I talked about the principles behind this portfolio almost a year back (over here) but it took me almost a year to build up this portfolio to $150,000 worth of value.
I am officially tracking it from 1 Jan this year. And this is not a hypothetical tracker since I am putting real money (a significant chunk of my wealth) inside it.
The $150,000 is split into 5 assets which makes it about $30,000 for each asset.
Here’s my 5 assets that make up the Permanent Portfolio:
1. STI ETF
It comprises the 30 biggest listed companies in Singapore.
Price: $2.97
Number of Shares: 10,000
Yield:~3%
Value on Jan 3: $29,700
2. Berkshire B
Warren Buffett’s company which I am using to replace the S&P 500 since I do not want to be taxed on dividends.
Price: USD164
Exchange Rate: 1.45
Number of Shares: 125
Value on Jan 3: $29,725
3. Gold:
I am using two different types of instruments here. I have 6 pieces of 50g PAMP Gold Bar bought from UOB and I will be using their selling price as the valuation. To facilitate re-balancing, I also bought 90 SPDR Gold Shares that are cross-listed on SGX (O87).
UOB Price 50 Gram Bar Price: $2,700
087 Price: USD110
Exchange Rate: 1.45
Value on Jan 3: $30,555
4. Bonds:
The idea here is to use a mix of Singapore Saving Bonds (SSBs) and high quality corporate bonds to give a boost to the yield. Right now, I am using 15,000 shares of SSBs priced at $1 and another 15,000 shares of FCL 3.65% bond priced at $1.
Yield:~3%
Value on Jan 3: $30,000
5. Cash:
Basically this will be made up of a portion of the money in our OCBC 360 Account.
Yield:~2%
Value on Jan 3: $30,000
Rebalance Rule:
Only rebalance when the proportion deviates by more than 30%.
For example, if Berkshire B tanks and Berk B’s proportion of the whole portfolio drops to below 14%, I will purchase more Berk B to rebalance the portfolio and make it 20% again. And if price of Berk B soars and the proportion exceeds 26% of the portfolio, I will likely sell some shares and rebalance to 20%.
For those with little to no idea why I am doing this and the benefits of it, please refer to the posts below for further information.
Should You Build A Singapore Permanent Portfolio?
15HWW New Investment Strategy: Part II – My First 3 Guiding Principles
15HWW New Investment Strategy: Part I – Why I Am Not Picking Individual Stocks Anymore
Nice! Can’t wait to see how your permanent portfolio performs for this year. Do track your rebalancing on the blog if you can cause I’m interested to see how it works!
Hi Finance Smiths,
Yes, the Permanent Portfolio will be a part of my monthly updates. Honestly, I am not expecting to make any rebalancing this year, but well, who knows?
Fantastic read! Thank you for sharing your perspective. I just started investing about 2 years ago and now am seriously looking to rebalance my portfolio. I must admist (sheepishly) that when I just started, I got carried away and just bought stocks that financial bloggers mention themselves gaining from. Didn’t really do my own research or have a long term plan.
Fast forward 2 years later, I want to simplify my investment system because I would rather spend time on family and hobbies rather than reading financial reports. Am looking into ETFs, physical metals, Bonds, all local and international. Pretty much like your strategy!
I’m just wondering, how does one juggle buying different ETFs/ stocks, etc using different instruments like SRS, CPF-OA, Cash, custodian brokers (like Standard Chartered) and traditional brokers (like UOB Kay Hian)?
Take those intruments into consideration or it doesn’t matter, as they are all part of the same portfolio? Any light shed on this is greatly appreciated.
Hi Paddle Pop,
Thanks for you kind and encouraging comments.
If you were lucky and followed the “right” bloggers, you might have made a good killing. =p
From the permanent portfolio perspective, it probably doesn’t matter if the assets are held in SRS/CPF or the traditional brokerages. As long as each asset can easily be rebalanced into another asset, things should be ok.
The main difference is that CPF and SRS monies are not exactly liquid as compared to typical investments.
Nice balanced portfolio. Looking forward to emulate you soon. Cheers!
Hi JASS,
Thanks for your comment.
All the best in your investment journey!
Hi,
If I want to follow your portfolio and wish to inject 20k into the portfolio every year (roughly 2k per month), what are your views on how should I go about doing it? The commission for POEMS is a minimum $25 per trade and if I invest constantly every month, will this not take out a huge chunk from my investment? I understand that STI ETF can be bought using POEMS share builders plan for less commission, but this is not applicable for Berkshire B shares and bonds. What are your thoughts?
Thanks and keep up the great work on the blog!
Hi Brendan,
Perhaps it would be good to accumulate over 3 months and inject it once every quarter? That should help to keep the expenses and fees manageable.
hi 15hww,
May i ask which platform/broker you use to buy Berkshire B? As i am not familiar with overseas purchase.
regards,
KS
Hi ks,
I use a local brokerage and do take note that I pay a custodian fee for the Berkshire B that I own.
Hi there,
Been following your blog for something.
Actually was inspired to start permanent portfolio because of your blog.
Anyways, thought you would be the best person to answer some of the questions.
1> To build the starting portfolio, should I accumulate at least a 80k worth of cash and then time market respectively for each asset classes, buying into each ETF stock, ETF bonds, ETF gold at the right price to achieve the right initial proportion split (all at once)
Or can I buy like 20k worth of ETF stock this year, wait and buy another 10k ETF bond the year after ? (time gaps in between each purchases)
2> Is it advisable to implement a permenant portfolio via a POSB RSP ? Instead of waiting to accumulate a lump sum cash and timing the market to make purchase ?
3> the inverse correlation between ETF stocks and ETF bonds seems not to hold anymore and under current rising interest situation should we still include bond etf now ?
Pardon the lengthy question 🙂 But i think you are more than qualified to answer them 🙂
Hi Cedric,
Very good questions and I shall do my best to answer them.
1. I think most people would advocate saving up and then buying at one point in time to kickstart the portfolio since it’s notoriously hard to time the market. But even though I already had $150k set aside in 2016, I took 1 full year to slowly accumulate gold and Berk B as I was uncomfortable buying them at the same price at one shot, especially when I had some beliefs that the prices were a tad high and the valuation of that particular asset was frothy.
2. A perm portfoli via POSB RSP might not work v well, in my opinion. A large part of the perm portfolio gains come when there is rebalancing and the rebalancing sorts of “buy low, sell high”. By doing a drip, your equity portion would soon exceed the desired allocation and you would have to rebalance. But POSB RSP might work if you are taking two years to save up enough to implement a perm portfolio.
3. Actually, I am inclined to include bond ETF in future although SSBs are working well for me right now. I think the “not holding” is likely to be just a temporary trend. Anyway, another purpose of the bond component is to reduce volatility in the portfolio. And although cash does that well too, bond provides higher returns.
Hope the above helps!