Investment options appear to be getting better for Australians living in Singapore.
You can now build investment portfolios with low cost exchange traded funds (ETFs) while anchoring to your home markets.
International diversification is always important, but it’s also important to have a home country bias. After all, if you’re Australian, and planning to head home at some point, you’ll be paying future bills in Australian dollars.
For that reason, let me propose the following portfolio of exchange traded funds, which you could buy through Standard Chartered Bank’s online brokerage.
Purchase fees are lower than they are for DBS Vickers.
Standard Chartered charges 0.25% commission on trades. This is especially good for people hoping to invest small, regular sums. Investing just $1000, for instance, would cost a commission of just $2.50 with the currency spread premium costing a further 0.04%.
If you invested $10,000, you would pay $25 in commissions, and a 0.04% currency charge, amounting to an additional $4. If your portfolio is valued in excess of $200,000, or if you have a minimum $1 million mortgage with Standard Chartered (poor you) you will receive an even lower, preferential rate charging just 0.2% per transaction, with an additional 0.04% currency charge.
Unlike DBS Vickers, Standard Chartered offers direct access to the Australian stock market as well.
Here’s a sample portfolio for a 40 year old Australian:
- 40% Australian composite bond index
- 20% Australian stock index
- 15% First world international index
- 20% U.S. S&P 500 index
- 5% Emerging market index
But there’s a catch!
Brokerages in Singapore now require that you take a multiple-choice test, online, before ensuring that you are qualified to open a brokerage account. Many of my friends have taken this test, and I’ve seen the questions. They knew nothing about finance beforehand, but after studying for a couple of hours and retaking the test (when necessary) they have all passed.
Ironically, I’ve been investing in stocks and bonds my entire life (building a million dollar portfolio in the process) but the test questions are…to be charitable, somewhat bizarre. Without taking an hour to study for the test online, I would certainly fail the test myself—and badly. The test’s lack of relevancy is mystifying.
However, if you want to open an account, you’ll still need to pass this test.
Fill up the Customer Account Review Form. After you have completed the form, you will be directed to take the e-learning portal.
- You have to complete the whole e-learning course. It takes about an hour. Once you have finished the course, you need to PASS the exam. There are 20 questions and the passing grade is 18/20.
- When you pass the test, SGX will send your test results to your email. You can attach this test result and send it to Standard Chartered.
If you fail this silly test (and yes, it is a bit silly) then you can always take it again.