How To Build A Multi-Asset Portfolio Even In Your 20s

Adam Wong

Adam Wong

Last updated 17 January, 2022

It’s never too early to start building your portfolio. Here’s how you can build a multi-asset one that will serve you well in your later years.

We all know about the benefits of diversification. It gives you exposure to more market opportunities and reduces the risk of loss to your overall portfolio. I personally diversify across 10 to 20 stocks in my portfolio, and research has shown that having just 10 stocks in your portfolio can reduce your risk (variance) by 76% compared to a single-stock portfolio.

However, stocks are just one asset class. Owning 10 stocks (or even 500) would still mean that you are exposed to the volatility to the overall stock market. For this reason, it is also important to diversify across different asset classes and build a multi-asset portfolio.

There are many different types of assets in the investment world, but I will focus on the four traditional asset classes, namely: cash, bonds, stocks, and real estate.

The four traditional asset classes

Why do I focus on the four traditional asset classes? Mainly because they are productive assets. A productive asset has the ability to generate profits and/or cash flow which you can reinvest to buy more assets. On the other hand, a non-productive asset (like art) doesn’t produce anything; it just sits there with the hope that you can one day sell it at a higher price than you bought it for.

Now even though all four traditional asset classes are productive, the nature of each asset class – and the intention of owning it – is different.

1.      Cash. Produces interest. You hold cash for liquidity.

2.      Bonds. Produces coupon payments. You hold bonds for stability.

3.      Stocks. Produces profit. You own stocks for growth.

4.      Real estate. Produces rent. You own real estate for income.

Of course, you can always own stocks for income or flip a property for profit, but I would say these are the main use of owning each asset class for most typical investors.

So the question now is: how do you easily build a multi-asset portfolio from the four traditional asset classes? And can you also do it if you’re young and only have a small amount of capital to invest? The answer: Yes, you can.

Let’s find out how.

EDM Lead Gen

Start managing and saving money like a pro with SingSaver’s weekly financial roundups! We dole out easy-to-follow money-saving tips, the latest financial trends and the hottest promotions every week, right into your inbox. This is one mailer you don’t want to miss.

Sign up today to receive our exclusive free investing guide for beginners!


Cash is an asset class that everyone starts with. Even if you’re in your 20s, you should have some amount of cash set aside in your bank account. If you don’t, then you need to start saving!

Even though cash generates interest, the goal of holding cash is not to earn that interest (interest rates are abysmal anyway); you hold cash for liquidity. So how much cash should you hold?

The first part is to keep six to 12 months’ worth of expenses in cash for a rainy day. Having this cash reserve cushions you against the blow of financial setbacks, such as unexpected expenses, a pay cut or a job loss.

The second part is to hold a portion of your investment portfolio in cash. I personally hold 10% to 20% of my investment portfolio in cash at any one time. The reason for this is to have cash available to take advantage of attractive investment opportunities as they arise (e.g. stock corrections, market crashes, etc).


Like cash, bonds generate interest – usually at a higher rate of return. But while cash is meant for liquidity, bonds are meant to provide stability. Depending on your risk profile, you may want to have more of your assets parked in bonds instead of stocks which are typically more volatile. There are many types of bonds, but the two most common types are government bonds and corporate bonds.

In Singapore, you can purchase Singapore Government Securities (SGS) bonds through the local banks. SGS bonds are AAA-rated and the latest 10-year bond yield is 1.83%. Not great, but better than your savings rate.

Alternatively, you can consider bond ETFs listed on the Singapore Exchange. Bond ETFs provide good diversification and liquidity. However, unlike bonds, bond ETFs have no expiry date and your principal amount is not guaranteed since they trade like a stock on an exchange.

But if you were to ask me, the best way to invest in a ‘bond’ in Singapore is to contribute to your CPF! This is because CPF monies are invested by the CPF Board in Special Singapore Government Securities issued by the Singapore government. (SSGS are non-marketable bonds primarily issued to the CPF Board.)

Source: CPF

The upside is that the CPF Special Account pays 4% to 5% interest per annum – far higher than what you can get anywhere for a similarly AAA-rated investment. Of course, the caveat is that you can only withdraw your CPF monies at age 55. Like it or not, the CPF is here to stay for Singaporeans; my opinion is to simply make the best use of it.


Compared to the rest, stocks are the asset class that have historically generated the highest returns. When you purchase a stock, you are essentially buying a portion of an underlying business — one which I hope you think will become larger and more successful over time. For this reason, people typically invest in stocks looking for growth.

The simplest way to start investing in the stock market is to simply buy…the entire market. In Singapore, you can purchase the Straits Times Index (STI) ETF, which tracks the 30 largest companies listed in Singapore. These include blue-chip stocks like your three local banks (DBS, OCBC, and UOB), Singtel, CapitaLand, and Singapore Airlines. Since its inception in April 2002, the STI ETF has generated an annualised return of 6.39%, beating the CPF Special Account interest rate.

However, if you’re truly looking for growth, I think the U.S. is still the best place to invest. America is home to some of the largest and most innovative companies in the world that have the potential to expand their footprint globally.

To invest in the U.S. stock market, you can consider an S&P 500 ETF which tracks the 500 ‘best’ companies in America. These include global names like Apple, Microsoft, Google, Amazon, Tesla, Visa, Disney, and Coca-Cola.

<Compare brokerage for US stocks>

Since its inception in 1992, the SPDR S&P 500 ETF has generated an annualised return of 10.64%. Just to show how amazing this is, every S$10K invested with this fund from inception would now be worth S$207K. Of course, past performance is not a guarantee of future results. But America’s economic brilliance and entrepreneurial spirit should see the country take bold strides forward in the 21st century, just like how it did the century before.

“Despite some severe interruptions, our country's economic progress has been breathtaking. Our unwavering conclusion: Never bet against America.”

– Warren Buffett

Real estate

Singaporeans love property. A quick look at our property price index and packed showrooms around the island makes this clear enough. It’s the dream of many Singaporeans to own a second (or third, or fourth) property which they can lease for passive rental income.

However, property is expensive in land-scarce Singapore. How is it possible for someone with a small investment portfolio to gain exposure to the property market? Through real estate investment trusts (REITs).

REITs are investment funds that pool investor monies together to purchase properties. There are currently over 40 REITs publicly listed in Singapore that own a combination of shopping malls, office towers, hotels, hospitals, data centres, and industrial buildings. These properties are filled with many tenants who pay rent, which is passed down to REIT investors as a dividend.

If you invested in every Singapore REIT since its listing, the top 10 performing Singapore REITs would earn you an annualised return between 6.6% to 14.0% inclusive of dividends. As you can see, REITs are a fantastic way to own a diversified portfolio of property assets, even with a low amount of capital.

However, not all REITs are created equal. Some REITs own a portfolio of retail and office properties, others own hospitals and nursing homes, while others may own data centres and industrial factories. It’s important to understand the demand-supply dynamics of different sectors of the property market and how they affect your REIT investment. It’s also important to evaluate a REIT’s portfolio of assets and its key metrics before you invest.

Final thoughts

How you balance your overall investment portfolio depends on your risk profile and financial goals. These will typically shift over time depending on your age and station in life. For example, a fresh graduate may prefer to allocate more of their portfolio to stocks for growth, but a retiree may prefer to have more in bonds and REITs for capital preservation and passive income.

Personally, I like to treat my CPF savings as my bond allocation and I equally divide the rest of my portfolio in Singapore REITs for dividends and U.S. stocks for growth. There is no hard and fast rule here; it’s important to build your portfolio to what makes the most sense for you and your financial goals.

Read these next: 
Money Confessions: 9 Singaporeans Share Their Portfolio Asset Allocation
5 Tips For Millennials To Start Adulting Financially
Uniquely Singaporean Things We Do To Accumulate Wealth
5 Worthy Financial Goals To Attain By 35
These 11 Horror Stories Will Get You ‘Woke’ About Your Personal Finance

Adam Wong is the editor-in-chief of The Fifth Person, an award-winning investment site that focuses on Asian and U.S. equity research. The Fifth Person has featured in national media including Channel NewsAsia, The Business Times, AsiaOne, and Money FM 89.3. The Fifth Person won best independent investment website at the SGX Orb Awards organised by the Singapore Exchange in 2018 and 2020.


Use a personal loan to consolidate your outstanding debt at a lower interest rate!

Sign up for our newsletter for financial tips, tricks and exclusive information that can be personalised to your preferences!