If you are reading this article, the chances are that you have already saved up S$100K or are very close to the number, so congrats! At the same time, it has to be considered that in an expensive country like ours, S$100K may not stretch too far on its own. What with rising GST also on the anvil, things are bound to get tougher.
To put things into perspective, this amount will just be enough for a downpayment of a loan for a 4-bedroom resale flat in central Singapore. However, S$100K as a ready-to-invest corpus is still a very sizeable sum to add to your long-term life savings and goals.
Two tips to remember when thinking about investing your money
#Tip 1: Build a diversified portfolio
To maintain healthy finances in this volatile financial world, you need to diversify your investment portfolio. Your appetite for risky investments should inversely correlate with the amount of grey hair at the time of investing! So make sure your portfolio consists of low-risk investments, medium risk, and high-risk instruments like stocks, exchange-traded funds, cryptocurrencies, etc.
You’ll also find this useful: 5 Investment Guidelines For Newbies to Grow Their Money in 2018
#Tip 2: Factor in compound interest
If you want to see your money multiply, know that compound interest is your best friend. Simply put, compound interest is when your interest from investments generates further interest. Who wouldn’t want to make money out of money they don’t even have? To see this in action, you must take a long-term view of your investments, and hold it for a very long period of time (decades).
Not sure what we mean? Use the Rule of 72 to calculate how long it takes to double your money.
Now that we’ve covered some basic tips about investing, here are some investment options you should consider to make the most of your S$100K savings.
Ok, disclaimer here: You don’t actually need $100k to begin investing in these options. You can start even if you have only S$500.
1. Singapore Savings Bonds (SSB)
SSBs are Singapore government-backed securities that offer you a low-risk way to grow your money, albeit slowly. With SSBs, this is as safe as it gets. SSBs are ideal for the risk-averse, guaranteed-return-seeking investors. We don’t recommend putting all your money in here, since the return isn’t very high. But what makes them attractive is that unlike other instruments, you are not penalised for withdrawing anytime during your investment.
Here’s a possible idea: If your savings in your high-interest savings account have maxed out the limit for bonus interest, and you’re thinking of waiting for the next market correction or bull market before you enter, consider putting a small sum of money into SSBs. When the market corrects, use your cash first, and you can liquidate your bond investments within a month. At the very least, your money won’t be left idle.
Read more about SSBs here.
2. CPF Special Account:
If planning for retirement is one of your goals, then this is the choice for you. CPF Special account is as safe as SSBs but guarantees a higher return (up to 5% vs 2.4% for SSBs). The only caveat, however, is that you cannot withdraw this money till you turn 55. So, know your end goal.
3. Straits Times Index, Exchange Traded Fund (STI ETF):
Designed for those who are moderately risk-averse and would like to include some high performing shares in their portfolio. The simplest way to understand this is that STI ETF tracks and invests in the top 30 best-performing stocks on the Straits Times Index in different levels of allocation. The benefit of an STI ETF is the diversity it provides along with the high-quality, high-return stocks. The two primary funds to invest in are SPDR STI ETF and NIKKO AM STI ETF.
Read our beginner’s guide to investing in ETFs.
4. S-REITs: Singapore Real Estate Investment Trusts
Given Singapore’s small size, increasing population, and business-friendly nature, the property market will always be in demand for the foreseeable future. While S$100K may not be enough to buy property in Singapore, it is still sufficient for you to invest in property. REITs allow you to invest in various types of real estate investments like malls, offices, hotels etc.
These investments typically tend to give a higher return than safer investments but are also tied to the volatility of the economy and property market. Do you research carefully to select good performing REITs and REITs with potential.
Get updated S-REIT data from The Fifth Person here.
If you believe that robots can outdo humans at certain jobs, then read on. Robo advisors are algorithm-based investment advisors. They are the ‘Siri’ of investing. Robo-Advisors ask you a few questions to gauge your risk appetite and goals, crunch the numbers, and recommend a customised portfolio. Also, Robo Advisors charge much lesser management fees than traditional services like mutual funds and brokers. Popular ones in Singapore are StashAway and AutoWealth.
Here is everything you need to know about Robo-Advising.
There are many ways to invest your money and grow them, and these are just a small number of options. Regardless of which way you prefer, bear in mind that money that doesn’t grow will simply be eaten away by inflation. Start thinking of how to grow your money today for a more secure future.
If you need a plan, here are 7 steps you need to take to achieve your financial goals.