Asked on 30 Apr 2018
Hi there! This is a good question and to have around $60k saved up before entering university is a pretty good way to start. There are a few layers which I would think is best to address this query or situation you have.
1) What is your time frame
2) What is your risk appitite
3) Do you believe in lump sum or dollar cost averaging
From the above 3 questions, you can identify which investment or savings strategy you would have.
For example, I would recommend the following:
Total amount: $60k
Less: Rainy day funds: $6k (6 months of comitted expenses, if you spend $1k a month)
If you are more risk taking, you can invest the bulk of it (eg 70%) into blue-chip dividend paying stocks (eg banks or REITs) which potentially yield 4-6% p.a
If you are less risk taking, you can actually put the bulk of it (eg 70%) into savings account which are high yield (eg 1% p.a like a CIMB account) the remainder 30% you can put it into a REIT or ETF like the STI ETF (Which tracks the singapore index, comprising of 30 of Singapore's top companies)
As a student myself in NUS, I hope my insights would benefit you.
With $60k saved up, split your pot into 3 basket: Emergency fund, Protection fund, and Growth fund.
Emergency fund should be the liquid cash you are able to deploy, preferably 6 months or more of your expenses.
Protection fund is the premiums you need to pay for health, critical illnesses and accident plans.
With the remaining cash or so, spend some of it to buy investment books (Or read online pdfs), watch online investment videos.
You can park your money at ETF or SSB while you are learning the ropes, and take up some part time jobs to boost your cashflows.
It would be good to set aside a sum for emergency as you might never know when you will need it. You can increase you savings by putting your money in a high interest savings account. You should also set aside a sum of money for your uni expenses. The remaining money you can start to invest via robo advisor.
If you could put money aside for longterm,
one way could be cost averaging by splitting your 60k
and take less riskful ideas from:
The Singapore Savings Bond for low-risk investment purposes.
If you are open, can start thinking about opening a CPD account for future investment, spend some time learning first.
Suggest going for safer options since you might need it for your University studies. Consider putting it in CIMB Fastsaver to get 1% interest or CIMB's Fixed Deposit account for 1.84% interest for 12 months (promo till end of September). Alternatively, you can buy Singapore Savings Bond too as your capital is guaranteed and is liquid as well
you can put some money into singapore savings bond, regular savings plan, as well as robo advisor. alternatively, read up on investment books/go for investment courses to build up on your financial/investment knowledge. you're investing for your future :)
Step 1: put in SSB
Step 2: Take up finance and basic accounting courses at NUS/SMU
Step 3: Learn to invest with the basic financial knowledge from step 2
Step 4: Do it young and your savings will grow quickly.
<Advise from someone who did step 2 to 4, Step 1 was not existent during his uni life>
So admirable. On your question whether you need emergency funds, I guess will depend on whether your family may need you as a safety net (in case monetary contribution is needed).
To grow your savings, I suggest to open either
CIMB Fast Saver for fuss free 1% per annum interest up to $50k. Pro is it offers you flexibility when you need the money in future.
Or can consider Citibank Maxigain for interest from 1.2% which will step up to 2.4% after a year (monthly increase by 0.1%). Pro is higher interest but if you withdraw, your counter will drop which means your interest rate will drop.
Risk profile low - buy singapore savings bond, or high yield savings account like maybank etc.
Risk profile medium - buy blue chip stocks, reits or index. Capitmalltrust give you 5% yield and dbs around 4% yield. Thats annual passive income of $3k or $2.4k
Risk profile high - go for small-mid cap stocks or p2p lending. Since u got long term horizon in front of you.
Best way to increase your savings?
There are a few usual suspects here:
Savings account (CIMB FastSaver seems like a good one since you are not working)
Singapore Savings Bond (Incremental interest rate, maturity in 10 years time, and should be redeemed approx 1 month before you need the cash)
But you could also...and here we are moving out of the realm of savings...
Try P2P Lending (you will be taxed on the income received in the form of 'interest') - Reviews
Investing as per what other people have suggested
Use the $60,000 to angel invest in 6 early-stage ideas while in university
On my last point: University is where you will find future startup entrepreneurs (Link, Link) Seedly's own Kenneth Lou was from NUS and some of my former bosses at Ninja Van were from SMU. (Polytechnics also have entrepreneurs!)
Investing in early-stage ideas is highly risky with (potentially) high reward. Being in school for +3 years will the opportunity for you to find the rare gems before they are snatched away by other angel investors, venture capitalist and grants.
Hope it helps