Wednesday, 28 September 2016

Maybank Kim Eng Monthly Investment Plan of S$500

It's mid week and I can feel my working pace slow down. The handover process has already begun and my workload should wind down even more as I transition out of the firm. The bad thing is that time passes slower and it feels longer to get to the end of each day.

The good thing is I have more time to review our investments before I hit the ground running in my next role. After increasing my POSB Invest-Saver monthly investment amount in the Nikko AM Singapore STI ETF (G3B) from S$300 to S$400, I had another look at the regular savings plan options.

Although I'm happy to wait for the launch of the Smartly robo-advisor platform to set up an equivalent S$500 regular savings plan in global equity and bond ETFs, I considered starting another regular savings plan.

No particular reason other than to transfer more forced savings into forced investments. Our monthly forced savings is at S$4,000 of investment cash and cash on hand now. This will become monthly forced savings of S$2,500 in investment cash & cash on hand and monthly forced investments of S$1,500 in ETFs.

I have to admit that three regular savings plans is not an efficient way to do index investing. I'm better off combining the S$1,500 into one regular savings plan to save costs. The thing is I like the idea of slow accumulation of different ETFs over time based on Dollar Cost Averaging (DCA).

I have sufficient cash for Value Cost Averaging (VCA) and dividend investing but they require a certain level of market timing. In my short investing experience, I have come to realise that it will take a long time to develop the required skills, discipline and temperament. This might happen eventually but most probably after making many mistakes.

I'm okay to take my time to learn but the regular savings plans will keep me vested in the markets in the meantime. Higher costs and lower returns is a price I'm willing to pay until I gain the requisite experience.
After reviewing the other regular savings plan options, I decided on the Maybank Kim Eng Monthly Investment Plan. Main reason is the extensive list of securities in multiple markets I can invest in. For now, I'm interested in these two securities with the following breakdown of the monthly investment amount of S$500:
  • SPDR Straits Times Index ETF (ES3) - S$400
  • SPDR Gold Shares (O87) - S$100

The orders submitted under the Maybank Kim Eng Monthly Investment Plan should be executed on the 8th of every month as long as it is a business day. If not, on the first business day after the 8th of that month. I just have to make sure there is sufficient cash in the KE Trade Prefunded Account before the 8th for the withdrawal to execute the orders. 

The Maybank Kim Eng Monthly Investment Plan would be held in my name while the POSB Invest-Saver is held in my wife's name. If possible, I would like the Smartly robo-advisor platform portfolio to be held in both my wife and my name as a joint account (will be our first one).

My wife and I generally do not like the idea of joint accounts and prefer to keep both of our savings and investments separate in individual accounts. She is okay for me to manage her money but any actions with those funds will require her authorisation.

I know I previously wrote about why we chose not to invest in a Gold ETF. However, I did mention at the end of the post that we might invest in the Gold ETF after the size of our ETF & Share portfolio has grown significantly.

I'm not saying that has happened. Clearly evident from the small S$100 monthly investment amount in the O87. However, I do think it's time to introduce a low correlation asset class exposure to better manage the recent and upcoming volatility.

I'm interested to see how this precious metals exposure plays out. Since it's still an ETF, I don't think I can count it as a form of alternative investments. I know there are seven common types of alternative investments:
  • Private equity
  • Direct investments in start-ups and private companies
  • Venture capital
  • Real assets
  • Hedge funds
  • Fund of funds
  • Private placement debt

These are for sophisticated investors and I doubt we will ever have enough capital and knowledge to gain access to them. It would make for a great topic to write about though and one can always dream.

1 comment:

  1. I think the most important thing here is that you're serious about financing your future and putting money aside! And that's a lot more than what can be said of most people trying to make money for themselves!