MoneyLab

With the tremendous growth potential of Chinese stocks as the underlying narrative, many investors are eager to capitalise on the opportunity it presents. However, investing in the Chinese stock market comes with unique risks and challenges that investors must be aware of. Personally, I think the risks of investing in Chinese stock market outweighs the potential rewards, and Chinese stocks only make up of about 2% of my equity portfolio through my holding of Emerging Market Large Cap fund. In this blog post, I will share some of the key reasons why I hold such pessimistic view. Accounting and Transparency Issues Some Chinese companies may not adhere to the same accounting standards as their counterparts in other countries, making it difficult for investors to assess the true financial position of a company. For example, in 2020, Luckin Coffee, a Chinese coffee chain, was found to have fabricated sales figures and misled investors. The scandal led to a sharp decline in the company's...

  When I was just 20, I started to educate myself on personal finance and investing. I read books about investing from the national library, keeping myself updated with the latest financial news by reading The Straits Times, and watching videos to learn about the different investment investment instruments and strategies. At 21, I made my first investment in the local stock market by purchasing 4,000 shares of Starhill Global REIT. Despite being an undergraduate with limited funds, it was a crucial step in kickstarting my investing journey. I understood that the earlier I start, the more time I would have to learn and grow my savings . At 25, I started my first job and began saving a significant portion of my monthly income. As I had low material desires, I was able to me live below my means without sacrificing much. I also set long-term saving targets for myself and was determined to achieve Financial Independence (FI) by the age of 45. At the time, this seemed like an ambitious...

The AI revolution has arrived. ChatGPT, an AI language model developed by OpenAI and launched in Nov 2022, has taken the world by storm. Its powerful language processing capabilities has revolutionised the way people interact with technology and transformed the way we work and live. From writing emails, handling enquiries, brainstorming ideas to making court decisions , the use of ChatGPT is making our job easier and boost our productivity at work. ChatGPT could also potentially be a valuable tool for investors looking to construct an investment portfolio according to an investor's preferences and risk profile. In this blog post, I will delve into how ChatGPT can be utilised for this purpose. To begin, I will inform ChatGPT of my investment preferences and risk tolerance, and specify the evaluation criteria for the portfolio. Specifically, my goal is to create a dividend-generating portfolio entirely composed of ETFs. Additionally, I would like a performance analysis of the recomme...

As a Singaporean investor looking to invest in the US stock market, choosing the right S&P 500 ETF can be a challenging decision given the large array of choices. Among the many S&P 500 ETFs available, I find the iShares Core S&P 500 UCITS ETF (CSPX) stands out as an excellent option for Singaporean investors. No Estate Duty Tax One of the most significant advantages of investing in CSPX is that it is not subject to estate duty tax. This is because it is domiciled in Ireland, which does not have an estate duty tax. In contrast, US-domiciled ETFs like the SPDR S&P 500 ETF (SPY) are subject to estate duty tax, which can be as high as 40%, for holdings in excess of US$60,000. Lower Dividend Withholding Tax (DWT) Another advantage of CSPX for Singaporean investors is the lower dividend withholding tax (DWT) rate compared to other S&P 500 ETFs . Dividend withholding tax is a tax levied on dividends paid by US companies to non-US investors. CSPX has lower DWT because...

Portfolio rebalancing is a crucial aspect of investing that helps investors maintain their desired asset allocation and manage risk. This process involves periodically adjusting the composition of an investment portfolio to ensure it remains aligned with the investor's goals and risk tolerance. Maintaining target asset allocation Market fluctuations and the performance of individual assets can cause your portfolio to drift away from your target allocation over time and your portfolio may become heavily skewed towards a particular asset class. Figure 1 shows the allocation drift of a 2-Fund portfolio that started with 60% US-Stock and 40% Long Term Treasury. The portfolio gradually shifted from 60-40 in 2003 to 82-18 by 2022 due to higher growth in the US stock market vis-a-vis the Long Term Treasury. Rebalancing your portfolio helps to maintain your desired asset allocation.    Figure 1. Allocation shift of a 60-40 portfolio over a 20-year period Managing risk Rebalancing ...

  Investing in property is one of the most popular choice for many people in Singapore, with the promise of high returns and stable investment being a major draw. The staunch belief that property is a 'sure-win' has been ingrained into many, especially for the older generation who witnessed the phenomenal rise in property value as Singapore transited from a third world to first. The recency bias due to the surge in housing prices over the past 2 years also reinforced this view. However, the reality of the property investment today may not be as rosy as portrayed by the media and real estate industry. Opaque costs of property investment Whenever I hear people share about their property gains, they only focus on two numbers: purchase price and selling price. However, when investing in property, there are many hidden costs to consider, including: Stamp Duty: A tax paid when purchasing a property, based on the purchase price or market value of the property, whichever is higher. Leg...

  In my previous post - Adulting 101: Saving, Spending & Taxes , we covered three key aspects of managing personal finances as and adult. In this post, we will discuss two additional aspects of adulting that are equally important - Investment & Insurance . Avoid common pitfalls in investing Investing is an effective way to build wealth and meet financial goals, but it is important to remember that investing carries risk . Therefore, it is important to manage your risk exposure and steer clear of excessive risk-taking. Here are some common pitfalls to avoid: 1. Not doing your due diligence Due diligence is a systematic process of analysing an investment decision. This include studying the stocks, sectors and geography that you are investing in. You should ask yourself questions such as, "What are the prospects of this investment?" and "What is the comparative advantage of the stock?" It is also important to consider the market outlook. Apart from finding conf...