The most efficient way of investing for average Singaporeans

We get questions on how to invest all the time, so we’d thought we’d write this article so our fingers won’t hurt typing answers on IG. Maybe you find it useful, maybe you won’t. Who knows?


How we actually invest isn’t new at all, or incredibly sexy – it’s based on Boglehead’s Three Fund Portfolio

Similar-ish articles on this can be read here, here, here, and here

 It involves investing in three types of things with a long term horizon of at least 20 years

  • A local index fund (STI-ETF)
  • A foreign index fund (S&P500, IWDA, VWRD)
  • Bonds

If the acronyms don’t make sense to you, don’t worry, we will explain later.

Why we invest this way

Efficiency – We don’t have a lot of capital, and when your capital is small, your investment returns are also small. Therefore the most efficient way to make money is through side-hustling and being good at your job, not spending six hours a week fussing over which stock to buy.

Simplicity – Compared to picking individual stocks, this is relatively easy to understand. And we should not invest what we don’t understand.

Affordable – What does a fresh grad have these days to put aside? $100 – $500? We’re inclined to pick stuff that doesn’t need a lot of money to start, also with relatively low management fees.

Level 1: The Local Index Fund


The local index fund (in Singapore, it’s the STI-ETF – is the easiest part of the equation. The quickest way to get started on it is through a Regular Savings Plan. All the local banks have an option: Click for OCBC, DBS, and UOB.   There’s also one through a broker, Philip Capital – this is what we use, but the platform is fugly.

  • For this investment, I put in some $500 every month.
  • If you are spending between $100 to $1000, you can’t go wrong with OCBC or DBS.

We’d expect there will be tons of pro investorswealth managers, and financial advertisers who will tell you that you shouldn’t buy the STI-ETF. And some of these are valid. Some of these reasons are:

  • Historically, the STI-ETF doesn’t have as much growth compared to some other index funds.
  • Somewhat related to the first, lots of companies on the STI-ETF are no longer in the growth stage.
  • It’s not really truly diversified, as 40% of it is made up of financial institutions such as banks.
  • Invested only in Singapore.

These are valid points. But we do think you should still invest in it – why?

  • This is the simplest thing you can buy with relatively little knowledge without exposure to the risk of having a self-serving salesperson just trying to earn some commission off you. (Not saying all salespeople are bad, but you’d need some knowledge to identify salespeople)
  • Just investing in the STI-ETF alone would put you far ahead of someone who doesn’t invest at all.
  • It’s a small but important first step to take when investing in the stock market. You can learn from this, rather than not starting at all.

Well, that was a lot to take in. Now, take a deep breath.

Level 2: The International ETF


So we know the STI-ETF isn’t perfect. So now, we gotta plug its flaws. That’s where Global ETFs come in.

Here’s how:

  • Growth. The S&P500, which is kinda the US’ equivalent of the STI-ETF has grown way more than it over the past 10 years.
  • Diversification. The STI-ETF has mostly Singapore companies. But getting a global ETF allows you to invest in companies all over the world. So you diversify across companies, but also across countries.

Buying International ETFs

Buying Global ETFs are slightly more complicated than local ETFs, mainly cause they are overseas. As you would already know from shopping online overseas, you gotta pay for expensive shipping fees.

So, lack any taobao purchase you make, you either…

  • Buy in bulk
    • Buy a large amount of ETFs, so the transaction fees only make up a small percentage. The amount I’m looking at is $10,000 per transaction.
  • Buy when there’s a discount (Buy when the ETF prices are low/during a crash)
    • It’s tempting to wait for the EXACT LOWEST time before you buy something, but more often than not, you’ll miss it. It’s much better to just buy when you feel the price has dropped to a reasonable/affordable amount.

Some ETFs for you to start googling – make sure you buy them on the London Stock Exchange, not the US Stock Market to avoid a hefty 30% dividend tax.

  • IWDA (Global)
  • VWRD (Global)
  • CSPX (US)

How to buy:  Check out Standard Charted, FSMOne and Interactive Brokers. Motley Fool did a pretty decent analysis here. 



If you were in your 20s and 30s with your whole life ahead of you, bonds wouldn’t be the best choice to grow your fortunes, because growth and returns aren’t exactly sexy.

Plus, most Singaporeans already have CPF, which sorta behaves like a bond, although it is far less liquid.  The CPF Special Account actually guarantees 4% interest per year, which is amazing compared to any of the bonds out there.

Personally, I wouldn’t touch bonds until I’m in my 40s, 50s or 60s. At that age, security would be a lot more important than growth.

But if you insist on getting bonds, I’d go with the super safe Singapore Savings Bonds. Although the Singapore Bond Index Fund also exists.

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