Photo by Swapnil Bapat on Unsplash
What a year! What a year.
Even though 2018 ended disastrously, the performance of 2019 completely made up for it. Since the major drop in at the end of last year, the market in 2019 went on to grow over 28%.
Anybody who was buying into the market during the year should have had a great time – defying any predictions of market collapse that were floating around. Any investors that freaked out and got out of the market at the end of 2018 and sat out on the sidelines in 2019 would have missed out on the recovery and growth.
So given the recovery, how did I do this year?
First, let’s take a look at how I did on the personal finance side of things.
Personal Finance: My 2019 Expenses
On the personal finance side, let’s take a look at my spending this year to see how close I am to my estimate for my FIRE number.
The first and major part is my monthly expenses.
Luckily, though I am now married, Mrs. FIRE-Path Lion and I are currently living with her parents until we can find a place to call our own. They’ve already paid off their mortgage so I help out by handling all of the utilities and management fee. This has allowed us to save on one of the largest costs for any family, the housing cost.
Here’s what the breakdown of monthly expenses looked like for me:
|Utilities||S$200 (total for 4 people)|
|Income Tax||S$600 (Average)|
|Total||S$3,390 / month|
|Total for Year||S$40,680|
The food cost is a mixture of cheap eating and some dinners that I pay for both myself and the wife, so it does include more than just 1 person cost (that’s how I justify the high amount, haha.)
Same with transportation, I normally try to take bus and train both ways. However, since I work in the same area as the wife, we sometimes take grab to and from work together. This allows us to share the cost (sometimes she pays, sometimes I pay. But as I earn more than she does, it’s usually me hahaha.)
With 2 people sharing cab, it’s actually not that expensive and it’s a convenience that is sometimes priceless when we’ve had a bad day at work and just want to get home to relax.
Other Big Expenses in 2019
Aside from the normal monthly costs, this year also happen to have a few large expenses, the largest of which was my honeymoon.
So here is a breakdown of the large purchases:
|Presents for Friends & Family||S$1,050|
|Honeymoon||S$15,000 (Total for 2 people)|
The Honeymoon cost does seem very high, but for context, it was in the U.S. and Canada, it was 3 weeks long and the cost is for 2 people. Which works out to roughly S$2,500 per person per week, inclusive of flight and hotel, so I don’t think it’s exorbitant, especially for a honeymoon.
Total expenses for the year: ~S$60,000 or ~S$5,000 per month. Pretty close to my estimate!
When this amount is spread out across the year, this is what the monthly expense looks like in a pie chart:
Fun Fact: If I wanted to sustain this level of expense after I stopped working, my FIRE number would be S$1,500,000 at 4% safe withdrawal rate!
Personal Finance Objective in 2020
Based on the amount I’m saving, it looks like I won’t quite make my FIRE-by-40 target! I’m going to have to cut back on my spending a bit if I hope to meet that goal. Luckily I think I can still do it.
The most important savings I can make in 2020 is to not have any more Honeymoon, lol.
Of course, the point of saving and having money is to spend it buying what makes us happy. I thoroughly enjoyed our honeymoon and would do it over again if I have the chance.
It does help me understand that I can easily hit a higher savings rate if I wanted. Based on what I spent in 2019 and what I will likely make in 2020, I want to reduce my expenses to about S$4,500 per month in 2020. This should cut my expenses down from S$60,000 per year down to just S$54,000 per year.
This will allow me to save more and accelerate my progress towards my FIRE number and doing so before 40 will become much more doable.
Of course, just saving money will not be enough to get me to my FIRE number. It’s important to invest as well so that the savings can grow instead of sitting stagnant in the savings account.
So what did I do for investments in 2019 and how did it do?
Investment: Following My 2019 Investment Plan
Looking back at what I wrote in a similar post last year, I wanted to increase my portfolio value by at least S$100,000 in 2019 and I’m happy to say that I managed to do that.
At the end of that post, I went over my learnings and investment plan for 2019. Let’s take a look at whether I managed to follow each item in the plan.
Plan #1: Stay the course & continue investing regularly
I certainly achieved this goal as I’ve continued to add to my investment portfolio each and every month without fail.
I did make a mistake in February though and ended up not investing then (doh!)
Plan #2 : Contribute S$7,000 to CPF SA
Check! Done and dusted. Money is sitting there earning the guaranteed 4% interest and helping to reduce income tax in YA2020.
In fact, I’ve already contributed another S$7,000 to my CPF SA today (1-Jan-2020) so that it can start earning the 4% interest as soon as possible and cut my tax for YA2021 next year.
Plan #3 : Invest all my bonus immediately in a Lump Sum instead of spreading it over time
That’s done too. If you notice the 2 large spikes in the cash flow chart above at 1-Apr-2019, that was when I placed my bonus into SRS to buy the STI ETF as well as the larger part into IWDA.
At that time the STI ETF was S$3.24 per share and IWDA was at US$56.08.
The STI ETF was very erratic throughout the year as a result of the U.S.-China trade war and ended the year at S$3.278, slightly higher than where I purchased in lump sum.
As for IWDA, it is now worth US$63.03, a US$6.95 increase from that day in April. It spent the majority of the year after that date at a price point higher than where I bought it so this worked out very well for me, despite the trade war causing quite a bit of volatility.
This was a big win for lump sum investing overall.
Plan #4 : Get to a better asset allocation
When I ended 2018, I mentioned that my asset allocation was too focused on the tech sector. I had 16% in QQQ and 14% in AAPL – and when we add up the 14% in technology holdings in IWDA – I had over 44% of my portfolio invested in the technology sector!
This isn’t good practice if we wanted to be diversified, so I committed to shift the balance of my portfolio away from tech and get closer to a portfolio with 70% in IWDA, 10% EIMI and 20% STI ETF as possible.
So how did I do? … It’s a bit complicated. Let’s take a look.
Here’s the chart of the tickers (and how much of each) I added to my portfolio during 2019:
Looking at it you’ll notice a few things:
- No AAPL or QQQ in sight.
- Predominantly IWDA compared to EIMI and ES3.SI (STI ETF)
Let’s take a look at these points one by one.
No AAPL or QQQ
I didn’t add any more money to my existing AAPL and QQQ position at all. As money flowed into the other tickers in the portfolio, the allocation in these 2 tickers as a percentage of the total portfolio reduced. So I think that was a success. You’ll see how much of my current portfolio is made up of AAPL and QQQ further down below.
A lot of IWDA compared to EIMI and ES3.SI
In order to get closer to a 70% allocation towards IWDA, I needed to make sure that the majority of the funds that is added to my investment portfolio goes into IWDA and that is what I did. Almost 68% of the funds that I invested last year went into IWDA.
The rest went into EIMI and ES3.SI to bring their allocation up relative to the amounts that were already sitting in AAPL and QQQ in the previous year.
However, despite the amount of funds that were added to the portfolio, I didn’t manage to really bring down the allocation of AAPL and QQQ by much. Let’s take a look.
Investment: 2019 Results
So given all the additional funds that I added to the portfolio in 2019, how does my portfolio allocation look now?
Nice, we’re much closer to the allocation I set out to achieve at the start of the year.
- The allocation in AAPL went from 14% last year to 12%. This is only a slight drop even though funds have been channeled to other assets in the portfolio, mainly due to the amazing performance by AAPL this year. More on this later.
- Allocation to QQQ went from 16% to just 9%, due to the additional funds injected into the portfolio. Good. Now AAPL + QQQ only make up only 21% of my portfolio instead of 30%.
- STI ETF (ES3.SI) went from 22% at the end of 2018 to 18.4% at the end of 2019. Despite getting 20.6% of the injected funds, the percentage allocation dropped. This is due to the lagging performance of the STI ETF compared to the rest of the portfolio.
- EIMI increased slightly to 8.2% from 7% even though it received 11.8% of the injected funds. This is also due to the lagging performance of EIMI compared to the other components of the portfolio. Other assets grew much faster so EIMI end up not growing much in allocation despite funds being injected.
- Given where everything else in the portfolio, although IWDA received 67.6% of the injected funds, it grew from 40% of the portfolio in 2018 to 52.4% of the portfolio at the end of 2019. This is edging closer to the target of 70% but it’s still very far away due to the presence of AAPL and QQQ, both of which did extremely well. I will count this as a win though as I do not want to sell any of the holdings, instead I prefer to add to my IWDA position as a way to increase its allocation.
OK, now that’s the allocation out of the way, how did the portfolio perform?
I think it performed extremely well!
Let’s take a look at a graph of my portfolio value over time – from the very start of my investment career in 2016:
I was able to hit the S$300,000 portfolio milestone this year. The portfolio started 2019 with a value of S$129,705 and ended the year at S$307,128 – an increase in value of over S$177,423 in one year.
Of course this also included all of my contributions as well as my lump sum bonus contribution early in the year. That really worked out though since after I made the lump sum contribution, after it recovered from the correction in December 2018, the market continue to take off massively.
Based on my spreadsheet, the rate of return on the portfolio in the last 4 years is hovering around 13.2% annually. Here’s a cool daily chart of rate of return over time (plus the massive crater at the end of 2018):
Based on the charge the XIRR looks to be averaging around 12% and I hope that the trend continues. With the rule of 72, if I can maintain the rate of return of 12%, my investments will double every 6 years! That’s insane!
That’s pretty impressive! But which components of the portfolio contributed to the gains?
(If you’d like to know how I keep track of my portfolio and graph out these cool return charts, I’ve shared my portfolio tracking template in my post here.)
Portfolio Components Performance
Here’s a breakdown on how each component performed (all returns calculated in SGD):
|Ticker||Allocation||Internal Rate of Return (3.5 years)|
|EIMI||8.22%||Not enough data for realistic number.|
Overall Portfolio Internal Rate of Return: 13.2% year on year
Let’s breakdown the performance of each ticker one by one:
AAPL & QQQ… Godlike Performance
Even though I didn’t add any more funds to AAPL or QQQ, their allocation stayed relatively high due to their amazing performance in 2019. AAPL shares essentially doubled in value going from as low as $142 at the beginning of 2019 up to $293 at the end of the year – up $151! This also contributed to QQQ’s wonderful performance as all the FAANG stocks did quite well this year.
So despite not receiving any more investments, they grew so much that their value within my portfolio stayed high.
Even though their performance was amazing, I don’t think I made a mistake in staying away from contributing more to these 2 tickers. Hindsight is 20/20 and things could have gone the other way with the trade war. Given the growth that AAPL has this year, it’s very unlikely that this level of performance will continue into this year. The sales of iPhone 11 and AirPods Pro (I think it’s going to be massive) is likely already priced in.
IWDA’s Amazing Returns Despite the Trade War
As the title suggests, although there’s an ongoing trade war between U.S. and China, IWDA had an amazing year. It just didn’t seem like anything could stop the market from continuing to provide great returns (which sort of scares me a bit.)
Even though the yield curve inverted in the middle of the year, the stock market continued to rally.
EIMI was sideways most of the year till the year-end rally
Unlike the developed market fund, the developing market one didn’t fare so well during the trade tensions. The value fluctuated throughout the year but was pretty much moving side-ways the entire time. However, there was a new sign of life at the end of 2019 with the anticipation of some progress on the trade negotiations. I won’t be holding my breath though. I’ll keep adding to my holdings until I hit my target allocation.
STI ETF performed ok, but lukewarm compared to the rest of the market
Overall, my STI ETF holding is giving me more than 9% return year-on-year, quite good, but it could not hold a candle to the performance of the rest of my holdings.
Yes, I still think that the STI ETF is still an important part of the portfolio for a Singaporean investor as I highlighted in my Bogleheads Portfolio for Singaporeans post. It’s meant to provide me with a local market investment to hedge against currency fluctuations, however I don’t think I will need as much as 20% of my portfolio allocated to it as my portfolio size continues to grow ever larger.
Therefore I will likely readjust my portfolio allocation in 2020 to hold less STI ETF in favor of the other tickers.
Speaking of which, what are my investment goal for 2020?
My Plans and Goals for 2020
I think with the FIRE movement, the great thing is that things get more simple the longer we are on the path rather than more complex. So I think this section will be even shorter than last year’s.
My objective for this year is going to be similar to last year but do even more of it. Here they are:
Plan #1: Contribute S$7,000 to CPF SA
Similar to last year, this is a no-brainer for a person with my income. This will reduce my taxable income as well as lock in the high guaranteed interest of the CPF SA earlier. In fact I’ve already contributed this year’s amount on the 1st of January 2020. So there you go, first item already checked!
Plan #2: Contribute the maximum allowed to the SRS as soon as possible
Similar to the CPF SA, the SRS will allow me to reduce my taxable income and still invest and grow the funds for my future retirement. If you want to read up on how this works, you can read my post on how to use the SRS to reduce your taxable income here.
Plan #3: Rebalance the portfolio to reduce STI ETF from 20% down to 10% of the portfolio
As mentioned in the above section, as my portfolio size increase, I feel that I should start reducing my allocation in the STI ETF and towards other holdings. There are a few reasons for this:
- I only really need a certain amount of SGD holdings in order to provide a safety net against currency fluctuation. Since my portfolio size is increasing, the percentage that the SGD allocation should be will reduce as the absolute size is kept relatively stable.
- I believe that international and global markets is more diversified and provides a higher growth potential compared to the 30 companies within the STI ETF.
So I think as I rebalance to 10% of my portfolio in STI ETF, I will keep EIMI at 10% but bump up the allocation of IWDA to 80%.
Of course, I will never get to 80% allocation in IWDA because AAPL and QQQ are still there and I won’t be selling them any time soon, but I can get closer to this allocation as I add more funds to my portfolio.
Plan #4: Continue to invest consistently and regularly whenever I have enough funds
Again, similar to last year, I will continue to add funds whenever I have enough cash. This has ensured that I continue to accumulate assets in 2019 whether the market did well or not.
It has served me quite well and provided a handsome return when I could easily have been worried about the market volatility during a trade war and end up sitting on the side-lines.
I think continuing to add to the portfolio is definitely the right choice going into 2020.
Plan #5: Invest all my annual bonus at once when I receive it
Also similar to 2019, I will again invest all my annual bonus into the market when I receive it again near the end of March.
It’s worked extremely well for me this year and as I analysed in my previous post on DCA vs Lump Sum, there’s a higher likelihood of Lump Sum doing better than DCA, I think the same strategy will give better odds at a better performance than waiting and spreading out the investments over time.
However, I might follow Big ERN’s strategy that he highlighted in this post and start a 3-month DCA before the bonus arrives. This only works if I know exactly how much I will receive and when (which I will.)
I’ll report back at the end of next year to see how that strategy worked out.
Plan #6: Continue to contribute to IWDA, EIMI and ES3.SI
Yes, AAPL and QQQ did amazingly this year, however as I mentioned above, this is blind luck on my part and it could have gone the other way. I will continue to hold AAPL and QQQ but will still not add directly to the holdings. A massive part of IWDA is already holding the components of QQQ and a large part of that is also AAPL. If AAPL does well, I will benefit from it but if other companies does well, I will also gain.
As I mentioned in my post on “Why index investing works”, consistently predicting which companies will do well and which will not is very unlikely. I will continue with my passive investment strategy and get on with life.
Objective #1: Reduce my expenses to S$4,500 a month
Given that my 2019 expenses was about S$5,000 per month, and this is with the S$15,000 spent on my Honeymoon, I think S$4,500 should be very much doable.
This should increase my savings rate and allow me to invest more and accelerate my progress towards my FIRE goal.
Objective #2: Grow the portfolio to at least S$400,000
Given the amount that was able to add to the portfolio in 2019, I am fairly confident that I can add at least another S$100,000 to the portfolio in 2020. I don’t want to get cocky though since the market could tank and wipe out half of the portfolio tomorrow. You never know. So I think S$400,000 portfolio is a reasonable goal.
That’s it! That’s a wrap on 2019, a wonderful year for a consistent investor. It shows how unpredictable the markets can be but still ultimately rewards an investor that has been consistently investing over the long term.
How about you? How did the market treat you in 2019? I’d love to hear your stories and goals for 2020.
It’s the start of a new decade, a new journey and exciting future awaits.
Nobody can predict how the markets will do tomorrow or a year from now, but I guarantee that a recession is coming… eventually. Then the market will recover again… eventually.
Since nobody can predict any of this in a consistent manner, the best thing to do is to stay the course and keep investing come hell or high water.
In the long term our persistence will pay off. So keep at it and you’ll surely be rewarded!
Happy new year and good luck in 2020!
Until next time.
28 thoughts on “My FIRE Path : Looking back at 2019 progress, lessons learned and my goals for 2020”
Looking up to you and to always remember to index invest as it’s the proven way while continue to learn and have a small pot for single investments into companies while doing my own due diligence!
Look forward to more articles from you!
Thanks Xavier for the kind words and your continued support! The key is to stay the course and continue investing come hell or high water. If we continue to invest and stay invested in low-cost index funds (and don’t panic sell when the market drops) we are sure to come out ahead. Have a wonderful 2020!
First of all, congratulation to your impressive achievement last year and hope you continue to shine in 2020 too!
I started investing last year August at the age of 27, using robo-advisor (Autowealth) to help with the assets allocation and get my feet wet in the US and global market. Though I am not a high income earner and just earning below average wage (around 2600SGD), each month I will deposit at least 1,200SGD to my investment account the moment i received my monthly income. Last year was giving me a whopping 6.94% return even though I had just started investing in August.
My goal for this year is to hit 50K SGD mark, and try to gain more investment knowledge and hopefully, can reach my FIRE number before the age of 40.
Once again, congratulation to your achievement !!
Hey Bryant! I must congratulate you on getting such an early start! I wished I had the sense and interest when I was 27 to start investing like you. You are certainly well on your way.
Believe me when I say I did not start out earning the level of income that I am earning now. In fact I started off in my first job at S$2,000 per month (before tax and CPF) so you’re doing great! I was only able to sock away about S$200-500 per month as I had to also pay for rent at the time.
Do remember that the market did extremely well last year and dark clouds and market corrections WILL come. It’s important when it does for you to stay the course and continue investing as the market goes on sale. Panicking and selling when the market drops is a sure way to lock in the losses because markets will eventually come back up. Of course this only applies if you are holding a broad-based index fund, not if you are picking individual stocks.
Given what you’ve told me so far (and the amazing savings rate you’ve managed to achieve at your income level) I’m certain that you will achieve your FIRE goal by 40! Remember, when you do get a raise, if you keep life-style inflation at bay, you can easily increase your savings rate extremely quickly 🙂 Keep me updated!
May we both have a wonderful 2020!
This is a beautiful discussion. I am 43. So, i can clearly vouch for starting early, keeping life style inflation at bay, keeping up the savings discipline. At the end of the day, we all are running our own “race” and objective is to reach that life-balance of life Vs bank-balance.
Congratulations on breaking a new high on your portfolio! Have been a silent reader so far and enjoyed the way that you write and share the knowledge. It’s amazing how you manage to top up your CPF, SRS and yet contribute so much to your portfolio! Alot to learn from you.
Thanks Kenneth! I certainly count myself extremely fortunate to be able to do that. Of course I did not start out this way so I believe that everybody can achieve what I have with hard work and some luck. I started my first job in 2009 earning just S$2,000 per month before CPF, but I’ve done well in my career since and discovered the FIRE community 🙂 thanks for reading and have a wonderful 2020!
Congratulations! We exchanged some comments in the past in the thread DCA vs lump sump. I was hesitant to get in August, as the markets were already doing extremely well so far but I did jump in the end with a lump sum of S$300,000 (by December it was 5% profit) and then added S$150,000 in late December, so obviously the % decreased (expensive shopping :). From now on however I intend to invest S$150,000 once a year via lump sum for maybe 15-20 years. I hope to stay on course, but the rollercoaster ride is going to be fun… So (assuming 6% average growth) I am looking at FIRE 4-5 times higher than yours. I think it is impossible to plan this perfectly and 3% withdrawal rate should be considered as a safer option, than 4%. In case if there is too much, this can be for the family and kids as you have mentioned in your FIRE thread. However I don’t think human nature ever feels there is “too much” when it comes to money. How about retirement in Caribbean, popping out some expensive champagne on your private yacht? 🙂 Happy New 2020 Year!
Wow! Congratulations to you as well! Glad to hear that you jumped in, just make sure you do stick in for the ride when the market does dive (and it will at some point.) Sounds like you’re doing great. I will be putting money in as and when I have enough cash to minimize the transaction fee, getting in as soon as possible is usually the optimal approach.
Haha having 4-5 times my target would be amazing! You should join the FatFIRE subreddit where most people are aiming to FIRE with plenty in passive income to totally be able to retire in the Caribbean with daily champagne 😉 that would certainly be amazing. 3% withdrawal will almost certainly guarantee that your networth continues to grow as you withdraw, so you’ll likely pass on with more in the bank than you started, so it’s a good choice if you want to be conservative and very sure that you won’t run out of money.
Wishing us both a wonderful 2020!
This is extremely inspirational to read as I’ve just started working and have similar goals to you. Just one question, how do you create a sheet that automatically track your daily portfolio value such that you can plot graphs like this.
I think your XIRR chart and what not is really cool too. Would you mind sharing the spreadsheet so that I can take a look at how you did it up?
Hey! Thanks for reading! I can share the google sheet later. Let me get home and clean it up and send it over 🙂 I have a script that runs everyday automatically to save a new row of data so the graph keeps getting updated daily.
Hey HY, here’s the cleaned up Spreadsheet template. You’ll need to create a copy of the sheet to start using.
You can enter your trades into the “Trades” sheet and it will automatically be added up in the “Summary” tab. The “Charting” sheet will automatically get updated everyday before midnight. The script will add another row and freeze the previous date’s data so that you have a portfolio history on a daily basis. Prices for IWDA and EIMI gets updated automatically, but STI ETF is updated daily also by a script. You’ll need to go to https://www.alphavantage.co to get the API Key so that the spreadsheet can automatically fetch the share price of the STI ETF and insert it into the “ES3.SI” sheet.
You can edit and add the API Key in the script by going to “Tools > Script Editor” and put the replace the API Key instead of the text “ENTER_API_KEY_HERE”
Let me know if you have any questions!
I have spent 1 whole day playing around with this and I’m almost there now. Thanks so much for sharing it. As i edited some of the columns on the summary page, I’m still trying to figure out how to edit the script such that it works for mine.
Im currently using getAlphaVantageSlowly(A2,row()) formula within on the summary tab of my sheet. Do I have to set a trigger run it every midnight or does it get updated automatically.
Also, why do you set the trigger to be a midnight if US market closes at 5am?
Sorry for the spam of questions!
Hey! You’re welcome! Glad you’re digging in and making it work for you!
Did you create “getAlphaVantageSlowly()” function yourself? I did not have that function in my script when I checked. However, you have to schedule for “UpdateSTIIndexPrice()” function to run at the end of every day so you can get the ES3.SI closing price.
Then I set the trigger to run “UpdatePortfolioValue()” function every night at midnight. I just have to choose a cut off time, midnight isn’t really significant as I just need a daily snapshot. London market closes around midnight Singapore Time. US market closes at 5am. But in the grand scheme of things, doing a snapshot at midnight vs 5am isn’t going to change the chart much. You could choose to run your snapshot every 6am after all market close and Singapore hasn’t yet open to get “true closing price” on all 3 markets. But if you run it that way, you’ll need to change “TODAY()” function in the Date column in “Charting” sheet to “=TODAY() – 1” to make sure that the price snapshot is set to the correct date (since the price at 5am 11th of January Singapore time is actually closing price of the 10th of Jan.)
Since it doesn’t affect the resulting chart much and any price movement will be captured in the next day snapshot anyway, in the grand scheme of things I just did the snapshot at midnight. Haha, hope that makes sense!
You are the best, its finally done customized to my portfolio.
Really appreciate the help. Would really love to buy you a coffee to thank you!
– I took away the getalphavantageslowly – buggy API, instead i
changed it to yours
As for triggers
– I run the SG prices pulling at 4am daily
– I run the UpdatePortfolioValue script at 5am daily with the TODAY()-1 funciton as you mentioned.
On a final note, I guess you are using googleforms for trade entry but for my current spreadsheet, it’s still a manual process to copy and paste it over from a separate sheet. Do you have a way to script it directly into the trades tab in the right format?
Nonetheless, i would love to buy you coffee to thank you if you’re up for it 😀 you’ve allowed me to simplify so much heh…….. you have my email! 🙂
Happy to help! Really glad you managed to get it working since it wasn’t super easy to explain haha.
I don’t actually using the google forms to do the trade entry actually. I manually enter the trades in the “Trades” sheet in the right column at the moment. I wanted to try using forms but I haven’t had the time to figure out how to use forms for that purpose yet.
Don’t worry about the coffee! I’m glad to help! Keep me updated on how the sheet works out for you over time! I’m still tinkering as well. Wondering if I should improve it by tracking the historical value of each of my tickers over time instead of tracking just the aggregate amount of my entire holding in the graph. That would be a bit of an overkill though.
Now that you’re married, I’m curious as to how you approach investing and financial independence with your wife. Does she also maintain her own separate mirror portfolio or do you intend to merge her investment/FIRE money into yours?
There are economies of scale in having a larger portfolio like priority banking rates and also not having to pay two commissions when buying the exact same stock. However I’ve heard some couples have trouble convincing their partner to invest with them so it would be interesting to know how you’re handling it. Thanks!
Hey Lindel! Great question. In my case we’ve continued to keep our investment accounts separated and I simply help the wife invest in her own account that is roughly mirrored mine (without the dabbling into AAPL and QQQ of course, hers is purely index IWDA, EIMI and ES3 only.)
The economy of scale isn’t a big consideration for us since we always invest when we minimise the fee. For example if our fee is minimum S$25 or 0.4% whichever is higher, then we only invest in each of our account when we have S$6,250 in our account (S$25 / 0.4%) which will minimise the fee paid regardless of whether we make 2 purchases with S$50 fee (S$25 + S$25) or one purchase at S$12,500 which also means a S$50 fee (S$12,500 * 0.4%). We can currently invest every 2 months so it’s not too bad. For couples who must accumulate for a few months before being able to minimise the fee definitely will benefit from pooling funds together so that they can make purchases more often at lower fee. So this should be considered from a case by case basis.
However, there are a lot of pros and cons of separate investment accounts that are not financial in nature. In my case, I believe that I might want to FIRE while my wife wants to continue to work. In this case it makes sense for me to withdraw from my own investment account and have a common pool for the “Family Fund” where we both contribute to for household spending while my wife still accumulate her own investments. She also enjoys her current work and would like to continue working longer and keeping the investments separate would facilitate that option better.
I am also managing my parent’s investments in my own accounts and don’t want to mix the funds (though I do keep accounts meticulously via my own spreadsheet) so it makes sense for me to not commingle the funds. So my considerations are not really financial but more specific for my needs. I count myself very lucky to have a wife that wants to invest and believes in the FIRE philosophy but also trust me to manage her investments for her (she doesn’t enjoy all the spreadsheet meddling as much as I do :P) so it works out quite well in this setting! I just have to nag her when it’s time for her to put more funds in to buy on a regular schedule, hahaha.
First off, Thank You putting up such detailed information. Your blog has inspired me into action. I am at the stage where I am deciding the type of funds to invest in. Given my attitude, I am looking for an automated RSP where monies get deducted and invested without much action on part. Would you recommend FSMOne and if so, I am considering investing either into (Vanguard Total World Stock Fund + Vanguard FTSE Emerging Market Fund) or (iShares S&P 500 + Vanguard FTSE Emerging Market Fund)? Also, would you consider doing an article where various automated options (FSMOne, Money Owl, POEMS) investing into global equities can be considered and compared (eg Lion Global Infinity Global, DFA Global Fund, IWDA, VT etc)?
Hey Rey! Thank you for reading! Sorry took a while to get back to you, I’ve been traveling.
I’m glad that my posts have inspired you to get started yourself! It’s great of you to understand your sentiments and want to set up an automated way to invest. However, I am not familiar with a RSP plan that will allow for RSP into stocks listed on the London Stock Exchange (where I purchase both IWDA and EIMI.)
The FSMOne only gives access to SGX, HKEX and US Stock Exchanges and I personally won’t invest directly through the US Exchange due to 30% Dividend Withholding and 40% Estate Tax implications. You can read more about why I invest through LSE in my post on the 3-Fund Portfolio: https://www.firepathlion.com/the-bogleheads-3-fund-portfolio-for-singapore-firewalkers/
POEMS only provides RSP for SGX stock tickers so does not match your needs.
As for MoneyOwl, I believe they are more like a RoboAdvisor than a brokerage. This means you won’t really get to select the underlying investment vehicle but rather you get to select your risk tolerance and the asset allocation. Not that this is a negative, if RoboAdvisor keeps costs low and help automatically allocate the money for you in the right assets then I think it’s a great choice for a “set-and-forget” option. However, do note that they will likely be slightly more expensive over the long term than doing it yourself. You can read more about my thoughts on RoboAdvisors in this post: https://www.firepathlion.com/robo-advisors-vs-diy-bogleheads-3-fund-portfolio/
Hope that helps!
Thanks for your detailed post. Enjoyed reading and educating myself on the cost structures which goes into deciding between DIY and choosing a right broker.
Wanted to understand which platform did you choose to buy AAPL, Invesco QQQ stocks and whether you used POEMS trading account to buy WDA and EIMI ?
For STI ETF, I understand that it can be purchased using any of the four brokers (POEMS, FSMOne, DBS and OCBC).
Appreciate if you could share some of your thoughts.
Hey Swakshar! Glad you enjoyed my posts and thank you for reading! I used POEMs to buy the US shares you mentioned as well as the IWDA and EIMI in the London Stock Exchange as well. This way I can invest in all the shares I mentioned using just one broker.
I just finished watching the webinar with Endowus. Their costs seem to be lower than POEMS
Can we use Endowus to make the same investments? Wanted to know if I can purchase Irish broad based indices through their platform.
Also, could you explain your rationale on why you chose individual stocks for Apple and Invesco since you mentioned in the webinar that those can be highly subjective and involves greater volatility.
Will wait to hear your thoughts.
Hi Swaskshar. The cost between Endowus vs POEMs really depends on how you will be buying the funds (how much and how often). They are very different types of companies. Phillip Capital is a brokerage and Endowus is an online advisor.
POEMs does not charge management fee, Endowus does.
POEMs charges transaction fee, Endowus does not.
Once your investment portfolio grows large, the Endowus management fee will begin to cost you more than POEMs transactions fee – if you are able to ensure that you minimise your transaction fee by ensuring your trades are large enough each time.
For POEMs you are paying per each trade, but it’s a one time cost per trade. If you don’t trade, you only pay a flat custody fee.
For Endowus you are paying them every year based on how much money you have in your portfolio – no matter if you trade or not.
You can check out my post comparing the DIY approach to robo advisors for more details here: https://www.firepathlion.com/robo-advisors-vs-diy-bogleheads-3-fund-portfolio/
As for Apple and Invesco. I purchased these stocks way before I started my indexing approach because I believed in Apple as a company as well as Technology as a sector. However, now that I believe in the indexing approach, I’ve stopped adding to my positions in AAPL and QQQ going forward. I’ve not liquidated my positions in them because I do not want to incur the transaction cost of selling AAPL and QQQ to buy the index. They are quite a small part of my portfolio so I’ll keep them as my “fun” side bet, haha.
Even I still fall prey to wanting to bet on companies I believe in even though I know that more often than not, people will get it wrong.
Thanks for sharing those differences. I would also want to know how do you do the rebalancing of your portfolio? Perhaps, you can throw us some light and share an example. As a starting investor, we are not familiar on these bits and hence can sit on a losing position once the portfolio allocation starts wavering off.
And since Endowus utilises mutual funds or unit trusts to invest globally, are returns significantly different if I use POEMS to invest in broad based index ETF funds?
Hi Swakshar, when we are in the accumulation phase (which is when we are topping up our accounts and continuing to invest towards our financial independence) the best way to rebalance is to keep buying which ever asset that has dropped or is lower than the target allocation. As you earn income, you are constantly adding funds to your portfolio so if your target allocation is 80% stock and 20% bonds, and currently it is 75% stock and 25% bonds, then the next time you buy into your portfolio, you will buy stock. Then you keep doing that until the stock portion comes up to 80% and bond hit 20%. Once you hit that you alternate between stock and bonds to maintain the 80%/20% split.
However, if the stock drops in value enough such that topping up won’t fix the allocation, you will have to then sell the bonds and buy stock to balance out the percentage. I hope that makes sense.
As for Endowus, it doesn’t matter whether they are using unit trusts, mutual funds or ETF – these are just the structure in which the underlying assets are held. The most important thing is to understand what assets are held inside these vehicles. For Endowus, they follow a factor investing approach to investing and thus do not follow the market-cap index approach. Their mutual funds hold a much more significant portion of their holdings in small-cap stocks as they believe that smaller companies tend to outperform larger ones and also hold more value (lower P/E ratio) stocks rather than growth stocks (higher P/E ratio) as those tend to perform better over time – or so their research has predicted.
In this way, investing in Endowus will not get you exactly the same returns as a broad based index ETF, which is market-cap weighted – this means that the holdings are held in proportion to the size of the company relative to the entire stock market. For example as Apple is a huge company and is roughly 1% of the global market cap, the stock index will hold 1% in Apple shares and so on.
So even though Endowus won’t exactly perform the same as a broad based index ETF, they can do better or they can do worse due to the difference in strategy. It is dependent on you whether their approach appeal to you or not. Their holdings are broad and have all the companies that you would expect but they hold different proportion of the stocks than the index. So do keep that in mind.
Great post, I recently landed on your blog and went through most of the topics here. Especially the yearly reviews, they are great read! Maybe if you do quarter reviews will be good to get a closer look into each year.
I started my investing journey last month, and my portfolio is very simple (VWRA 80%, AGGU 20%). I am 28.
Honestly, the first step feels scary. Especially when all your portfolio is on red. I try to convince my self this is a buying opportunity so I can stay the course =)
Hey! Thanks for reading! I have been toying with the idea of a quarterly review for sure, but feel like there isn’t enough of a change to warrant a full post – haha, FIRE progress isn’t pretty boring once you have it all set up. Now that the market is correcting again, this might be a good time to recap how it’s gone so far again!
Definitely think of it as a buying opportunity, you’re young and will be adding to your portfolio over your life time, you want the marker to be low so you can buy in cheap 😉