4. Having $10,000 Split Into Buying >5 Different Asset Classes

Let say you are just starting out to invest and you have set aside $10k for this after factoring in emergency funds and savings etc. 

SG example 😁

You take: 

• $2000 to invest in MCT shares (MapleTree REITs)
• $2000 to invest in G3B shares (STI ETF)
• $2000 to invest in SSB (Gov Bonds)
• $2000 to invest in Syfe Cash+ (Cash Management)
• $2000 to invest in Syfe Equity 100 (Robo-Advisor)

First look at this, you might think that this is a good diversification method as you spread out your risk into 5 different asset classes.

You might want to relook at this, think again and ask yourself questions.

Why only allocate $2k so little into Bonds that needs to be held for 10 / 20 years before expiry to gain the full bond coupon payouts? 10 years is a long time and to just put in $2k really does not make any sense at all. 

Why put $2K into Cash+? Why not $4k into SSB or $4k all into Cash+?

If I am young and able to take some risks why not put $6K directly into Syfe Equity 100 to maximise my returns in one area instead of splitting evenly into Bonds, Cash Management etc

Do you get where I coming from? 😀

$10,000 is not alot of money and to over diversify into 5 different asset classes with each asset class only given $2k. In reality, how much returns can that asset generate with that smaller amount of fund allocation?

Not only that, 5 different assets means you have to monitor 5 different things at one time. Its not very productive and it consumes your time which can be used to watch more Netflix for some hahahaha. 😂

Another example.

If you want to purchase Cryptocurrencies with $10,000, how will you do it?

A: $5,000 into BTC and $5000 into ETH

B: $10,000 into BTC only or ETH only

I will do it method B hands down. Focus on one coin and maximise its returns. $10,000 is a small sum of money, to split it into more than 1 coin in my opinion is not the most wise choice to do so unless its $100,000 then it will be a different story.

5. $500 Split Into >1 Asset Class  

This is the same as point 4. 

If the amount to invest is so small eg. $500, I will discourage you to split into 2x $250 or 5x $100 to invest. The amount is just too little for each investment and there will be no economies of scale in returns. 

I believe some of you will do this at some point in your journey at the beginning as this was what I did when I first started out due to not knowing the unknowns out there and trying to do this to make some cautious baby steps. 😁

6. Buying 1 Share For Multiple Stocks

This will link back to my pointers for 4 and 5.

Not knowing the unknowns and trying to make baby steps by buying 1 or 2 shares of different companies to diversify your risks. 

Means having the mentality to just buy 1 share of eg. TSLA and if something goes wrong, its just 1 share.....

Number 1: you are buying too little shares per company. If the company share price increases, you don't earn much capital gains (no economies of scale).

Number 2: Of course when the company share price drops, you don't lose too much and this makes you feel better.

Its obvious that number 2 is the key driver that make you purchase stocks in this manner. Understanding the company and why you buy their stocks by reading their fundamental analysis and entering the market at a price that you are comfortable with using technical analysis is the key to overcoming this problem.

There are no right or wrong. Is just from my experience, for now I am more focus on doing concentration in buying stocks rather than to buy many stocks at smaller amounts.

Nevertheless after going through the list above, please do your own due diligence before investing as always.