Webinar: Investing in Singaporean companies (home bias): What is the right strategy?
Endowus Insights

Webinar: Investing in Singaporean companies (home bias): What is the right strategy?

Updated
23
Jun 2022
published
20
Aug 2020
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Singapore skyline

Making your first investment in the Singapore stock market is an intuitive choice, given that several of the listed companies are household names that we interact with on a daily basis. However, given the lacklustre performance of the local stock market relative to other countries, more investors are investing outside of Singapore.

00:00 Introduction

6:15 What is Home-bias?

9:15 Why does this happen in Singapore?

16:52 How Singaporeans exhibit Home-bias?

20:52 Is Home-bias a problem?

26:24 Why should we invest globally now?

56:31 Japan and the lost decade

58:35 QnA

Q: Should I have investment holdings in Singapore first before investing overseas?

Dinesh: This is a question that I faced when I first started out investing. I did not know much about overseas investments and the possibility of investing overseas. However, with the wealth of information that we have today as well as having industry experts we can have access to, it is a lot easier to invest overseas.

One way to do it is to start with a global portfolio and once we gather experience and are able to control our emotions with investing well, we can then move on to having more flexibility with investing 5-10% of our portfolio in individual stocks.

You Ning: Yes, starting with a global core portfolio that you don't meddle with because that is your retirement money makes a lot of sense. If you want to try your hand at investing in individual local stocks, it will be sensible to do it with a small part of your portfolio instead of risking too much.

Q: Does it make sense to convert investments in the Straits Times Index exchange-traded fund (STI-ETF) to global funds now, considering that STI is cheap compared to many foreign markets?

Dinesh: It depends on what was your investment goal when you first purchased it - is it to purchase for exposure or returns? For myself, I will keep it until it no longer serves the purpose which I have purchased it for. It is ultimately a personal decision; you should ask yourself on what your investment criteria was and what does it mean for a company to fall out of your investment criteria.

You Ning: The best investors in the world are very pragmatic and they always have a logic, a thesis for buying certain stocks and when they sell, basically that thesis has been broken or has been realised, and the same should apply for the STI ETF investment as well.

What is really important is that you are comfortable with your investment decisions, because if you are not, making decisions out of fear or greed will not lead to good outcomes.

Q: When you started, how much of your pay did you manage to put in investments or savings?

Dinesh: I was rather fortunate that when I started working, my parents were self-sustaining. Living with them, I was paying no rent and they did not require me to provide an allowance, so I could save a huge bulk of my salary - this amounted to about 40-50% of it put into investments. However, it is inevitable that as you age you will have more financial commitments and that percentage will likely be reduced. As far as I know, the benchmark is about 20-30%.

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