Saturday, September 15, 2007

Selecting an investment fund

Hi

There are so many investment funds in the market. I need advice about selecting the fund to invest, but the insurance agent and adviser normally recommend only those funds that they they are engaged to sell. Can I expect to get impartial advice? I am quite confused.

REPLY

You should ask the adviser to recommend a fund that meets the following criteria:

* is a large, well diversified fund
* has low annual fee, i.e. less than 1% per annum for equity fund or 0.5% for bond fund
* have a low upfront charge (less than 3%)
* invest 100% of the monthly savings
* no exit penalties

If the adviser can recommend a suitable fund that you meets your criteria, they will be giving a useful service to you.

The adviser may not be able to recommend a fund that meets all of the above criteria. You have to take the next best choice.

I have recently decided to invest in a Vanguard fund that is based outside of the USA (to avoid US withhholding tax). It is a very large equity fund that has an annual fee of 0.35% and no upfront charge.

The STI ETF in Singapore also have similar features.
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4 comments:

Anonymous said...

Hi Mr Tan,

I have been trying to find a way to buy vanguard fund outside USA, can you please advise how you buy it?

Thanks,

Carrie

September 15, 2007 7:31 AM
Yong Kiat said...

Dear Mr Tan,

How do you invest in Vanguard funds?

Is this available in Singapore?

September 15, 2007 6:52 PM
Anonymous said...

Dear Mr Tan,

Would appreciate if you could share with your readers which Vanguard fund you invested in and the process involved in purchasing this fund outside the US.

Many of us have no idea how to proceed with our purchase.

Thank You

September 16, 2007 12:01 AM
Anonymous said...

Engaging an insurance agent is like engaging a salesman.Insurance agents don't understand investment.They know how to sell funds. They will sell you hot funds. They pick the highest performing fund for you .Adjusted for risk this may not be the best fund and may not be suitable for you.
If you have no good and competent adviser in this area just use MR. Tan 's criteria of fund selection and buy from the online portals.You save on charges. Why pay insurance agents when you don' t get proper advice and often dangerous advice?

September 17, 2007 11:46 AM

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