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GET RICH SLOWLY
GET RICH SLOWLY
bit.ly/uwcseainvest
bit.ly/uwcseainvest
Minimax investment means investing the minimum amount of effort to get the maximum possible return. This means not using the services of companies like Zurich International, Friends Provident or similar. Put simply you don't need to pay these companies exorbitant fees, when you can invest yourself, at a fraction of the cost, and with the flexibility you would expect when you are investing your own money. No tie in, no early redemption penalties. It's your money.
It's all about 'passive investing':
Passive investing is an investment strategy that aims to maximize returns over the long run by keeping the amount of buying and selling to a minimum. The idea is to avoid the fees and the drag on performance that potentially occur from frequent trading. Passive investing is not aimed at making quick gains or at getting rich with one great bet, but rather on building slow, steady wealth over time. Passive investors attempt to replicate market performance by purchasing exchange-traded funds, or ETFs, that track major indices, such as the FTSE 100 (VUKE). (Investopedia)
"All investing at its root has the same goal, to beat inflation by a wide enough margin to allow your savings to grow by compounding in a reasonable period of time. Given that most people save for 20 to 30 years in order to retire, that is what we have to consider “reasonable.”
So, your target is double, double again and maybe double one more time. One becomes two, two becomes four, then becomes eight."
Wise & Hilarious: John Oliver - Retirement Plans
Wise & Hilarious: John Oliver - Retirement Plans
In a nutshell:
In a nutshell:
Create a trading account with an International brokerage (a bank that lets you buy ETFs) like Swissquote. There are Singapore brokers like Saxo Bank, or DBSV but using a Singapore based broker requires taking and passing an online test. If you use Swissquote, they are slightly more expensive, to begin with, but cheaper in the long term, and this is all about the long term. *
Invest in 'baskets' or collections of funds (ETFs) not individual stocks, at least $4000 SGD each time (to keep costs at 1% or less)
Each 'basket' contains 1000s of stocks from 1000s of different companies, so you're investing lots of little bits in lots of companies.
Just purchase from 3 or 4 'collections', ideally in your home currency, eg for Brits it could be VWRL.L (leading global stocks) home country bonds like IGLS or VGOV (Bonds) and your home country index, like VUKE, which tracks the FTSE 100 index in the UK. I currently buy VUKE, IGLS (Bonds), and VWRL.
Keep the amount in each balanced - Bonds should be roughly equivalent in % to your age.
Buy when you can afford to, sell when/if you have to - you are in control.
Aim for $2,000,000 or 25 x your annual cost of living in total investment to retire/become financially free comfortably! The plan is to live off 4% one day, eg 4% of $2,000,000 = $80,000 annual income. If you can live off $40,000 then you only need $1,000,000 invested.
Summary:
Summary:
Open a brokerage account
Transfer in at least $5000 SGD to get started
Invest in at least 1 Global ETF (like VWRL) to get started, or if you're up for it, 3 to 4 ETFs
Add to them as often as possible, keep your funds in those more of less equally balanced
Keep repeating 2 and 3 for as long as you are earning.
Stop working and live off the income generated by your investments.
I've been following a minimax strategy for years, which has returned about 15% not including dividends as a very conservative estimate, but an SAS teacher called Andrew Hallam is the real expert, and thankfully, he is happy to help anyone who is interested.
Andrew Hallam
Also worth a read is:
https://andrewhallam.com/local-and-expatriate-investing-in-singapore-part-i/
Watch this short (13 mins) video from Andrew, to help work out your 'financial freedom number', that is what it is you need to have saved up before you can retire comfortably, because you will be 'financially free', able to live off the interest generated by your savings.
https://andrewhallam.com/international-teachers-are-you-investing-enough-money/
His book 'Millionaire Teacher' or 'Millionaire Expat: How To Build Wealth Living Overseas' or/and a general browse of his blog will tell you all need to know, there are copies you can borrow from the library.
*There are many other brokers, eg Interactive Brokers but you need to be wary of companies that are domiciled in the USA, as their Inland Revenue is very aggressive in finding ways to tax any assets that are US domiciled.
If you don't just want to take Andrew's word for it, check out this article on lifehacker, and the links from it.
Financial Mistakes to Avoid at Every Age
And here is a link to a video on passive investing that Andrew recommends:
Passive Investing: The Evidence the Fund Management Industry Would Prefer You Not to See
Below is a Google Drive folder which contains a copy of the video documentary above, along with Andrew's PowerPoint slides from a visit he made to the college in May 2012; the advice hasn't changed!
Balance with a Google Spreadsheet
Balance with a Google Spreadsheet
Here's a Google Sheet, make a copy and update it to match your investments each time you buy.
Can I pay someone to do this for me?
Can I pay someone to do this for me?
It's best if you can find someone who will do this for a flat, fixed fee. There are online tools 'robo-advisors' emerging now that offer these services, such as nutmeg in the UK, and smartly, but they still have excessive fees, usually around 1%, which sounds low but adds up very quickly, you should always avoid % based fees if you possibly can. 1% is still quite a chunk of change once your portfolio hits the region of $100,000, = $1000 a year... and it will need to be closer to $1,000,000 if you want to live off it and stop working; at that stage even with a 1% account fee, you'd be losing $10,000 a year in fees....
Mark Zoril comes highly recommended by Andrew Hallam and appears to come highly recommended in general, judging by the comments on Andrew's post, and he charges a flat fee of < $200 USD, no tie in, no percentages, no hidden fees. There a few teachers using his services who all seem to echo these sentiments.
"I teach internationally and have always had my retirement in managed utual funds. Mark has been tremendously helpful in trying to organize the transfer of my accounts. We work through video conferencing and his insight and assistance has been very helpful in simplifying my investments and getting them in low-cost index funds with Vanguard."
Ethical Investing
Ethical Investing
There are plenty of ethical ETFs, I cant vouch for their profitability, although DSI is looking good, and they are easy to look up, and you can use the rationale Andrew Hallam advises to invest in those, or maybe invest 10% of your investment?
The Motley Fool has some advice on this (great site for financial advice)
"Many investors see socially responsible investing as deliberately sacrificing profits for the sake of personal values. Yet increasingly, the practice of investing in a socially responsible manner has evolved to give you a chance to do the right thing and still make a handsome return in the process."
http://www.fool.com/investing/etf/2011/04/06/5-etfs-for-the-socially-responsible-investor.aspx
Andrew has written about this here:
"screened for social, human rights and environmental criteria. It excludes companies involved with weapons, tobacco, gambling, alcohol, adult entertainment and nuclear power. It also has low exposure to oil and gas companies. It beat Vanguard’s S&P 500 Index (VFINX) over the past one-year, three-year, and five-year periods ending October 18, 2017.
That doesn’t mean it’s going to keep winning. But if it helps you sleep at night, it’s not a bad choice."
and there are others if you do a bit of Googling:
http://etf.stock-encyclopedia.com/category/ethical-etfs.html
http://etfdb.com/category/socially-responsible-etfs/
With the huge spread of the ETFs like VWRL, there's no way you can miss the odd unethical company, but I'm an optimist, so I see it the other way, we can't miss the majority (I believe most people are essentially good) of ethical companies.
Secular Tithe
Secular Tithe
Another way to be an ethical investor is through 'secular tithing' -
http://dotheword.org/2010/12/27/tithing-is-the-new-thing-in-secular-giving/
http://www.nbcnews.com/id/40607088/ns/us_news-giving/#.UXpmQJXynpg
http://betterlikebutter.blogspot.sg/2012/01/on-secular-tithing.html
http://www.patheos.com/blogs/daylightatheism/2009/08/the-secular-tithe/
I'm not an atheist or an agnostic, but I passionately believe in this idea, and have for many years - that's how we justify it I guess - regardless of the possible ethics of the 4871 companies represented by the VT, I can take steps to ensure that the proceeds from our investments are used ethically - we look for an organisation(s) we felt we wanted to support - a college GC? A charity/charities close to your heart? Maybe World Vision? Think about it.
Mr Money Moustache
Mr Money Moustache
Mr Money Moustache has a blog which is well worth visiting, he espouses the same principles as Andrew Hallam, but, shall we say, with a different style! If you're looking for a 'second opinion' this is it:
Mr. Money Moustache’s advice? Your current middle-class life is "an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income. Or two thirds, or more. Sound like a fantasy? Not to readers of this blog.
What happens when you can save more of your income? As it turns out, spending much less money than you bring in is the way to get rich. The ONLY way.
His post on frugality, the new fanciness is a must read.
The effects of compounding are surprising: if you can save 50% of your take-home pay starting at age 20, you’ll be wealthy enough to retire by age 37. If you already have some assets now, you’re even closer than that. If you can save 75%, your working career is only 7 years."
UWC Staff: Join the Currents Community
UWC Staff: Join the Currents Community
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