.png)
Portfolio Management
Master the art of building and maintaining a well-balanced investment portfolio that grows with your life goals.
What is Portfolio Management?
Portfolio management is the art and science of selecting and overseeing a group of investments that meet your long-term financial objectives and risk tolerance. It's not just about picking stocks; it's about creating a cohesive strategy that works together.
Key Components
Strategic Allocation
Long-term target mix of assets based on your goals and risk tolerance
Security Selection
Choosing specific investments within each asset class
Risk Management
Monitoring and controlling portfolio volatility
Performance Review
Regular assessment against benchmarks and goals
Asset Allocation
Asset allocation is the most important investment decision you'll make. Studies show it accounts for over 90% of portfolio return variability. It's how you divide your investments among different asset classes.
Major Asset Classes
The Rule of 100
A simple guideline: subtract your age from 100 to get your stock allocation percentage. A 30-year-old might have 70% stocks, 30% bonds. Adjust based on your specific risk tolerance and goals.
The Power of Diversification
Diversification is spreading your investments to reduce risk. It's the only "free lunch" in investing. When some investments fall, others may rise, smoothing your overall returns.
Levels of Diversification
Asset Class Diversification
Mix of stocks, bonds, REITs, commodities, and cash
Geographic Diversification
Investments across Singapore, developed markets (US, Europe), and emerging markets
Sector Diversification
Exposure to different industries: technology, healthcare, finance, consumer goods
Company Size Diversification
Mix of large-cap, mid-cap, and small-cap companies
Model Portfolios by Risk Profile
Here are sample portfolio allocations for different risk profiles. Your actual allocation should be customized based on your specific situation.
Conservative
Expected return: 4-6% p.a. Low volatility.
Balanced
Expected return: 5-7% p.a. Moderate volatility.
Aggressive
Expected return: 7-10% p.a. Higher volatility.
Portfolio Rebalancing
Over time, some investments grow faster than others, causing your portfolio to drift from its target allocation. Rebalancing restores your original mix by selling winners and buying laggards.
Rebalancing Strategies
Calendar Rebalancing
Rebalance at set intervals (quarterly, semi-annually, or annually). Simple and systematic.
Threshold Rebalancing
Rebalance when allocations drift beyond a set threshold (e.g., 5% from target). More responsive.
Rebalancing Considerations
Consider transaction costs and potential tax implications when rebalancing. In Singapore, there's no capital gains tax, but frequent trading still incurs brokerage fees. Using new contributions to rebalance can minimize costs.
Tax-Efficient Investing in Singapore
Singapore's tax environment is highly favorable for investors. Understanding the tax implications helps you maximize after-tax returns.
Tax-Free in Singapore
- • Capital gains from investments
- • Singapore stock dividends (one-tier system)
- • Most foreign dividends (if no SG business)
- • Interest from Singapore banks
Potentially Taxable
- • Frequent trading (may be deemed trading income)
- • US stock dividends (30% withholding)
- • Some foreign interest income
- • REITs distributions (partially taxed)
Using SRS for Tax Efficiency
The Supplementary Retirement Scheme (SRS) offers tax relief on contributions and tax-free investment gains. Withdrawals after retirement age are taxed at only 50% of the amount, often resulting in zero effective tax for most retirees.
Performance Monitoring
Regular monitoring ensures your portfolio stays on track. But avoid over-monitoring, which can lead to emotional decisions and excessive trading.
Key Metrics to Track
Total Return
Overall portfolio growth including dividends and capital appreciation
Risk-Adjusted Return
Returns relative to the risk taken (Sharpe ratio)
Benchmark Comparison
How your portfolio performs vs relevant indices
Asset Allocation Drift
How far current allocation has drifted from target
Frequently Asked Questions
How many holdings should I have?
For individual stocks, 15-30 positions provide good diversification without over-complexity. If using funds/ETFs, even 3-5 broad-based funds can provide excellent diversification.
Should I manage my own portfolio or use a professional?
DIY works for those with time, knowledge, and emotional discipline. Professional management suits those who prefer hands-off approach or have complex situations. Consider robo-advisors for a middle ground.
How often should I check my portfolio?
Monthly or quarterly is sufficient for long-term investors. Daily checking often leads to emotional decisions. Set up alerts for major moves instead of constant monitoring.
When should I change my allocation?
Major life changes (marriage, children, retirement) warrant allocation reviews. Market volatility alone shouldn't trigger changes. Stick to your plan unless your goals or risk tolerance fundamentally change.
Build Your Optimal Portfolio
Get personalized portfolio construction and management advice from our certified advisors. We'll help you build a portfolio aligned with your goals.