Saturday, 19 July 2014

Designing a "caveman portfolio"

I haven't travelled much around the world, and haven't lived in a foreign place for a substantial period of time (e.g. one year and more). That said, I think Singapore is the safest place in the world. There's no natural disaster, we have a stable political environment, and this is a peaceful country. I believe these would be the key factors that attract people to establish their lives on this island, work or start a business here, and invest long-term into assets in this country.

I believe in the future of this country. I think it is possible to design a "caveman portfolio" of Singapore stocks which shouldn't require active monitoring, selling and buying etc. This reduces transaction costs and minimises time needed in managing the portfolio. After I have decided on the stocks to be included in this portfolio, I just keep investing into them. I can then retreat to my own "cave", and spend my time on other aspects of my life and other interests which make me happy.

I would design this portfolio to consist of at most 10 stocks, covering businesses which would exist forever. My preliminary portfolio shall include businesses in the financial and telecommunication sectors. They are: DBS, UOB, OCBC, SingTel, StarHub and M1. They will form the "foundation" of my portfolio. I figured that these are established businesses with continuous revenue, as well as relatively resilient during bad times. They pay dividends regularly too!

After setting the foundation, I'm thinking of forming the next tier of my portfolio with stocks that are in the business of property, healthcare, and education. These areas involves more companies and investing into the right one is crucial to building a portfolio that can give me a peace of mind. Shall share more about why these sectors form part of my "caveman portfolio" and my personal selections in my next post.

Any views or advice are welcomed too!

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