Explore the highlights from Baiduri Capital’s recent engaging Q&A session, where audience questions were addressed and key perspectives were shared. This summary reflects the speaker’s views expressed during the session and is provided for general information and educational purposes only
Choosing what to invest in
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Q1: Can I sell my physical gold and invest in gold stocks instead?
A: Physical gold is often bought as a safety net during economic uncertainty because it’s a tangible asset you can exchange for value. If you value that security, keeping physical gold makes sense. However, storing gold comes with practical challenges such as proper storage, insurance, and resale conditions. Gold ETFs or stocks offer convenience and liquidity, but they involve management of fees. Ultimately, the choice depends on whether you prioritize physical security or ease of trading.
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Q2: What’s the difference between an ETF and a mutual fund?
A: Mutual Fund: Actively managed by professionals aiming to outperform a benchmark. Managers adjust allocations based on their market outlook (e.g., favoring Apple over Amazon). This active approach usually comes with higher fees.
ETF: Passively tracks an index (e.g., S&P 500) by replicating its composition. It aims to match, not beat, the index return. ETFs generally have lower costs because they don’t require active management.
Key takeaway: Choose mutual funds if you want active management and believe managers can outperform. Choose ETFs for lower cost and market-matching returns. -
Q3: Should I buy DBS stock at $54 or invest in OCBC instead?
A: Both DBS and OCBC are at all-time highs, which often makes investors hesitant. However, markets can continue rising even at record levels. Focus on fundamentals:
DBS offers strong resilience, a solid track record, and a dividend yield of about 5.4%, which remains attractive.
If you’re unfamiliar with Singapore banks, many investors prefer DBS for its size, stability, and higher yield.
If you can tolerate short-term volatility and don’t need the capital in the next 1–2 years, DBS remains a strong long-term option.
Easy ways to start investing
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Q4: Is there a low-cost ETF for the Straits Times Index (STI)?
A: Yes. There are two ETFs that track the STI (SPDR STI ETF (SGX: ES3) and Nikko AM Singapore STI ETF (SGX: G3B)), both with an expense ratio of about 0.25% annually, which is among the lowest in the local market. While this is slightly higher than U.S. ETFs (as low as 0.03%), if the STI delivers around 5% annual returns, the cost is relatively small compared to potential gains.
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Q5: How much of my portfolio should be invested in ETFs?
A: There’s no universal rule, it depends on your investment goals and risk appetite. For example:
If you aim for high returns (e.g., 9% annually) and can take more risk, you might consider growth-oriented ETFs like the S&P 500.
If you want capital protection, you may want to limit your exposure to REIT ETFs, as they are not capital guaranteed and are subject to market price movement. Start by defining your objectives and risk tolerance, then allocate accordingly. -
Q6: As a beginner, should I start with ETFs, REITs, or something else?
A: ETFs are a great starting point for beginners because they’re simple and provide instant diversification with one trade. This removes the complexity of picking individual stocks or REITs and helps build confidence as you begin your investment journey.
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Q7: For REITs, is information like occupancy rates publicly available?
A: Yes. Singapore’s REIT market is highly transparent. REIT managers are required by MAS to disclose key details such as occupancy rates, lease profiles, and financial performance. These updates are typically shared through company presentations and reports, which investors can access to make informed decisions.
Building wealth over time
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Q8: How long should I hold my investments?
A: Investing is about building long-term wealth through compounding, not short-term trading. Avoid buying and selling within a day. That’s trading, not investing. Align your holding period with your financial goals (e.g., retirement, major purchases). Once you know your objectives, decisions about returns and asset choices become clearer.
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Q9: If I have an extra $50,000, should I invest it all at once or spread it out?
A: Invest gradually using a dollar-cost averaging approach. Splitting the amount into smaller portions (e.g., $10,000 over five intervals) reduces emotional stress and market timing risk. However, don’t take too long to avoid stretching this over several years. Spreading investments over weeks or months helps you stay invested while managing volatility.
Making money from investments
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Q10: How should I allocate dividend investing and capital appreciation?
A: Start by defining your financial goals and required returns. For example:
If you need 6% annual returns, assess whether you can tolerate the volatility that comes with growth-focused investments.
If market swings make you uncomfortable, allocate more to dividend-focused assets for stability. Test with smaller amounts first to gauge your risk tolerance before committing larger sums. -
Q11: Is it better to reinvest dividends or take them as cash?
A: It depends on your goals and lifestyle.
If you need cash for immediate enjoyment (e.g., holidays), taking dividends is fine.
If you’re investing for long-term growth (e.g., retirement), reinvesting dividends allows compounding, which accelerates wealth accumulation.
There’s no one-size-fits-all approach, align your choice with your financial objectives.
Watching market trends
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Q12: Amid the current AI boom, is there an AI bubble in the market?
A: AI has real, practical applications that improve productivity, unlike past trends such as NFTs. However, while the technology is valuable, some AI-related stocks may be overpriced. From a risk-reward perspective, valuations in this sector can be high, making it less attractive for long-term investors. Instead of chasing sector hype, focus on broader themes like building resilient portfolios and generating income, especially in a low-interest-rate environment through dividend strategies.
Disclaimer: The information contained in this document is provided for general educational and informational purposes only and does not constitute financial, investment, legal or tax advice. Any views expressed are those of the speaker at the time of the event and may change without notice. Investments involve risks, including the possible loss of capital. Recipients should seek independent professional advice before making any investment decision.
