It was a slow month for me in 2016. STI has dropped to 2,630 points and my portfolio is down 6.87%. A big percentage of my lost is in my STI ETF. I just have to keep calm and continue to buy more each month.
Added only one counter:
529 shares of Nikko AM STI ETF.
At the end of 2016, I hope I can push my portfolio past the S$160,000 mark.
I have wrote about the ETF a couple of times. Recently, I came across a video on Facebook by SGX introducing STI ETF (Please watch the video below). Well done, SGX! I personally liked the video. It gives a good introduction and a baseline understanding of STI ETF.
I've long been a proponent of the STI ETF. Please read some of my earlier articles:
I have been asked by a few readers, new to investing, on what should they do or what should they invest in or how do they get started?
If I could go back in time and give myself advise, I would tell my 23-year-old self to start investing in STI ETF and dollar cost average my STI ETF investment.
So to Mark Tan who has asked me what should he do with his S$10,000 savings; I think you should considered investing in the STI ETF.
Invest in STI ETF monthly
Again, my advise to myself would be the following 5-years plan to kick-start my investing journey (who has S$10,000 to begin with):
23-year-old self
Savings: S$10,000
Continue to save: S$250 monthly (not a very big amount and I believe most should be able to save this amount or more)
Continue to save all my bonuses - to build my emergency / war chest fund.
Not to spend extravagantly (I doubt anyone would listen to that advise)
Invest: S$400 monthly on STI ETF
The next 5 years would look something like that:
This is just a hypothetical example. There will be interest earned in the savings account. In addition, STI ETF will be distributing dividends as well. The market value of the STI ETF might be higher than the S$24,000 invested. Or it might be lower. Whichever the case, the point is I will have started my investing journey with S$24,00 invested.
So for those who do not have S$10,000 to start their journey? It doesn't matter. Start with a Regular Savings Plan.
Regular Savings Plan
There are a few Regular Savings Plan options that allows you to invest via a GIRO arrangement on a monthly basis. One is POSB Invest-Saver and the other is OCBC Blue Chip Investment Plan. Please take a closer look at the fees and charges. For those with lesser discipline, this is the best option.
Conclusion
I am not advertising for POSB or OCBC. I have been using the OCBC Blue Chip Investment Plan to invest in the STI ETF for my SRS account. Investing earlier or just starting this journey is my key advise to myself if I could go back in time.
At the end of each year, apart from Christmas, I look forward to the interest added to my CPF accounts (especially the CPF-SA). In 2015, the total interests added to my CPF-SA was S$4,984.38. The detailed breakdown will be S$3,054.88 interest generated directly from CPF-SA and another S$1,929.50 transferred from the interest added to the CPF-MA.
S$4,984 is more than half of the interest that was added to my account in the last 5 years (2010-2014).
The amount of interest given each year is become substantial. Let's just do a simple calculation and take S$70,000 (approximate amount in my CPF-SA), how much would the amount be in 20 years? I will be 54 years old by then and that is just a year before I transfer the amount to my CPF Retirement account. The answer is about ~S$155,000. The amount will have grown more than 2 times. That is the beauty of compound interest. And that is without adding in any employee-employer contributions monthly.
31 December 2036, I should be receiving at least S$6,200 worth of interest from the S$70,000 I have inside my CPF-SA now.
In one of my posts last year - Will CPF still be an election topic in 2045?, I mentioned that I might be considering contributing a small sum every month to the CPF-SA: "Let the magic of compounding show its power. Do it early. A S$100 monthly (S$1,200 yearly) contribution for 30 years will amass a sum of S$69,636. If it is S$200 monthly (S$2,400 yearly) contribution, it will amass a sum of S$139,273..." Decision made - Looking forward to the reward in the long term
I decided at the end of 2015 to do my first transfer of S$2,400 from CPF-OA to CPF-SA to kick-start this micro saving plan. Let's just say, I am looking forward to adding the S$139,273 to my retirement account.
The interest accumulated in my CPF-SA has slowly grown over the years.
On top of the monthly employer-employee contribution, I will be "accelerating" the progress to build the CPF-SA to a sizable amount. The message I hope to drive is the magic of compounding takes time to work.
Do the right things! Be patient! Good things takes time!
Towards the end of 2015, I considered hard if I should park my money into the SRS account. It is always painful to part with S$12,750. We are talking about not being able to see my money (another S$12,750) for the next 30 years.
I started this journey 4 years ago and the idea was to complement my CPF savings for retirement. And, of course, enjoying the tax deferment on my SRS contribution each year. Plus, force myself to purchase an investment instrument for the long term.
Rome wasn't built in a day, but they were laying bricks every hour.
With each passing year (not exactly every hour), adding S$12,750, I am beginning to see a separate sizable retirement fund - 4 x S$12,750 = S$51,000.
I just have to keep this momentum moving year after year for another 16 installments.
Another year has past and it has been quite a journey. I recalled my first portfolio post in July 2014 had just S$ 47,765.00 invested. The start of 2015, I was looking at a portfolio of S$72,500.00 (invested).
With that, my goal in 2016 is to continue to grow my monthly passive income towards the S$900-1000 mark.
Based on the projection from the dividends given in 2015 from the counters I am holding, I should receive a total of S$6,300 in 2016.
Apart from the dividends, I received S$1,500 from bank interest in 2015. If my emergency funds are not touched, I am looking at the same amount from the interest.
Read: Higher Interest on your Money S$7,800 (estimate) from dividends and interests and that will work out to be ~S$650 monthly in 2016. Step by step. Wishing everyone a successful and good 2016. Read: Goal 2015
