The Bogleheads 3-Fund Portfolio for Singapore Firewalkers

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Hey there! If you’ve started doing some research into FIRE (don’t know what FIRE is? Check out my “What is FIRE?” post before continuing!) you may have run into the concept of the 3-Fund portfolio. Then if you, like me, wanted to setup a similar portfolio here in Singapore, you would have found that most of the resources are focused on people in the U.S. and isn’t very useful for us. That’s why I’ve taken some time to do the research for myself and have compiled the information here in the hopes that it will help you to build a similar portfolio.

(Now if you’re fairly new to the concept of index investing and want to get a fundamental understanding about why index investing works over the long term – and really really understand it – then you should read this post: Why index investing works in simple terms.)

So now that’s out of the way, let’s dive into the meat!

Super Short Summary of the 3-Fund Portfolio

The 3-Fund portfolio is one of the core pillars of FIRE. It is a simple and straightforward way to structure your investment portfolio to position yourself for long-term investment success. Explaining the details of why and how the 3-fund portfolio works is outside the scope of this article, you can read up more about it by following this link to the Bogleheads website for more details.

The portfolio, true to its name, consists of 3 parts:

Each of the parts of the portfolio plays a unique role, so let’s dig into how you can set this up for yourself!

Note: If you’d like to have an intuitive way to understand why passively investing in stock indexes works – like the way you will be doing with the Bogleheads approach; then my post on “Why index investing works in simple terms” will be helpful to get your head around this topic.

Local Stock Market Index Fund

Let’s start with the easy one to get it out of the way.

For those new to the 3-fund portfolio concept, the purpose of the local stock market index fund is to provide you with a portion of your portfolio that is not impacted by foreign currency risk. The local stock market index fund should be denominated by the currency of your monthly expenses (in this case, Singapore Dollars) such that, if SGD drops in value relative to other currencies, you have a pool of investments that you can draw on that has not dropped in value.

Update [4-Apr-2020]: Due to the lower expected returns and lower diversification of the STI ETF (relative to international funds), I personally started out targeting just 20% of my portfolio in STI ETF. Just this year I have reduced the allocation to just 10% of my portfolio.

Given that its role is to provide some stability against currency movements, I would not hold much more than a year’s worth of expenses in STI ETF and therefore will likely be adjusted down further as my portfolio increase in size. You will have to make a decision on how much you’d allocate to STI ETF based on your own circumstances.

Update [13-Feb-2022]: While I’ve slowly reduced my allocation to the STI ETF over time as my portfolio size increased. Recently I’ve decided to remove it from my portfolio altogether. You can read my reasonings in my post on removing the STI ETF from my portfolio here. This does not mean that the STI ETF is a horrible investment or that if you have it in your portfolio it is a mistake, however I believe it no longer plays a role that I need in my portfolio allocation.

Generally when we discuss indexing, we’d want a broad-based index with a large number of companies in them to provide diversification. However in Singapore, the only index is the Straits Times Index (STI) which is made up of only 30 companies, but it is the best we’ve got.

Currently there are only 2 possible choices of ETF that replicates the STI:

Here are some of the important data points for each of these ETFs:

Expense Ratio0.30%0.33%
Dividend FrequencySemi-AnnuallySemi-Annually
Net Asset Value (NAV) as of 08-08-18SGD $662.02 MSGD $233.17 M

The SPDR has a slightly lower expense ratio and have roughly 3x the NAV so SPDR is much larger as it has been around much longer. However, they are very similar and it would not matter much which one you choose, so won’t worry too much about this and just select whichever ones that is more convenient or if it matches any plans that your brokerage offers.

Personally, I’ve selected the SPDR Straits Times Index ETF for my portfolio, because my brokerage account is with Philips Capital (using their POEMs platform) and their Regular Savings Plan only offers the SPDR for the monthly shares purchase. I’ve set mine to purchase S$1,000 worth each and every month so I will always be dollar cost averaging into the STI.

If you’re wondering about the past returns of the STI ETF, I’ve written a post on the returns you would have gotten if you Dollar Cost Averaged into the STI ETF in the past 10 years here.

Now that we’ve settled the local market fund, let’s take a look at the International Stock Market Index Fund.

International Stock Market Index Fund

On to the fun bits! The International Stock Market Index Fund is meant to provide the investor with exposure to public companies from around the world, ideally excluding the local market since we already have a fund dedicated to that above. The idea would be to get funds that hold as many public companies from as many countries as possible (both developed countries like U.S. and developing countries like China); as the world economy grows, so does our portfolio. Plus, we won’t have to care about which country will come out on top in the future (U.S. or China) because we own both.

Now, as Singapore investors you may keep hearing about Vanguard and their amazing index funds (like VTSAX) if you look at personal finance blogs from the U.S., however we don’t have access to their mutual funds here in Singapore. Thus you may think that the next best thing would be to get into the Vanguard ETFs that are listed on the US Stock Exchanges like the Vanguard Total World Stock (VT) with an expense ratio of only 0.10%, but not so fast!

Unfortunately for us, non-U.S. investors are heavily discouraged from purchasing any stocks through U.S. stock exchanges (U.S. domiciled stocks) due to the hefty 30% dividend withholding tax and up to 40% estate tax for any investments exceeding USD $60,000 in total value. This makes buying any U.S. domiciled stocks or ETF prohibitively expensive and out of the question for us Singapore investors.

So what are our options?

First, instead of looking at the U.S. stock exchange, let’s turn our attention to the London Stock Exchange (LSE.) There are ETFs listed here that attempts to achieve a similar goal of VT but are domiciled in Ireland, which removes the estate tax concerns and reduces the dividend withholding tax rate — which is now effectively a transfer between a U.S. company to an Irish company, with a withholding tax rate — of just 15%.

Let’s take a look at the ETFs that we have access to in LSE which could be our International Fund:

[Updated 29-Feb-2020] I have swapped out iShares Core MSCI World UCITS ETF (IWDA[USD] or SWDA[GBP]) for SPDR® MSCI World UCITS ETF (SWRD) which was launched last year (28-Feb-2019).

The swap is because they both track the same index but SWRD has a lower expense ratio (0.20% vs 0.12%.) Although SWRD is a much smaller fund (since it’s much younger – this means the trading volume is lower and could mean higher bid-ask spreads – if you are buying and holding for the long term, the difference in bid-ask spread won’t matter much.

I also believe the fund size as well as daily volume will continue to grow due to lower expense ratio so investors will be shifting funds over. The difference in expense ratio (though by just 0.08%) will be significant over the long term.

Disclaimer: Due to switching costs, I still continue to hold IWDA in my own portfolio.

Expense Ratio0.22%0.12%0.18%
Replication MethodPhysicalPhysicalPhysical
Dividend DistributionAccumulatingAccumulatingAccumulating

All 3 options are “Accumulating” ETF, which means they do no distribute dividends and instead they automatically reinvest the dividends for you back into itself. This means we don’t have to wait to receive the dividend and manually reinvest, it is done automatically for us. Since I’ll be reinvesting dividends anyway during the wealth-accumulating phase of my journey, having this handled automatically for me is great. This means my dividend will never be sitting idle.

Let’s take a look at each option.

VWRA: The Simplest Option

VWRA is similar to VT in the U.S. but it is missing the small-cap companies that VT provides. It is the simplest option with a good expense ratio that allows you to simply add both developed and emerging market companies to your portfolio in just 1 ticker. Simply add VWRA to your portfolio in the right allocation and your International Stock portion is done. Simple!

SWRD & EIMI: The Developed & Emerging Market One-Two Punch

Disclaimer: Though I currently hold EIMI in my portfolio, I am not sponsored by iShare – but hey if they’d like to reach out, I’m all ears!

Although VWRA is the simplest option, it is not what I’ve selected for my own portfolio. What I did instead was to purchase IWDA (SWRD equivalent – see update above) and EIMI in combination in order to form this part of my portfolio.

Here are 3 reasons why I did not elect to use VWRA:

  • The expense ratio of VWRA is 0.10% more than SWRD and 0.04% more than EIMI and every little bit counts when this is going to be the largest part of my portfolio.
  • SWRD and EIMI split allows me to have flexibility in how much I’d like to be exposed to developing markets vs. emerging market separately (I can choose 50/50 split or 80/20 split between SWRD/EIMI based on my risk appetite.

SWRD provides me with the developed markets exposure and EIMI provides the emerging market portion. Together, I will only be missing the developed markets small-cap companies from this group, which is probably fine as in contrast, VWRD is missing the small-cap companies from both developed and emerging markets.

Having the developed and emerging markets in 2 separate ETF also allows me the flexibility to increase or decrease my portfolio exposure to either markets independently. That’s a flexibility that you can view as both a positive or a negative, but it’s good to note. At the moment, I try to keep the emerging market exposure to roughly 10% of my portfolio.

Having said that, both routes are great choices and you can choose either option to make up your International Funds and you’ll be fine.

If you are wondering if the emerging market makes enough of a difference to bother, and you are choosing between just getting VWRA or just SWRD (ignoring EIMI) I think Investment Moats’ article comparing the performance between IWDA (the SWRD predecessor) and VWRA is a good read.

Phew! Hopefully that was clear. Now, let’s take a look at bonds!

Bond Index Fund

Finally, last but not least is the Bond Index Fund. The role of the bond fund in the 3-Funds Portfolio is to provide stability and “smooth out the ride” as JL Colins of www.jlcollinsnh.com like to put it. (Check out his famous Stocks Series, it’s great!)

Bond prices are largely dependent upon the interest rate environment which changes much less often, in a slow and more predictable manner. This will mean that bond prices are much more stable and less volatile than that of stocks. Additionally bond prices tended to historically be inversely correlated with stock prices – meaning when stock prices go up, bond prices tend to fall and vice versa.

By adding bonds to your portfolio, when stock prices fluctuate and maybe falls sharply in recessions, the bond fund component is there to reduce the impact by moving in the opposite direction as the stocks. Of course bonds also has a much smaller potential return compared to stocks (1-2% for bonds compared to 7-8% for stocks in inflation-adjusted returns.) Due to this, most investment advice always recommend adding more bonds to your portfolio as you age to reduce risk at the cost of also reducing returns.

OK that makes a lot of sense, so what’s available for us?

For the bond fund, since we want to make sure it is low risk, we want to approach it in a similar way to either the local stock market fund (made up of SGD denominated bonds to mitigate currency risk.) With that criteria, we really only have 2 options here:

Total Expense Ratio0.25%0.30%
Fund SizeSGD $754.52MSGD $290.51M
Yield-to-Maturity2.34% p.a.3.22% p.a.

In terms of liquidity, neither of the Singapore bond ETFs has fantastic average daily volumes and thus suffers from a larger bid/ask spread (the gap between the price the sellers want to sell and the buyer wants to buy.)

After assessing my situation and looking at the options above, I’ve decided not to have a bond portion to my portfolio.

Wait what? Why don’t you have a bond allocation and what are you doing instead?

There are a number of reasons why I do not personally have a bond allocation in my current portfolio:

  • Long investment horizon: Since I am relatively young, being only 33 years old, I have a longer investment horizon which reduces the risks from stock market volatility. Having the majority (even up to 100%) of my liquid investable cash in stocks allows me to capture higher average returns of equities and let compound interest more time to work its magic. Putting a portion of my investments into bonds now – while it lowers risk – also lowers the returns of the portfolio.
  • We already have CPF: As Singapore residents, we are all required to fund our CPF accounts each month. The contribution can be as much as 20% of our paycheck – dropping lower as our income rises above the $6,000 cap – with another up to 17% contributed by our employer. These amounts are already being placed into the Special Account (at least 4% in risk-free return) and Ordinary Account (at least 2.5% in risk-free return). Given the amount we are already contributing to the CPF monthly AND the relatively high risk-free return we receive, we can view this portion of our networth as our “Bond” component and put the rest of our liquid cash into stocks instead. (Should you invest your CPF money?)
  • Low volume, large spread & returns of the bond ETF: Lastly, the quality of the Bond ETFs are frankly not that great. The returns aren’t much higher than the CPF return (and is not risk-free), the liquidity isn’t good so the spread is large (means you end up paying a bigger premium every time you buy or sell.)

Based on the above, I decided to forego having a bond portion. However, if you feel that despite all the above points, you’d still like to build your bond portion, I’d probably go for the ABF Singapore Bond ETF due to lower expense ratio, higher volume, and larger fund size even though you get slightly lower returns since the bond allocation is meant for stability and not for gains.

One big benefit of having a bond allocation that is not your CPF is that it is liquid. This means that you can make use of it for rebalancing your portfolio when a recession hits. If stocks start dropping in value significantly, it is beneficial to have a bond component that has not gone down significantly that you can sell to buy stocks when stocks are cheap. Without the bond component, you may not have liquid cash ready to take advantage of the drop in stock price as all of your money is already invested in stocks.

Of course, if you are still employed and earning consistent income, you should be able to continue to buy into the stock market as prices drop – this does require to continue having a job when the markets are tanking (something that’s not a guarantee during times of market trouble.)


And there you have it! My thoughts and notes on how to construct a 3-Fund Portfolio in Singapore to set yourself up for long-term investment success! This is a pretty long post, which I think is good for going into adequate depth on a topic like this, but do let me know if you prefer content in long-form like this or more broken up in smaller posts instead so it’s not overwhelming.

Thank you for reading this far and I hope that this post was helpful. If you have your own take on the 3-fund portfolio that is different from what I’ve shown here, I’d love to hear it!

Of course, if you have any questions, suggestions or feedback please let me know in the comment section down below! You can also follow me on twitter if you want to have a conversation by tweeting @firepathlion! Thank you for reading!

If you enjoyed this post, it would make my day if you could help share this article with your friends who might also find it interesting. Thank you!

Until next time!


118 thoughts on “The Bogleheads 3-Fund Portfolio for Singapore Firewalkers”

  1. Regarding the use of CPF as bond replacement, one can still use the amount in CPF to buy STI ETC while the stock start dropping value.

    • Yes that is true. The CPF has the benefit of having a relatively high and safe return while also can be used during bad markets like the financial crisis of 2008 to buy up stocks for cheap. Sort of a best of both worlds.

      • I stumbled upon your blog and I must say this is a very good write-up.

        Really appreciate if you can answer some of my questions as I’m very keen to replicate this strategy.

        1. For your investments into this portfolio for the equity portion, is this solely based on cash? Or it includes CPF as well?

        2. Also, your investments into foreign equities are based on DCA? Would you recommend manually DCA for these equities or a lump-sum investment whenever the price is attractive?

        3. What % of disposable income will you recommend to commit to this portfolio? It feels like you’re committing a lot into this portfolio

        4. Can cash in high interest savings account be a possible replacement for the bonds component?

        5. Given the recent headwinds & SG possibly going into a recession, does it make sense for me to start this portfolio strategy now?

  2. I am SO excited to come across this blog and read about Fire from a Singapore perspective! I’ve been looking for information like this for a long long time! Thank you for starting this blog!

    As an aside, have you heard of ChooseFI? I think you would make a good candidate for launching the ChooseFI Singapore local group! (There are hundreds of them around the world.)

    • I’m so glad you are enjoying reading this blog! Since it’s still early on, I wasn’t sure if this type of in-depth long-form content would resonate, so I’m very happy to hear that you’re finding value in my posts.

      I’ve certainly heard about ChooseFI! I listen to them twice a week, including many other FIRE-related podcasts – I recommend Mad Fientist’s as well if you haven’t started listening to him yet! Great to find another FIRE enthusiast here in Singapore 🙂 A ChooseFI local group does sound like a lot of fun but I’ll have to explore how to do this without exposing myself to my employer! Even if I may not be able to start one, I would definitely love to attend a local meetup of some sort (under the guise of anonymity, hahaha.)

  3. I am SO excited to come across this blog and read about Fire from a Singapore perspective! I’ve been looking for information like this for a long long time! Thank you for starting this blog!

    As an aside, have you heard of ChooseFI? I think you would make a good candidate for launching and moderating the ChooseFI Singapore group!

    • Oh I had another question, looking at the performance of VTSAX vs ES3, the trend up in ES3 does not seem as obvious. One of the ideas behind buying the market is that as long as the economy is robust, the market will always trend up, but I’m not sure I can see that in ES3?

      ES3 also seems a lot more more volatile (understandably, given that it’s only 30 companies), but this volatility will eat into returns as a consequence of sequence of returns. What are your thoughts on it?

  4. Hi there
    Thank you for producing this very useful blog. There is limited info on index investing for Singapore so your views have come in very handy!

    My questions:
    1. What is your allocation between the Singapore and international equities and bonds?
    2. For those who want to set up a monthly savings plan to include both Singapore and international exposure, how would you suggest going about setting this up? For example to start, which platform would you recommend? I’m conscious that a monthly plan which incorporates 4/5 (Singapore and international) funds may be quite expensive in terms of fees.

    Thanks for your advice!

    • Hi Roundcloud! I’m glad you liked my post! Here are my answers to your questions:

      1. Currently I’m trying to shoot for 20% local and 80% international. I don’t plan to hold bonds at this time and may get up to about 10%-15% bond when I retire so I have some amounts I can use for rebalancing. This is because equities has a much higher growth rate which is needed to sustain a long retirement (more than 40-50 years) so I don’t plan to have much bond allocation 🙂 I hope that makes sense!
      2. Unfortunately I don’t see any service that offers an automated way to invest into international stocks on a monthly basis. All the regular savings plans offered here only allow you to automate the purchase of local shares listed on the SGX, no international. For the best options for investing in local stocks, you can check Seedly’s post comparing all the available plans offered by multiple brokerages here: Which Regular Savings Plan Is The Cheapest? POSB vs OCBC vs POEMS vs Maybank Kim Eng

      I hope that helps and feel free to ask any further questions! Thank you very much for reading!

  5. Thank you so much! To follow up then, what would be a cost effective way/ platform to invest on a regular basis in international funds? Would be interested to know how you have done so!

    • Sure! Though at the moment I can’t say if the current platform I’m using is necessarily the most cost effective as I haven’t really done enough research into the other platforms!

      What I can say is this: I am currently using the POEMs platform by Phillip Capital and I only really purchase from LSE and U.S. exchanges.

      The commission for each trade are:

      • LSE: Minimum GBP 25 or 0.4%, whichever is higher.
      • U.S.: Minimum USD 20 or 0.3% whichever is higher.

      So with that, I make sure that I always save up until the fees get as close to the minimum as possible. In the above cases:

      • LSE: Minimum trade = GBP 25 / 0.004 = GBP 6,250 or roughly SGD 11,000.
      • U.S.: Minimum trade = USD 20 / 0.003 = USD 6,667 or roughly SGD 9,000.

      This way to are trading in big enough sizes such that you minimise your fees. You should do this with any brokerage firm you use so that the absolute amount you’re paying in fees are a smaller percentage of your total trade. I hope that makes sense.

      This may mean you’ll have to save up for a few months before making 1 trade, but that’s the way to reduce your costs. Making 1 trade every quarter or even every 6 months is fine as well, so no need to rush. Lower cost and consistency is more important long term.

      • Excellent Post. I follow similar principle and have my brokerage account with Saxo. When i initially started , went with SGD account. So, all my trades are converted to USD at the time of purchase incurring exch rate conversion. I am not sure if those rates are competitive. Do have a suggestion based on your experiance? Is you account USD or SGD account with Poems. Would it be better to have USD account(SAXO provides the option) and then top up cash in USD ourself(exchanging outside-other banks)

        • Hi Krishnan! I would try to measure the current rate that you’re being charged at Saxo. The current conversion rate that I am paying averages around 0.28% of the transaction value and I find that this is reasonable. I have not yet explored whether using an external currency exchanging service would have been better and how much better. This is mainly because I don’t believe that I will get much better than 0.28% to warrant putting in the effort to find such a service and going through the hassle of finding the method to convert the funds and transfer the USD back into my brokerage account without incurring any further fees. At the moment if I do a quick check using TransferWise we’d get USD 7,248.85 for SGD 10,000 whereas we’d get USD 7,281.49 when checking with the Google rate. This is a difference of USD 32.64 which is about 0.448% – much more expensive than what I’d get by just doing so through my brokerage. So at the moment I don’t know if there are services that will be able to give us a much better rate that is worth our time 🙂

          However, do check what Saxo is currently charging you so you know that you’re not getting ripped off!

      • Hi there, love the content of your blog! I lost some sleep last night binge reading your posts and not regretted one bit!

        I’m in the midst of setting up my very own 3 funds portfolio and deciding on a broker to buy my ETFs from. I came across your comment above. Based on this link: https://financialhorse.com/best-stock-broker-2020/, why did you stick with POEMS when SAXO is looking to be cheaper?


        • Hi Yun! I stuck with POEMs because it would just be troublesome to move hahaha and I like keeping my stuff in 1 place. The fees I’m getting is not too bad, though higher than the optimal.

          Also there’s a recent update to International Broker’s fee structure which make them a better choice now I believe. Their trade commissions are only 0.05% or USD 1.92 whichever is higher and there’s no inactivity fee etc now. You can check that out as well.

  6. Thanks again for sharing your thoughts. A final question: if you convert SGD to purchase your funds in the local currency (GBP or USD), how do you mitigate the risk of currency movements in the long run? For eg, you invest S$1000 now and it buys you £550 worth of shares in VWRL. In 10 years VWRL is worth £1100. But when you convert GBP back to SGD you only get $1000 because the rates have moved against you.
    Again, would be most interested and grateful to hear your thoughts!

    • Yes currency risk is definitely a concern and I will be doing a long-term investment analysis on IWDA as well while also incorporate the effect of currency movements. I think the preliminary results still shows very good returns in the past 7-8 years even when accounting for times when SGD rose against USD. Hopefully I have that article up once I finish the STI series and I’ll let you know! However, on the topic of risk mitigation, that is precisely the reason why we must have SGD denominated portion of our portfolio, if USD somehow drops against the SGD and wipes out all returns in IWDA or VWRL, then we have the STI ETF to draw on while the USD recovers. This doesn’t eliminate the risk, but it does allow us to wait it out.

      Also, IWDA and VWRL are only denominated in USD, but the underlying assets still has its own value. Even if USD drops in value, the value of the underlying asset (the companies) has its own intrinsic value which are not tied to the value of the currency. For example let’s say 1 USD = 2 SGD and Apple is worth USD $5 today (SGD 10), however somehow USD drops against the SGD to 1 USD = 1 SGD, but Apple itself never drops in value, you’d expect it’s share price to adjust and become USD 10 (and thus also still worth SGD 10) as the business fundamentals did not change. Although this is of course a simple scenario, but evidence suggests that equities is a good hedge against inflation and drops in currency value.

  7. I will look out for that, I don’t think anyone has done any research on the effects of currency movements on long term investments in Singapore. Would be super helpful to see this especially with the MAS’s long term policy of gradual appreciation of the SGD, which of course means that any investments you buy in say USD or GBP will suffer FX losses in time which will eat into profits earned from the underlying fund.
    Thanks again for all your hard work.

  8. Hi FPL,
    Great post! If your local bond ETF is not attractive, why not consider a global bond ETF (like IGLO) considering that your portifolio has a global stock ETF (like VWRD or IWDA+EIMI)?

    • Hi SAndrew! That’s a good question. The reason I do not replace the local bond ETF with an international bond ETF is because the Bond portion of the portfolio is meant to provide stability to the overall portfolio. With an international bond ETF, it is usually denominated in USD and the dividend is also in USD, which exposes that to exchange risk. I haven’t done a deeper analysis of the effects of exchange rates on past performance (maybe I will do that in the future and find that I’m worrying for nothing) but I think it would negate the purpose of the bond fund by having it be affected by the volatility of the currency exchange.

  9. Great blog post! It was informative and well written, please keep this up – there is hardly any FIRE financial blogs for Singaporeans so I was pretty excited to see this and shared it with my circle of friends.

    One question though, why are you shooting for 20% local and 80% international? Is it because Sg market is too small so you don’t overweight it?

    • Hi Ochazuke! Thank you for reading and sharing my post! I hope to keep making good contribution to the FIRE community here.

      The reason I am shooting for 20% local and 80% is:
      1. The local is meant as a hedge against exchange rate risk in case the USD value drop negatively impact my international investments.
      2. Historically Singapore index returns are lower on average than international, and I expect it to continue to do so. This is because –
      3. International is more diversified and includes many more global companies compared to the STI (which only includes 30 companies.) So if we believe in holding public companies as an engine of growth, holding more companies and internationally is better than holding a smaller set.
      4. An added point to diversification. International fund provides global market exposure which is much safer than betting just on Singapore.

      Those are my main reasons why I would like to only hold 20% STI instead of higher. Hope that answers your question! 😁

  10. Hi, for US-listed ETFs, you said there is “up to 40% estate tax for any investments exceeding USD $60,000 in total value.” I recall Financial Horse said there is only the 30% dividend withholding tax. Please advise where we can see the details about this 40% estate tax. Many thanks!

  11. Hi FPL, thanks for the info! I found an issue for Irish-listed shares from one of Financial Horse’s readers who wrote “(page 78 Vanguard prospectus): “If a Shareholder does not dispose of Shares within eight years of acquiring them, the Shareholder will be deemed for Irish tax purposes to have disposed of the Shares on the eighth anniversary of their acquisition (and any subsequent eighth anniversary). On such deemed disposal, the Company will account for Irish tax on the increase in value (if any) of those Shares over that eight year period. The Company will pay this tax to the Irish Revenue Commissioners. To fund the Irish tax liability, the Company may appropriate or cancel Shares held by the Shareholder. This may result in further Irish tax becoming due which the Company may satisfy by appropriating or cancelling additional Shares of the Shareholder. No tax is payable by the Company in respect of Exempt Investors and Shareholders who are not resident or ordinarily resident in Ireland and the required Declarations are in place.” ” How does this affect Singaporean investors, and what can we do? Thanks!

  12. Hi FPL,

    I currently have some DCA into G3B and is interested in purchasing some IWDA/EIMI as well. Do you have a begineer guide on how can i do that? Also what are all the underlying fees that i’ll have to pay? Purchase/sell fees?

    • Hey Eugene!

      Thank you for commenting! Although I haven’t written that beginner article yet (I should get to it at one point) but you can first refer to this article from Financial Horse on this topic: https://financialhorse.com/stock-brokers/

      If you are looking to buy IWDA/EIMI, you’d want to look at the part about the UK Market and make the decision there. He also covers all the costs that you will incur from each of the options as well. I hope this helps good luck on your investment journey!

  13. To my understanding, your strategy involves investing in these indexes to eventually build a portfolio big enough to sustain your COL in the future through passive income. I’d like to ask a few questions:

    1)Do you also have a stock portfolio outside of the three key equity foreign and bond indexes which focuses on dividends as well? If so, what’s a decision point you’d have to divest a stock (i.e. Profit of.. 15%?) or would you continue your Dollar Cost Averaging and never sell the stocks.

    2) how do we trade in the foreign etfs mentioned in your article (the LSE ones). I personally use POEMs as well.

    3) what’s the process of subscribing to the regular savings plan on POEMs and the minimum amount?

    Thanks in advance and thank you so much for providing a Singaporean’s viewpoint on FIRE! It’s been something that has been lacking for a long time.

    • Hey Brandon! Thanks for reading and asking your questions! Here are my answers:

      1. I do not have a dividend investing strategy and I plan to fully continue Dollar Cost Averaging while I accumulate my portfolio. I will only be selling to rebalance along the way or once I’m already FIRE’d.

      2. Within POEMs you can search for stocks listed in quite a number of markets. Look for the “Trade” Tab on the top and then within that tab select “ETF” or “Stocks” then search for the share you wish to buy. If you have USD in your account, you can choose to have the settlement currency as USD, otherwise select SGD as a settlement currency. Depending on the type of account you have opened with POEMs, you may be able to buy first and pay later, or you must topup your account before being able to place an order. For mine, I have to topup before making a purchase.

      3. The first time you subscribe to the Regular Savings Plan you must do so at the Philips Investor Center and sign a form. To start, you must select at least 1 ticker, provide a GIRO facility and select how much you’d like to purchase of that ticker per month. Philips support up to 30 tickers for the RSP (I think they are the components of the STI Index) as well as the STI ETF 🙂 There’s no way to start the RSP purely from online I believe. However once you have started, you can use POEMs to change the monthly purchase amount at any time as well as add more tickers at any time. The minimum investment amount per month is S$100 I believe.

      I hope that helps! I’m glad that you’re also looking for content around FIRE in Singapore! I was looking around myself and didn’t really see anything catering to this topic specifically so I decided I might as well start my own! If you enjoyed my blog, I’d really appreciate it if you would share it with your friends as well!

      If you have topics that you’d like me to explore, do let me know! I’m trying to keep a backlog of topics that would be interesting to us FIRE folks 🙂

  14. Yo, really appreciate your dedication and passion on the topic. Will definitely continue following your journey to being FIRE’d and will keep a lookout for topics which you could explore thanks alot!

    • Hi Mei! Thank you for commenting!

      I have not used the SSB myself, so please take my response with a grain of salt. I don’t think that the SSB would be appropriate to think of as the bond portion of the portfolio. This is because it doesn’t really allow you to do rebalancing properly. Each person is limited to S$200,000 of SSB at any given time so once your portfolio gets large enough, you won’t be able to buy any more SSB to make up your bond allocation.

      The bond portfolio is also meant to provide a counter-balance to your stocks portfolio so ideally it should move up when stocks are down and vice versa. However, the SSB value stays the same (that’s the value that SSB provide, extreme stability.) I think it’s even safer than a U.S. Treasury Bill since the T-Bill price actually fluctuates with the market and interest rate.

      In this case, I think of SSB more similar to an FD, cash or high interest savings account with a 1-month redemption delay. I’d think of it more of a place you can hold your emergency fund to protect it against inflation, but not really as an investment vehicle. Of course, if you are looking for something to stabilise your portfolio, then using SSB will be better than not having just 100% stocks portfolio. However, I think it’s more similar to holding cash. That’s my take. Hope to hear what you think!

      Thank you again for reading my post! 🙂

  15. Hi,
    Given that most Singaporeans will be tapping on CPF-OA funds for housing, I am curious to know more about your strategy of using CPF funds to form your bond portfolio. How do you rebalance it?
    Thank you!

    • Dear FPL, thank you for the great post. The dividend yield for VWRD listed on LSE is 1.98% as quoted by Bloomberg. As a Singaporean investor, do we receive 1.98% or (1.98%-15%) dividend?

      • Hey Kt! Thanks for reading! The dividend listed is already after the 15% withholding since that is withheld before the dividend is paid to Vanguard (then Vanguard pays the rest out to investors, giving you the 1.98% figure.)

  16. Hi, for the international ETF, other than IWDA, there is a new etf SWRD by SPDR that has TER 0.12%. I think its also ireland domiciled and is accumulating too. What are your views between these two etf choices for the international etf portion?

    • Hey Cx! You are right! Interesting… after looking at both again the main difference seems to be the TER and the size of each fund.

      The IWDA is slightly more expensive at TER of 0.2% but an asset value of $19 billion.

      SWRD is cheaper at TER of 0.12% but an asset value of just $303 million, so 2 orders of magnitude less.

      So the concern I have for SWRD is liquidity and trading volume. I believe they are offering such a low TER in order to attract investors to buy more into the fund. I don’t see any reason why it won’t grow to be competitive with IWDA since SPDR is a pretty well-known company. If it continues to get more liquidity, I might just switch to using SWRD myself! At the moment there’s an inertia for me since I’m already invested in IWDA and switching will incur trading costs. If I just buy into SWRD going forward instead of IWDA, that could be the solution, but it also increases my custody fee so it’s a tough one… hmmm. I’ll need to calculate how much the saving of 0.08% will mean over my life-time haha. It might not be large enough to really bother switching at this point.

      • Hi FL!

        Was just looking into this very exact topic – SWRD vs IWDA.

        If I am just starting out my investment journey, would you recommend I just go with SWRD and forgo IWDA (since I don’t have to incur the cost of ‘switching’)?

        • Hey! If you hate just starting out and haven’t bought any of the tickers yet, then SWRD is great. The lower volume and smaller fund size shouldn’t matter much if you’re just buying over the long term. Eventually their fund size and volume should go up due to lower cost. The 0.08% difference in expense ratio is attractive over the long term for sure and if you can start with it, I’d recommend to go with that!

      • Hello FPL,

        You mentioned that the SWRD has AUM of $303 mln back in August 2019. I suppose you got this figure from the fund manager.

        I checked the total NAV of SWRD today which says as of 14 May 2020, it is $148 mln.

        Do you think there is an outflow since August 2019 and hence, would this imply concerns on its long-term fund viability?

        • Hey E K, yes the August 2019 number I got from their Fund Fact Sheet at the time. The AUM drop could be accounted for by 2 major things, the market crashing due to COVID-19 thus reducing the value of the total assets (since prices dropped by more than 30% at one point) and also due to people selling out during the crash.

          However, I would not worry about the fund’s viability too much since $140 million is still good for a fund and SPDR is a reputable fund management company with huge AUM across multiple funds. It would be devastating for them to allow a fund like this to go under so they’ll likely make ends meet with other funds in their portfolio. In the long term, I do still believe that the low TER will allow it to grow the AUM over time once the market has stabilised.

  17. Great post. I have a question regarding the SWRD and IWDA. Since these two ETFs are similar, why the prices of them differ greatly? Around USD20 and USD56 for today respectively.

    • Hey Elf! Thanks for reading! Yes SWRD and IWDA are attempting to replicate a similar index and thus are extremely similar. They are offered by different providers (IWDA by iShares and SWRD by SPDR) and thus each provider gets to choose the which they would like to baseline each share of the ETF (cheaper price per share tend to make the ETF more accessible to smaller investors who can purchase more units using less capital.)

      However, as both ETF replicates the same index, when the underlying index increases by 1% both ETF will increase by roughly 1% and conversely if the index drops by 1%, both ETF will also drop by roughly 1% as well, so it doesn’t matter which ETF you choose from gains perspective.

      It’s like if I have 10 doughnuts and sell them in a bundle of 2 for $2 each (IWDA) but another seller choose to sell them one at a time at $1 each, in the end if the price of the 10 pack of doughnuts go up to $20, the bundle of 2 will be $4 and individual piece will be worth $2, it’s just how each seller wants to bundle the units of goods.

      I hope that makes sense.

  18. I stumbled upon your blog and I must say this is really well written.

    I’ve been searching for a similar portfolio and I’m very keen to replicate your portfolio strategies. Appreciate if you can answer some of my questions:

    1. Does your investment into this portfolio for the equity portion includes CPF or solely cash? Because from your write-up & replies, it seems like you’re putting a lot of money into this portfolio.

    2. Does it make sense to hold my money in high savings account for the bond portion?

    3. I understand there’s no option to DCA into the foreign funds mentioned in your post. Are you buying them as a lump-sum? Or do you manually buy in every month?

    4. What % of my disposable income will you recommend putting into this portfolio?

    5. Given the headwinds and SG possibly entering into recession next year, does it make sense for me to start this portfolio now?

    Looking forward to your replies and newest post!

    • Hey Jggg! Thank you for reading and reaching out with your questions! Here are some answers to your questions:

      1. Currently my portfolio shown here consist only of cash + SRS. I am still keeping my CPF uninvested as I need the funds for housing in the near future.

      2. The high savings account should be looked at as an emergency fund as it will likely not beat inflation (or not by much.) The bond portion should still provide returns but still provide a relative safety net compared to stocks in times of a recession. Personally, I would not keep more than 6 months or 1 year of living expenses as a emergency fund in high interest account.

      3. I currently purchase the foreign fund as and when I get my salary. You can say that I do a lump sum each time I have enough money to buy the stocks. However, as I am buying with all of my disposable income (which is around a fixed amount each time) over a long period, I’m effectively spreading out my risk over time. The advice is to buy whenever you have the funds to do so at a reasonable cost and don’t wait to cumulate money until you have money to invest in a large lump sum. You can read my post on Lump Sum vs DCA to read more in depth as to why 🙂

      4. Personally, I will hold about 6-12 months in emergency fund outside. Then any large money you know you will need in the short term (like to buy a house etc) should also be kept out of the market. The rest I am currently putting into this portfolio to expose it to the growth/risk of the market.

      5. If you are going to be investing for a long period of time and are following a proper portfolio allocation for your risk tolerance level, the recession will not matter in the long run (over 10-30 years.) So if you are following this investment principle, I would say waiting is just trying to time the market. Nobody can be sure that markets will go up or down tomorrow. It could go up for another 10 months before coming down and it may not come down as low as it is today. It could also drop tomorrow. But as nobody knows and in the long term it doesn’t matter, I don’t think there’s benefit to waiting.

      Most important thing if a recession does happen. Whatever you do, do NOT panic and sell unless you truly need the money. The market will come back up and you want to stay in the market so that your funds capture the returns when it does recover. If you panic and sell, you might as well not started investing as that will definitely cost you. It will be likely that you will buy in at a high, sell at a low, then when the market begin to recover, you’ll take some time before becoming confident enough to get back in – thus locking in a huge loss.

      Hope that answers your questions!

      • Reading your answer, raises a question for me.
        Are you able to use SRS fund to buy SWRD/IWDA in Poems? Am with Saxo broker and its not possible. For this reason, i buy the Lion global fund that tracks Vanguard fund(VT). Its one of the unit trusts available under OCBC. It comes at a high cost of .38%. So, if there is another option to buy SWRD with SRS, will be greatly interested to know. Thanks in advance.

  19. Hey!

    Since IShares MSCI World ETF is listed in many different exchanges and currencies, what made you reach the decision to invest in IWDA listed in USD in London Stock Exchange? Why not the same ETF listed in EUR or GBP, or one from Xetra for example? Does it make a big difference which listing of this ETF we should pick? Thank you for this lovely blog <3

    • Hey Lumi! Thanks for the question! To be honest I didn’t think too much about the currency selection. The reason I chose USD was because that’s the one I could buy with my brokerage so there isn’t really a deeper reason haha.

      However it shouldn’t matter which currency you buy it in since the underlying values of the shares are the same. You should pick the currency you have an easier (and cheaper) time converting to and from SGD. since USD is the most highly traded currency, it might be cheaper to stick with USD unless you have some use for GBP or EUR in your brokerage account. Hope that helps!

  20. Dear FPL, thank you for the great post. The dividend yield for VWRD listed on LSE is 1.98% as quoted by Bloomberg. As a Singaporean investor, do we receive 1.98% or (1.98%-15%) dividend?

    • Hi Kt! Thanks for reading! That is a dividend with 15% already withheld so you will receive the full 1.98% because LSE list what VWRD pays out to investors (which must have already had the withholding tax deducted.)

  21. FSM1 just launched with their own rsp plan and it is alot cheaper than posb invest saver and other brokers/banks. For local domiciled etfs, 0.08% or min sgd 1 to invest but there is minimum sgd 10 to sell. What are your thoughts on their rsp? Is it a game changer for RSP services?

  22. What about the new etf VWRA which is the accumulating version of VWRD? Would it make sense to just have a single etf or continue with SWRD + EIMI?

  23. Hi,

    What do you think about VWRA as it is the same exact thing as VWRD but one is accumulating and the latter is distributing?

    • Hey! In my opinion accumulating is better than distributing because you don’t have to bother with reinvesting the dividend yourself and you’ll only need to sell the shares to generate cashflow when you need. It’s much lower maintenance and leaves less money on the table since you don’t need to wait before reinvesting the dividend, all automated. That said it is rather new and isn’t as liquid compared to the others so the bid ask spread might be a bit higher. That should come down over time though. So if you’re going in for the long term then it’s a solid choice!

      • The bid-ask spread of VWRA is currently 10 cents, while for IWDA it’s usually 5-15 cents wide. For a regular investor who doesn’t trade frequently and who doesn’t move serious amounts of money, bid-ask spread isn’t that important, compared to the expense ratio. For VWRA, it’s just 0.22%, impressively cheap given that it includes both developed and emerging market. Not to mention it’s from Vanguard, who has a well-earned reputation for looking after its investors.

        I agree that for long-term investing, VWRA is a great choice.

        Just curious, why do you prefer a local bond fund (A35 / MBH) as the bond fund, instead of a globally diversified bond index fund? Thanks for the detailed article Firepathlion.

        • Hey JA! Agree on the bid-ask spread, I don’t think it’s a major concern here. The TER being 0.22% instead of 0.20% (IWDA) and 0.18% (EIMI) is really not a big deal. What you lose with VWRA is the “Small-Cap” companies in developing markets, which also isn’t too big of a deal. It’s definitely a solid choice.

          In terms of bond fund, I personally don’t hold bonds at all as my horizon is long enough to withstand the risk of equities. In the long term equities growth rate is much better than bonds. However if we live in Singapore, I believe we want a bond fund that is low risk so I feel that a local bond fund denominated in SGD would let you avoid the exchange rate risk. Of course… you’re trading this off with even lower returns and less diversification… so it’s a complex decision. Your question is a good one and this might warrant a more detailed analysis to really compare the pros and cons between local bond funds and a more globally diversified one – could be a post in the future! Thank you for asking these questions!

  24. Hi FPL,
    Appreciated your sharing on international ETF and invest via LSE, for lazy guys.
    Where to get more information of these ETF (SWRD, EIMI, IWDA, VWRA) for better understanding of them.

  25. Hi FPL,
    I was looking up SWRD on Interactive Brokers. There is one listed on LSE and another one on XETRA (IBIS2). One is in USD and another in EURO (i think) and both leads to the same fact sheet.

    Have a question about the 2:
    1) Does EURO mean double conversion cost from my end to asset purchase? (SGD -> EURO -> USD)?
    2) Is both Ireland domicile? i.e. 15% withholding tax

    Overall, is there any significant difference and would you recommend one over the other?

    • Hey Investor J! They’re pretty much the same just listed on different exchanges. For Singapore investors like us since our funds are in SGD, it doesn’t really matter which one we use. The conversion is SGD -> EUR or SGD -> USD and your brokerage should be charging similar spreads for conversion. I’d go with USD though as a preference since it’s a global reserve currency. The reason why it makes a difference in Europe is because if the investor’s income is in EUR, they don’t have to pay exchange charge. I believe there is also a GBP version meant for people investing in the UK. All are the same.

      If you have funds coming in in USD, then choosing the USD one will save you the conversion cost.

  26. Hi FPL,

    I must say your article is by far the most beginner friendly one i have read so far.

    Does the 3 Fund Portfolio still work if i were to replace local STI ETF with S-REITS ETF instead? Is it as effective in guarding against foreign currency risk?

    Thank you!

    • Hey Doug! Thank you for reading and the kind words! I’m glad this post has been helpful!

      In terms of going for S-REITS ETF instead of STI ETF, I’m not a big fan because it’s very industry specific. I assume you’re doing it for the dividend income, but being industry focused opens you up to concentration risk. Of course it also has less potential for capital appreciation due to the nature of the industry. Which S-REIT ETF are you looking at and what’s the past dividend payout?

  27. Hi FPL,

    Thanks on all your sharing. I must say this is really well written and easy to understand especially for beginner investors like me. You inspire me to start my investing journey this year and going with Bogleheads 3-Fund Portfolio 🙂

    I was reading up on SWRD and IWDA after I came across your blog and I came across VHVE. What do you think about VHVE (USD, Accumlating, 0.12% TER) a new etf which only started last year and is the accumulating version. Vanguard is also reputable for looking after its investor (at least this is what I read so far haha). If I have not started investing, is this a good idea to start with VHVE first? Thanks.

    • Hey N! Glad you liked my post and found it useful!

      I’ve just taken a look at VHVE, thank you for bringing it to my attention. I think it looks like a very good option! A few things I notice, it follows a different benchmark (FTSE Developed World) than IWDA (MSCI World Index) and therefore has a much larger and diverse holding – 2,196 vs 1626 (which is a good thing!) Now adding to this it is by Vanguard AND it has a TER of only 0.12%! The only downside is that the fund size is smaller due to being new thus the liquidity isn’t so good. To me this is not a big deal as I expect the fund size to increase due to being such a good option option for passive investing.

      So if you’re starting out, this is definitely a good fund to get started on, I may even switch over myself 🙂

      So if you’re starting out, I think this is certainly a great choice! I might switch over to this fund myself.

      • Hi FPL,

        Thanks! Good read. Don’t seem to have a lot of difference in the Performance comparison chart for Developed Markets. The Emerging Markets performance comparison chart shows much bigger difference! I think VFEA is a good pair to go with VHVE.

        My only thought is that the volume seems to be very low.. less than 1000… would there be a issue in the long term?

        • The lower volume is due to the size of the fund as it’s rather new. As the fund size increases and more people start buying and selling the fund, the volume should increase and liquidity should improve. If you’re looking long term, this shouldn’t be an issue especially that it’s a vanguard fund.

    • Yes I’m still using this approach, but I’ve stuck with my original fund choice of IWDA even though the expense ratio is higher, it’s mainly because of inertia at this point and I haven’t made the move to switch yet.

  28. Hi FPL, I was thinking about replacing the STI component of a 3 fund portfolio with REIT, (specifically Lion-Philips) due to

    1. better capital gains as compared to STI sideways movement

    2.dividends growth which can be reinvested for more growth

    3. the underlying value of land/property and the belief that it will maintain and grow in value as long as SG does well

    Of course I understand that

    1. My investments will be in a focused in an even more narrow field as compared to the STI

    2. Potential risks due to land/property policy changes in the future

    I’m sure I’m not the first to think about this and I’m wondering what were your thoughts


  29. Thank you for such an informative blog for newbies like me to kick start our investment journey.

    How would you invest in these 3 ETFs based on percentage? For example, $1000 in total for monthly investments?

    1. SPDR Straits Times Index ETF (ES3)
    3. EIMI

    I am guessing 10%, 60%, 30% respectively?

    As per FinancialHorse’s suggestion, if I wanted to include a hedge in this portfolio, outside of the capital markets and add another ETF, let’s say iShares Gold Trust (IAU).

    How should re-balance my portfolio?

    10%, 55%, 25%, 10%?

    • Hi Jason! Glad you enjoyed my post and find it useful!

      In my case, I am trying to target STI-IWDA/SWRD-EIMI at a 10%-80%-10% manner as is closer to way the global market cap is allocated. This plays out nicely as I do believe that the developed markets still have great growth potential compared to the developing markets – however as the developing markets grow, I’ll be adjusting my allocation accordingly.

      As for gold, I believe it is a very conservative play. Gold is really a hedge against instability and inflation – but in not really a good investment vehicle as it doesn’t really produce anything unlike a company. The degree in which you should allocate to gold really depends on how risk averse you are as an investor. If you’d like a hedge against volatility, I’d opt for Bonds rather than Gold. However, this is a decision that you’d have to make based on your own risk appetite.

      Hope that helps!

      • Oh wow, thank you for the speedy reply!

        Point taken on the investment value and I understand from your post that you are no longer holding any bonds.

        1) Based on aggressive investment, what’s the max % you will be looking when re-balancing with bonds in mind?

        2) With only 10% on EIMI, I guess you don’t see much potential on emerging markets?

        3) A long shot here, if I would like to have more India related holdings, do you happen to know any ETF that I can look at?

        Have a great week ahead!

        • Hey Jason!

          1. In my case, I will look to employ the equity glide path strategy detailed in this super comprehensive post on the topic: https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/ The main idea is that there is a Sequence Return Risk for early retirees where the stock market performance in the first few years of retirement has a huge impact on the success of the portfolio over the long term. If there is a huge market crash in the first few years of the retirement, the portfolio will have taken too much of a hit to make it through the retirement because you’re forced to draw down a large percentage of the portfolio too early and thus it will not be able to recover. This means that at the beginning of FIRE, we should have a larger percentage of our portfolio allocated into Bonds to protect ourselves against this risk. However! In the long term a higher equity allocation is required to provide the portfolio with good enough growth to survive a long retirement – therefore we should slowly shift our allocation towards less bonds and more equities as we move further into retirement. So based on the article listed, I’ll be following a glide path where I start FIRE at 60% Equity to 40% bond allocation and slowly increasing my equity allocation back to 100% over 10-11 years – which seem to produce the best results. Hope this makes sense! I definitely recommend you read that article if you want to get into the details!
          2. I want to follow the market cap allocation as much as possible 🙂 So in that sense yes. However as the developing market grow in size, I will be adjusting my allocation accordingly!
          3. Unfortunately, I am not aware of any ETF that is focused only in India, sorry! In any case, if it does exist, I believe it will be extremely expensive to invest in compared to other more popular ETF as that’s a more exotic vehicle.

          Have a wonderful week as well!

          • Hello! It’s me again, thank you for the URL share, it was a mind boggling read with all the graphs and numbers ( definitely not a numbers person, haha) I took some time to also understand the Vanguard portfolio which involves VHVE + VFEA.

            Is there any con for me to pick up the VHVE + VFEA over the SWRD/IWDA + EIMI portfolio?

            I have seen several posts across various forums on their concern about low trade volumes on SWRD so it’s hard to buy/sell. Understand from post that you have started on SWRD (over IDWA) acquisition, do you have such problems?

          • Hey Jason, the difference between VHVE + VFEA and SWRD/IWDA + EIMI portfolio in terms of the underlying investment is just that the Vanguard one follows the FTSE Index and SWRD/IWDA follows the MSCI Index. When you invest in both the developed and developing markets using either of these will track roughly the same things so their performance will be quite comparable. The difference between the 2 indices are the countries that each index define as developing and developed. In one index a country (for example South Korea) might be defined as “Developing” but in another it is considered as part of the “Developed” market. Over all they are very similar and should provide similar returns.

            As for low trade volumes, this is only a factor in times of crisis and you wish to sell quickly – you’d want enough people on the other side of the trade to be buying so the larger volume and liquidity will help there. However, as buy and hold investors we are going to be buying over a long term and only selling years later when we need the money so this will not be an issue. By that point these funds will grow large enough with enough investments that liquidity issues will be a non-factor. That being said, if you want to day-trade, fund liquidity will be a huge problem for you and is not recommended. Of course, I also do not recommend day-trading.

            I have not switched over from IWDA yet, mainly because of inertia and I don’t want to add another ticker to my portfolio – however since SWRD offers lower expense ratio to IWDA, I recommend those who are starting out to just start with that instead of IWDA 🙂

  30. Hi FPL,

    Hope you have a great national day weekend!

    I can’t reply to the threaded replies anymore so starting a new one. Thanks to the wonderful insights on the low trade volumes vs holding for long term. Seems it’s for a long term investment, then short term sells or liquidity shouldn’t be an issue.

    Is there any reason why you prefer to invest in the MSCI Index over the FTSE one? Is it because you were with IWDA previously and Vanguard didn’t come earlier?

    Even with SWRD investment under State Street, the EIMI portfolio is still under iShares, where VHVE+VFEA is both Vanguard.

    I came across various forums, including blogs like https://blog.wealthfront.com/avoid-blackrock-etfs/ which suggest going Vanguard or full State Street is better than anything iShares, what do you think of this part?

    Thanks in advance!

    • Hey Jason, yep I started with MSCI because at the time the vanguard one hasn’t really started yet and I haven’t done as much research into the available funds. IWDA was highly recommended by multiple sources and after looking into it I found it to be the best option at the time – it’s still a perfectly good option today as well 🙂

      As for the article you share on Blackrock vs Vanguard, I think it’s valid. Vanguard does have a better track record of lowering fees consistently to ensure that they minimise cost for their investors due to their ownership structure. So if you can jump into a Vanguard fund to ensure you have a fund with your interest at heart, that’s a perfectly good choice!

  31. Been binge reading your blog of late 🙂 Thanks for the great content

    I have a conceptual question – should one have a different portfolio allocation when one is building wealth to reach FIRE versus when one has already reached FIRE?

    To clarify with a bit of detail, FIRE seems to me like a two-staged plan:

    1) Accumulate wealth to reach one’s FIRE number in a relatively short period of time (e.g. 5-15 years)
    2) Once that sum is reached, draw-down on that sum at the safe withdrawal rate to cover one’s expenses for an extended period of time — e.g. 30 years to indefinitely

    Positioned this way, 1) and 2) appear like very different investment goals. 2) is long term and is what most FIRE research focuses on (which I am 100% sold).

    However, 1) can be a very short-term goal especially if one sets himself an ambitious time frame or has already worked on FIRE for a while.

    – For example, say a guy has worked on FIRE for a while and plans to retire in 2 years. He hasn’t reached FIRE yet but can feasibly do so based on his monthly savings rate + current portfolio value.
    – Should he adjust his portfolio allocation to be significantly more conservative (i.e. more bonds, and even cash / cash-like products), to protect himself against a market downswing in the next 2 years? (And switch back to a higher risk exposure on retirement)

    Interested to get your thoughts – thank you!

  32. Firstly, thank you for the content, it is indeed top-tier and insightful for baby investors like me.
    Secondly, can I ask which platform do you use to purchase International Stock Market Index Fund more specifically (SWRD and EIMI)? And what frequency a year do you purchase them on? Because purchased monthly, it will incure high transaction fees and erode away any potential earnings.

    • Hi Joel! Happy to hear that you’ve found the content here helpful for you! The brokerage I use is Phillip Capital and I use their Cash Plus account. My current portfolio size is large enough such that I can get transaction fees as low as 0.12% with a minimum of GBP 10 – but this does require me to invest quite a large amount per transaction to hit that low fee. I try to accumulate enough for a transaction fee of about 0.20% before buying in – which requires about SGD 9,000 to 10,000 depending on the exchange rate. That used to take me about 2-3 months to accumulate. You’d definitely want to keep the transaction fee lower than 0.5% per transaction if you can, so do save up enough to reduce your fee! Hope that helps!

  33. Hi FPL!

    Do you think it is better to buy

    1. VRWD (where there’s a mix of developed and emerging economies)
    2. Two separate funds (one containing developed economies and another emerging economies) ?


    • Hi June! I touched upon this in the post! VWRD and VWRA are actually the same thing, one is distributing (pays out dividend) and the other is Accumulating (reinvests dividend automatically) so I definitely think it’s a good choice if you don’t want to bother with rebalancing it yourself!

  34. Hi FPL!

    Thanks for the prompt reply!
    I went to read your post. It was really well-written.
    I decided to buy VWRD after some thought but when I went about trying to execute the trade, I realized that there are so many hidden costs involved in buying and selling this counter as a Singaporean.

    Now I am not sure if it’s worth all the hassle because I am not sure how much of the dividend I will end up receiving.

    If there are any readers out there who already own the stock and have received dividends, it would be great if they could share their experience with me!

    Thanks for creating this platform, FPL!

    Your newest fan,


    • Hi June! You’re welcome! The dividend handling fee that brokers charge when shares payout dividend is one of the reasons why I believe it’s better to simply go with the Accumulating version of the funds. In that case, you’ll only have to pay the trading commission and the custodian fee – however you’ll still need to buy a relatively large amount (around S$8,000-S$10,000 worth) in order to minimise your trading commission. This will depend on your brokerage – how much is their minimum commission as well as the commission rate. This way you can control when you want to withdraw the funds and when to pay the trading fee to generate the cashflow that you need. Thank you again for reading!

  35. Thanks for this great post

    I’ve a question regarding bonds. I am ~29 (non-Singaporean)

    I just started investing recently (last month) and portfolio allocation as follow: VWRA 80% and AGGU 20%

    I see a lot of people suggesting that
    – ditching bonds at this age
    – bonds now have low interest rates, it’s better to switch to high-yield saving acc instead.

    So, I am wondering, do bonds make sense in my portfolio?

    • Hi Mohammed! I’m in the camp of holding 100% bond at our age range. I also have 0% bond at the moment so that I can capture the higher potential returns of equities. Bonds help in reducing risk by lowering the total volatility of the portfolio but at the expense of potential returns – so for younger investors who have much longer investment time horizons, the volatility risk is mitigated by the length of the investment horizon.

      If you wish to go with 100% equities, you must be confident that the funds you are investing is not needed in the short term to maximise its chances of providing higher returns. If you do not leave the funds invested long enough, then you have higher likelihood of being affected by short term volatility of the stock market and may end up getting lower returns or making a loss. The longer you can stay invested the less likely you will be to be negatively affected by the short term volatility.

      Hope that helps!

  36. Thank you for sharing this!

    Have you considered WSML (which covers developed market small cap)? It seems we can better replicate the total market with a combination of SWRD, EIMI and WSML.

    Also, have you thought about selling IWDA and put the money into SWRD instead? Think the fees saved will more than cover the transaction costs!

    • Hi Kristine! You’re welcome – I’m glad you found this post useful!

      Your suggestion of using WSML to round out the portfolio so we can also include developed small cap into the mix sounds like a great idea! How many percentage of the portfolio would you consider allocating to it? The TER of WSML is 0.35% which is probably one of the more expensive one – but if we only hold a small amount, it could be nice to have for the potential benefit of holding small cap companies.

      Since MSCI World Small Cap holds roughly 14% of the market cap of each of the countries in the index, and I want 80% of my portfolio to be Developed World. We can say 86% of 80% should be IWDA/SWRD and 14% of 80% should be WSML – which works out to be 68.8% IWDA/SWRD and 11.1% for WSML. To keep it simple, maybe it makes sense for me to go 70% IWDA/SWRD and 10% WSML, then 10% EIMI and 10% STI ETF. What do you think?

      As for switching from IWDA to SWRD – I have in fact thought about that pretty hard! HAHA, I’m in the trap of taking the large cost of selling IWDA then buying SWRD now and then wait a few years to make back that cost to break even due to the TER difference. So based on my calculation, it would cost me 0.12% to sell my holding, then cost another 0.12% to buy SWRD through my brokerage – that’s a total cost of 0.24% of the total value of my IWDA holding today. But the switch from IWDA to SWRD will save me 0.08% on an annual basis which – for simplicity – should breakeven after 3 years (make back the 0.24% in cost reduction.)

      ALTHOUGH, this would all be pretty moot if iShares happen to reduce their TER from 0.20% down to 0.12% as well within the next 3 years to remain competitive against SWRD… and I’d never break even then, hahaha.

      So it was a head scratcher – maybe I’m over thinking it and should just switch. If I had switched sooner, maybe early this year, I would already be on my way to recouping the cost! Ah well… such is life. Taking the huge hit upfront does cause me a bit of anxiety, lol.

  37. Hi, thank you for writing this post for me to understand more.

    I’m 28 and just started investing, looking at long term investment of at least 10 years. For now, I am planning my portfolio: 50% SWRD, 10% EIMI, 5% MCHI, 15% CSPX and remaining are likely individual stocks. Do my allocation make sense though there maybe some overlapping? How should the ideal weightage be for developed market vs emerging market? Do you have any suggestions?

    IWDA was actually recommended in quite a few posts I read, and SWRD is “less popular”. I have compared SWRD and IWDA and the concern I have is the volume for SWRD as it actually took quite some time for my order to be filled. However, if I were to hold it for say 10 years, low trade volume should not be my concern?

    Is it necessary for local market exposure? If so, do you recommend STI instead of individual stocks? I see that STI has been stagnant and the yield is not really high, but my knowledge on local market is limited since I have been researching overseas market. Do you think I should expose certain % of my portfolio to local market, whether STI, REIT, or even individual stock? Is your local portfolio all STI?

    I also have SRS and CPFIA. If you have, do you include them in your portfolio allocation? Because I planned to use CPFIA with Endowus to get access to overseas market, which will add my exposure to US also. As for SRS, I am still considering if I should do it with Endowus or should I use it as my exposure for local market.

    Would appreciate any input from you. Much thanks.

  38. Hi Firepath

    With ISAC in the market, do you believe investing in ISAC would be better than SWRD + EIMI combo?

    • Hey! ISAC has 1,611 holdings in the ETF compared to IWDA’s 1,569 and EIMI’s 2,998 – so in terms of diversification, having those 2 are still better. As for expense ratio, ISAC is 0.2%, IWDA 0.2% and EIMI 0.18% so using IWDA + EIMI is going to give a very tiny edge (probably not worth it.)

      However, ISAC wins in terms of simplicity since all you have to do is buy that single ETF and get both developing and developed market exposures. Although in that case, then it’s best for you to buy VWRA since VWRA is more diversified with 3,589 tickers in the ETF and the expense ratio is only slightly more expensive at 0.22% – which is negligible. Of course VWRA is tracking the FTSE All-World Index whereas ISAC is tracking the MSCI All-Country World Index – but the difference here is minimal. The increased diversification of having a full replication of the index rather than the optimised holding strategy of ISAC is probably going to make VWRA a better choice.

      Hope this helps!

  39. Hi! Regarding IWDA vs SWRD, you mentioned that you swapped IWDA for SWRD. Just to check that “swapping” means selling all your IWDA shares and buying SWRD directly?


  40. Hi Firepath,

    Great post, thank you very much. Your investment advice is certainly in line with what I read from the Intelligent Investor, and its simple to do. So I definitely want to do that! =). May I ask a question please?

    I see that you mentioned Vanguard FTSE All-World UCITS ETF (VWRA[USD]). However, the link doesn’t seem to work anymore and I tried googling for this but can’t find it. The closest I found is FTSE All-World UCITS ETF – (USD) Accumulating (VWRP) (https://www.vanguard.co.uk/professional/product/etf/equity/9679/ftse-all-world-ucits-etf-usd-accumulating). May I know if this is the correct one? Perhaps vanguard has replaced VWRA with VWRP? I’m looking at vanguard because I want to keep my passive investing strategy as simple as possible =). Thank you!

  41. Hi FPL,
    Thank you for your latest update & congratulations on reaching your goal sooner than expected!
    I’ve learnt much from your sharings.
    As someone being very late into investing & not at all savvy, I’ve taken some active steps following your sincere & generous sharing of your financial journey.
    For one,I bought Amundi using SRS via Endowus.
    I’m also keen to buy VWRA Lumpsum (20-30k) 2-3 times a year and have been reading on choice of platforms.
    Many suggest IBKR. However, from what I read, it seems rather challenging and complicated for me.
    If I plan to invest Lumpsum, is it wise and safer for me to just use Standard Chartered ?
    What do you advise? What are my options?
    Thank you in advance for your advice.

    • Hi CC! Thank you for reading and I’m glad to hear you find my posts helpful! That always motivates me to keep writing these updates.

      As for your question, it’s cheapest to invest in VWRA using IBKR, but I myself also use SCB, it’s not the cheapest option, but it works fine for me. The most important thing is that you do start investing and continue to stay the course, so choose which you’re comfortable with even if it’s not the most optimal. Just know that in this case the difference in brokerage and currency exchange rate could mean you’re going to be paying about 1.2% in transaction fee of the total purchase price if you’re exchanging currency (depending on how much, it’s going to be about 1% FX spread) and about 0.2% in trade commission.

      IBKR is going to be much cheaper since their exchange fee is a flat $2 something, and the commission is quite low.

      In my case, I exchange a lot of funds and with a larger AUM, the exchange fee comes down to about 0.13% and 0.16% in commission – so it’s not too bad. So once you get a large enough account size, it probably won’t be too bad as well – but still won’t be as good as IBKR. But it’s fine for me cuz I make use of other products from SCB that makes this worth it.

      • Hi FPH,
        Thanks again for yr thorough & reassuring response. As you mentioned, I was really keen to get started while learning & deciding abt VWRA. Thus, started buying Amundi in cash too. Easiest platform for me.
        My sincere thanks once again. I diligently read yr posts & feel your genuine intention in educating others through yr sharing of yr financial journey.

        • Awesome to hear! I think for cash, the most cost-effective way to invest is to DIY with ETF, but if using a platform that you’re comfortable with will get you to invest, that’s of course better than leaving money on the side line! So do keep investing and stay the course! Thank you so much for the kind words once again!


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