Is “VWRA and chill” good advice?

VWRA is a splendid way to invest.

It is extremely diversified.

It is very low-cost.

It is set-it-and-forget-it material.

It is advice that gives you the best outcomes.

Historically speaking, a 100% equity portfolio is the best strategy for retirees.

So “VWRA and chill” is good advice, right?

Financial advice isn’t so simple

It involves 6 steps laid out by the Financial Planning Association of Singapore (FPAS).

1. Establish and define the relationship with the client.
2. Collect the client’s information.
3. Analyze and assess the client’s financial status.
4. Develop the financial planning recommendations and present them to the client.
5. Implementing the financial planning recommendations.
6. Review the client’s situation.

I covered why that means Finfluencers can’t give financial advice.

(Good) Financial advice is tailored

Financial advice has to take into account different aspects of a client’s needs.

It has to be tailored to time horizon, goals, and individual risk tolerance and knowledge.

There is no point investing in VWRA if you want to use the money in the next 3 years.

There is no point investing in VWRA if you sell out every time the market drops by 10%. (This happens about once in every 30 months)

There is no point investing in VWRA if the person doesn’t know what stocks or bonds are.

There is no point investing in VWRA if the person doesn’t save any money.

(Good) Financial advice has the following qualities

It has to be free from conflict of interests and be objective. This doesn’t just mean fair, but it should be done in your best interests.

It should be evidence-based and easy to execute. VWRA and chill is simple, but it is on the same tier as “eat less, move more” in response to a question about weight loss.

It should be transparent about the risk you are taking on. VWRA and chill sounds simple, and it is, but it dodges the very real possibility that you could lose 50% or more of your life savings. It doesn’t tell you the other part.

To capture the returns, you need to be able to stay in your seat.

That is easier said than done.

VWRA and chill is good advice, but it isn’t enough.

Only through appropriate action can we turn advice into reality.

Check out my earlier posts on investing in stocks, and my guide on investing.