the brokerage transaction costs. ($10-$25 per trade)


You also save on an incredible amount of time and effort from having to no longer monitor or rebalance your own REITs portfolio. 

Also, if you are interested to invest into US equities, looking for the highest risk-adjusted returns and have a long time horizon, you may want to check out my review of Syfe Equity100 here as well as the portfolio performance here.

TL;DR Syfe Promo Code

For people who are interested to invest into Syfe and wants to open an account, you can use the promo code below as a bonus 🙂

Promo Code: SRPTH8LK3

$10 bonus for the first deposit of $500 (or more)!

$50 bonus for the first deposit of $10,000 (or more)!

$100 bonus for the first deposit to $20,000 (or more)!

Note: Bonus is applicable on the first deposit made only. The bonus will be automatically credited to your portfolio and invested along with your existing investments

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.

Dividend(Income) Portfolio for the Post-Covid World

An income portfolio consist of mainly dividend stocks which can yield 4% or more in general. The purpose of an income portfolio is to generate passive income for the investor in the form of dividends. So how do you choose dividend stocks and what are some of the key characteristics that a good dividend stock should have?

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In my previous article, we talked about 2 Growth Portfolios which can compound your returns over a long time frame, possibly doubling or tripling your initial capital. A growth portfolio is generally suited for an investor with a longer time horizon (10 years or longer) with a higher risk appetite. It is also more suitable for investors with a smaller capital (<100k) so they can compound this smaller capital into a bigger amount in the long run.

As the capital compounds, the investors’ time horizon and goals will change. While compound interest is taking place over the years, the investor may eventually switch from a Growth Portfolio in his 20s-30s to an Income Portfolio in his 40s and beyond.

This is also why many financial bloggers based in Singapore are building dividend-based portfolios which can generate passive income in good times and in bad. Most bloggers are in their late 30s or 40s which is the reason why their portfolios are more tilted towards an Income Portfolio. This method however, can only prove to be an effective way to invest if you managed to attain a bigger investing capital. (300k or more) The reason why this is so is because an income portfolio’s main purpose is not to go for capital gains, but instead provide passive income year in year out through a sustainable dividend yield.

Just think about it, 5% yield from $50,000 vs a 5% yield from $300,000. That’s a huge difference.

Young investors thus should not try to emulate what financial bloggers are doing; investing into individual REIT positions as well as the Big 3 Banks in Singapore (DBS/OCBC/UOB). Well it is good to hold some, it is important to have a clear goal of what you are doing so you are maximising your returns based on your own risk and time horizon. Blindly copying what others are doing may work since you know the entry price, but do you know when to exit?

Once you understand the purpose of an Income Portfolio, here goes. I will be using a hypothetical amount of $100,000 to craft out the portfolios. Why 100k? Because it is a decent amount to actually craft out a portfolio of individual stocks. Any amount lesser should be invested into ETFs or a few positions (4-6 stocks) at most.

This will be an investment portfolio I would own if I were to have $100,000 of capital right now and my goal in mind is to gain passive income which can supplement my income/eventually cover my annual expenses (Financial Freedom)

High Yield Generating Machine (2020)

This portfolio will focus on dividend yield and will be focusing on Large-Cap Blue Chip companies with a stable share price and should display the following characteristics:

  1. Dividend Payout Ratio: >60%
  2. Increasing Dividends Year-On-Year
  3. Company is Consistently Profitable (Positive Profit Margin)
  4. In a healthy industry
  5. Debt-To-Equity Ratio: <1.5

Note: Chasing high dividend yields without looking at fundamentals is a surefire way to lose money in the long run. Make sure the yield is sustainable.

A sustainable, long term dividend yield can be between 4%-6%.

The focus here would be Singapore based equities instead of USA, simply because SGD denominated investments will not be subjected to currency risk and also the dividend withholding tax which foreign investors like you and me would incur if we were to buy US equities. (You will only want to buy into Growth stocks instead of Dividend stocks if you are looking at US equities.)

SG Equities

  1. Netlink NBN Trust – $10,000
  2. DBS Group Holdings – $20,000
  3. Micro Mechanics – $30,000
  4. Mapletree Commercial Trust -$10,000
  5. CapitaLand Mall Trust -$10,000
  6. SGX -$10,000
  7. Frasers Logistic & Commercial Trust -$10,000

Total: $100,000 Approx 5%-6% dividend yield

Reserve List

  1. Ascendas REIT
  2. MapleTree Logistic Trust
  3. HK Land
  4. UOB
  5. SATS
  6. ST Engineering
  7. MapleTree Industrial Trust

An alternate portfolio can be crafted for an individual with little or no time to manage his/her portfolio. This one is suited for busy professionals or those that simply don’t wish to understand the fundamentals of the company and would rather use their time to do something they love but also wishes to participate in the stock market.

Lazy Man’s Passive Income Generator

  1. Syfe REIT+ Portfolio -$60,000
  2. DBS Group Holdings -$15,000
  3. Micro Mechanics -$15,000
  4. Netlink NBN Trust -$10,000

Total: $100,000 Approx 5%-6% dividend yield

$60,000 is placed into Syfe REIT+ portfolio. Why? Because they will help you to invest directly into the top 20 S-REITs in Singapore under the iEdge S-REIT Leaders Index. It is one of the most cost efficient and fool-proof way to get involved in the REIT market and automatically diversifies for you.

Syfe Promo Code

For people who are interested to invest into Syfe and wants to open an account, you can use the promo code below as a bonus.

Promo Code: SRPTH8LK3

$10 bonus for the first deposit of $500 (or more)!

$50 bonus for the first deposit of $10,000 (or more)!

$100 bonus for the first deposit to $20,000 (or more)!

Note: Bonus is applicable on the first deposit made only. The bonus will be automatically credited to your portfolio and invested along with your existing investments

The remaining $40,000 is placed into fundamentally strong stocks such as DBS, Micro Mechanics and Netlink NBN Trust. Again, this is not rocket science like I mentioned in previous blog posts and you can tweak and adjust the numbers or holdings based on your own needs and capital.

The above is just something I will invest into if I were to start clean with a capital of $100,000 given to me. Please do not take this as a Buy or Sell call.

Sticking to a sound, sustainable investing strategy consistently is the best way to remain invested and stay away from emotions of fear and greed. If your goal is to achieve passive income from investing, the above can be a good place to start and craft out your game plan and create a yield shield portfolio that can last you through retirement.

Remember, the longer you drag, the longer you take to hit financial freedom. The equation is as simple as it gets: Time X Compound Interest = Returns.

So the longer you take to start due to whatever excuses you are telling yourself, you got to start now. If you are reading my blog and still yet to start investing, you can do so at an extremely low capital (even $100!).

You can do so via Robo Advisors such as Syfe and Stashaway. You can read my article here and here to learn more. I will also be doing regular updates on my Syfe Equity100 portfolio every month and you can check out July’s updates here.

I use StocksCafe to keep track of all my investments (include Robo) + research on stocks. You can also view my portfolio as well as many others so you can compare your own performance with other investors. If you are interested in signing up, you can use my referral link to sign up and access premium features for 1 extra month for new users. (3 months)

Disclaimer: 

The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment.

Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.