Build a Generation Wealth portfolio from scratch.

Recently, I and my gf discussed about weathering the storm of our future and we concluded that there’s a need to build a portfolio. We are considered a young couple waiting to collect key and we need some funds such as renovation, expenses and protect our downside. 

I projecting this fund (building the foundation) as mid-long term 3-5 years. After we should able to proceed growth index or stock pick in small allocation. I believe using S&P 500 as a benchmark is reasonable because the holding majority derives from US and tech stocks. During the drip cycle we need to buy even more than usual DCA to beat S&P 500.

I suggested investing small amount of world index as a foundation since she has mild knowledge about investing. World index ETF is the safer to invest passively in the long term which adjust the market cap over time by geographic basis. We aware the world index is not a growth massively than S&P 500 or Nasdaq but it provides us a good sleep during uncertainly. Once there is a opportunity arise (black swarm event), we maybe invest in growth ETF ( such as QQQM) in minor allocation in this portfolio (I will write down if this event happens).

I don’t include dividend ETF because our age should focus on stable growth. US Dividend ETF take sometime to recover back to their fair value if a dip happens, and there tax withholding of 30%. Why not focus on high fixed deposit will safer and accountable as a joint account. As a individual I do encourage myself to invest in dividend growth stock in SG market such as a local bank.

SMART goals:

This framework helps ensure that your goals are well-defined, progress can be tracked, and they are attainable within a realistic timeframe. 

Specific: To achieve building family fund in the event of crisis. We will invest in safer way.

Measurable: World index stock must be the main asset in the early stage. Monopolised good stock inclusion in the mid stage. The stock must base on good track record. Building warchest for recession and invest consistently.

Achievable: Risk review yearly to keep the portfolio on track of beating the core inflation overtime.

Relevant: Invest safely in quality stocks during up or down period

Time-bound: 10% growth and warchest in one third of this fund over time.

I choose ticker FWRA as a foundation for this portfolio.  I shall let ChatGPT to intro us this stock:

Invesco FTSE All-World UCITS ETF Acc (FWRA), which tracks the FTSE All-World Index. This ETF provides exposure to large- and mid-cap companies across both developed and emerging markets.

Here are some key details:

• Expense Ratio: 0.15% p.a. (low-cost option for global diversification)
• Replication Method: Optimized sampling (rather than full replication)
• Fund Size: Over $1.46 billion in assets under management
• Dividend Policy: Accumulating (dividends are reinvested)
• Base Currency: USD (currency risk applies)

Back to my view on this stock, as I did my research and comparison among similar stock. This stock is new World index than the rest and carry the lowest expense ratio and Ireland domicile is only 15% tax withholding than 30% tax withholding in U.S. The AUM growth from 460millions to 1.46 billion with 2 years. Accumulating policy is the best approach given 30- 50 years horizon. The share price is around USD 6- 7 dollar right now that give us a chance to buy lot shares.

Let’s dive in the allocation section:

Sector Allocations

The ETF provides broad exposure across various industries, with the largest allocations typically in:

• Technology (around 22%) – includes giants like Apple and Microsoft
• Financials (approximately 15%) – banks, insurance firms, and asset managers
• Healthcare (about 13%) – pharmaceutical and biotech companies
• Consumer Discretionary (roughly 12%) – retail, e-commerce, and automotive
• Industrials (around 10%) – aerospace, manufacturing, and logistics

The AI story still bullish despite tariffs and uncertainly. Many companies will be looking at cost efficient to run the business.

We are the Risk manager of our account, we need to measure the worse scenario to stomach the risk and crisis.

Risk Factors

• Market Volatility: Since it tracks global equities, it is exposed to fluctuations in stock markets worldwide.
• Currency Risk: The ETF is USD-denominated, meaning investors outside the U.S. may face currency exchange risks.
• Liquidity Risk: Some emerging market stocks in the index may have lower liquidity, affecting trading efficiency.
• Sector Concentration: A significant portion of the ETF is allocated to technology stocks, which can be sensitive to economic cycles.
• Geopolitical Risks: Exposure to emerging markets means potential risks from political instability or regulatory changes.

 

I can only factor in Geopolitical and currency are our main risk facts. We can take Covid and tariff as examples both of these crisis may last for at least 2 years. Many of us lost their during high interest rate and discourage investors to invest and spending which many of us just want to save and timing the bottom.  The forex risk is relevant based on tariff and rate hike.

My advice to myself, saving at least 12 months of your current salary and after complete saving move your next pay-check to SGD Money Market Fund wait for opportunity to invest and small DCA into the good undervalue stock. To minimise forex risk, I deploy sufficient USD in my broker platform and still keep SGD as a main currency. We are blessed that Singapore is a peace and progressive country SGD did not depreciate against USD for last 15 years however I not worry if USD depreciate and stock dipping because a good stock will recover over time and the returns will cover depreciated USD given US market is the open market for the world to invest.