Asked by Anonymous
Asked on 21 Jan 2020
Currently, I have 100k parked in SC bonusaver account earning 3.88%, 75k parked in 2 UOB one account earning 2.435%, 100k in a 5year endowment from OCBC-GE maturing next year march and around 70k in OCBC 360 account earning just the salary interest. I am considering between opening another SC bonusaver account or getting started on investing. However, as a full-time working mother with a kid and planning another, I worry I might not have time to monitor the investments.
If you're talking about more risky investments (=stocks, mutual funds, ETFs)
maybe you do it simple and take just one of these for ultra longterm:
Chart of VOO as an example
Vanguard SP500 ETF (ticker: VOO)
iShares SP500 ETF (ticker: IVV)
buy & hold for at least 10 years (you must be able to stash away that money for 10 y !)
bought with cheap online broker with regular new investments
don't open up new saving accounts
for having a perspective substract current Singapore inflation rate yearly from
your mentioned %-numbers
I am a firm believer in value investing, and believe that with minimum effort, you can make your money perform much better over the long run than letting others invest for you.
In value investing, once you make a move, you don’t have to monitor the investment regularly. In fact, Warren Buffet encourages you to think of making no more than 20 investments in your lifetime. Buy, and hold it for at least 20 years.
Top Contributor (Jan)
If you do not have time to monitor your investment, then you should avoid investments that require tremendous time and effort from your end. This is because time is more valuable when spent at work and especially with your family. As a result, it will make sense to invest in tools that can yield a similar rate of return without so much work.
However, before we start investing, it may be more important to spend quality time to understand your finances and your priorities in life. By understanding what you want for your future, we are able to maximise your money to its fullest potential. For instance, do you need so much immediate liquidity? Can we shift around the money in the banks to bring the returns up to the next level while maintaining the same rate of liquidity?
Thereafter, you may wish to decide whether you need this guaranteed return from the bank or to invest part of your money into tools that can potentially generate higher return over time. In your situation, I will suggest you to look into a diversified portfolio across different equity funds. (I will be able to explain the philosophy behind why it makes sense to invest only into certain equity funds instead of bonds while maintaining a reasonable risk level based on your risk profile. In other words, we will be taking calculated risk instead of unnecessary risk to this end.)
While there exists charges such as management fee, that is where it is the job of the fund managers to ensure that your invested capital grows over time. Furthermore, we can tap on the expertise from global investment firms like Mercer and BlackRock to create a customised portfolio based on your risk profile. In any case, all investment tools have charges and fees of their own.
In case you are wondering, this is the latest fund performance from AIA: https://www.blog.pzl.sg/aia-singapore-investment-linked-fund-performance/
Having mentioned that, past performance is never an indication for future performance. All in all, it is about sharing a common vision and to create a goal that you want for your future. Money is merely a tool to put into the right assets to achieve your goals.
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Top Contributor (Jan)
Wow that's a lot of cash. Unless you're planning for an extremely huge purchase (like a down-payment for a property) using that money within the next 3 years, it should be invested.
Since you're a parent I would say at max, hold a year's worth of expenses in cash for emergencies, and any money needed within 3 years. Everything else should be invested.
I would suggest to hire a financial advisor to manage your investments with you. You should be looking to build a globally diversified portfolio that matches your risk profile. Build this asset to eventually provide you with financial independence so you can fund your retirement and your child's education.
Just investing 200k from your 420k and hopefully getting a 7% compounded return over 25 years would give you 1m at the age of 56.