Right now, barring a late-year crash, my portfolio is up 15% over the past year. I would say this year has been pretty good for me, considering that I did not have any losers and at worst broke even with some stocks. But since then, I have cleaned up my portfolio, trimmed some holdings and refreshed my perspective on investing. Here is how I am going to think about it in 2021.
If you have been reading my recent articles, you will know that I adopt this strategy. In 2021, I hope to increase my core portfolio allocation to at least 60% and hover around the 60% to 70% range. The rest of my satellite portfolio will be split into different plays that I have conviction in. This will include alternative currencies (cryptocurrency), robo-advisors, as well as personal stock holdings.
Currently, I have 50% of my portfolio in a combination of CSPX (10%) and VWRA (40%), as I want to capture the broad market returns. As what Lee Hsien Loong said about our vaccine acquisition methods, which is to achieve a diversified portfolio of vaccine candidates. You also need a diversified portfolio of holdings.
The reason why my core portfolio is not just solely VWRA is because I want to have slightly higher exposure to the US stock market. The argument from Bogleheads is that there are periods of outperformance and underperformance by the US stock market, how would you know having a slightly higher weightage of the US stock market will be better?
Well, I do not know whether the US stock market is better. But this is my reasoning. In the US, the proportion of people invested in the stock market is significantly higher than in other countries (at about 55%). This is compared to China which is about 7%. The reason is due to differences in philosophy. But this also leads to a smaller group of wealthy people being in control of the Chinese stock market which may be unfavourable as it can lead to market manipulation. Moreover, Chinese authorities tend to be way more restrictive than the Western counterpart. In addition, you would also want to invest your money where the most innovation occurs. In the US, innovation and capitalism thrives. US is home to the most innovative tech companies and other countries usually only have 1 or 2 outstanding companies.
If you are still new to the investing scene, I would recommend reading up on Jack Bogle’s book to get you started. Also, you would see many books and online sources recommending US ETFs like VOO, IVV, VT or VXUS. However, keep in mind that these ETFs are not tax efficient for Singaporeans. The UCITS ETFs traded on the LSE are much more tax efficient. I shall not go into the benefits of them but it is a mistake that I made at the start.
My satellite portfolio is split into a few portions right now, Stashaway, REITs and my individual portfolio picks. In 2021, as I gain more knowledge about cryptocurrency, I hope to delve into it. But for now, they are not part of my portfolio.
Now, you might be thinking that I am a hypocrite for saying that I withdrew from Stashaway.
After reading up and learning more, I slowly changed my mind about Stashaway and robo-advisors in general. They are more targeted at competing with active fund managers while trying to attain low cost for the investor. Currently, my portfolio with them is still very small, only accounting 6% of my portfolio.
The reason why I decided to put my money into Stashaway was because I had some money left after allocating my portfolio and did not want to let it decay in a savings account. Moreover, the sum was not large enough for a conviction play so I decided to use Stashaway.
Still a very convenient platform that I recommend to my friends who want to start out.
Given the attractive price I bought this REIT at, I will continue to hold it in the near future. Despite the rise of ecommerce, I still foresee shopping mall foot traffic to rise as the pandemic wanes. I will continue using these dividends for some of my fixed expenses monthly.
My conviction plays
I am sure if you follow my blog, you know I have bought into Apple stock before (NASDAQ:AAPL). I have not increased my holdings but I still remain very bullish on the company. They have recently released their breakthrough M1 Macs which got me pretty excited for them. The new iPhones continue their strong sales and the release of the iPad Air, Apple Watch and AirPods Max strengthen their ecosystem for Apple enthusiasts. I definitely don’t see this as a necessity in anyone’s life but they are phenomenal products made by perhaps the best company in the world.
I have also purchased into another company, but I shall not reveal it in this article because I am writing an analysis about it soon. It is my bet that people will be more willing to buy into convenience.
This sums up my portfolio. I definitely made some mistakes along the way, such as selling SEA Limited too early to take a profit, or buying into a REIT with negative tailwinds. Nevertheless, I have learnt a lot from this year. I hope to increase my portfolio size and increase my holdings in the ETFs in 2021. If I see any value in the future, I will take the opportunity.
Content creators that I love
Over the past year in this scene, I have found myself going back to a few content creators that I love.
Joseph Carlson – US Dividend Growth investor, makes very good commentary
Betterspider – A huge reason why I started this blog and someone who makes content I respect
The Woke Salaryman – Local content with interesting insights and relatable content