Sunday, January 29, 2017

Investing in Singapore

Many cheaper tools in the US and U.K. don’t exist in Singapore. Robinhood App, an application that provides free trading is not yet in Singapore. Commissions for trading in Singapore is still expensive which minimum $30 (including GST) per trade. In US, many brokers don’t charge a minimum.

Why are these important considerations? Cost is an extremely important factor. But even without these cheap tools, there are ways for us to remain competitive. Here are a few rules

1.Don’t buy actively managed funds. There’s plenty of literature on how active funds don’t outperform their market benchmarks.

2.Buy cheap. Always use the cheapest providers. In Singapore, go to the exchange and buy simple ETF products. Going through an expensive intermediary will be incredibly expensive. Why pay more than 0.5% annual expense on active managed funds?

3.Know that actively managed funds regress to the mean. I.e, hardly any actively managed fund persistently outperforms the market.

What does this mean? Buying a combination of funds through an intermediary will not be your best move. Think about the fees you can save if you invest through a simple broker on the capital markets. Here’s a short article on how to invest in ETFs.

For more such articles, follow