I have 100k to invest, I’m thinking of placing it into something very safe with returns generating 4-5% annually. Where should I place my funds? - Seedly
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Anonymous

Asked 3w ago

I have 100k to invest, I’m thinking of placing it into something very safe with returns generating 4-5% annually. Where should I place my funds?

I currently already have money invested in stocks and various Life Insurance plans and even a ManuLife Ready LifeIncome plan(Probably mistake buying this). Any advice would be great. Thanks!

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Hi anon,

There is nothing in the market that can give 4%-5% safely. Even CPF can only give 4% on the SA and MA monies, and there are restrictions on flexibility.

To get 4%-5%, you will have to take on risk. Bond funds, blue chips, etc can give such yields but you have to take on the full ups and downs of the market. As you are already invested in stocks, you already have such exposure.

If you truly want no risk, you will have to look at short term endowments and FDs. You could get around 2% risk-free on a short term endowment, but with a lock in of around 3 years. It's probably the only option you can get right now in this market.

Readylifeincome does give you a guranteed 0.95% of your sum assured for life. The plan is geared more toward building and increasing the death benefit and maturity benefits towards the end of the policy, which is why the guaranteed payout is not that good. I suppose you are past the free look period already, else you are allowed to free-look, take back your premiums and evaluate your options on similar plans with better yields.

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Elijah Lee
Elijah Lee

3w ago

Hi, in any case, you get a guaranteed $720/yr, which, with some luck and Manulife meeting their projections on the par fund, should at least net you something like $2K/yr (hopefully). Take that as a perpetual income stream, and you can periodically check the surrender value every few years to see when you might break even. If not, it's just pocket change to pay off your phone bills and such. Could be worse. You might want to hold cash for now. Try money market funds which are better than bank interest rates and relatively safe (although not guaranteed). I wish I'd have a better solution for you but rates are really low, 3 year endowments are getting snapped up faster than it takes to eat breakfast, and some of the best lifetime income plans are coming off the market as interest rates drop. Stay liquid and wait for the next best thing. Sometimes, waiting is part of the strategy.
Question Poster

3w ago

Thanks Elijah for your reply! Yes according to the projections it’s $2.4k/year based on 4.75% which i’m unsure they can hit amid this economic situation thus i’m going on the conservative side of $720/year(guaranteed). According to what I see, the breakeven point of my premiums paid which is in this case total $80k, breakeven surrender value(Guaranteed) would be on the 26th year of the policy. I guess I could look on the positive side that this plan also has a death benefit as well. Yes guess the only ‘safe’ place to park funds would be fixed deposit but from what I see anything above $50k would only net 0.3-0.5% per year. Guess have to just wait for now and see how to make money work for us.
Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Jun)

Level 9. God of Wisdom
Answered 3w ago

There is nothing "safe" with 4-5% p.a.​​​

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered 3w ago

No risk, No gain. If there's something very safe that initially generate 4-5%, it would have been bid up by risk-advserse investors, reducing its yield subsequently

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Tay WenHao
Tay WenHao
Top Contributor

Top Contributor (Jun)

Level 7. Grand Master
Answered 3w ago

As Frankie mentioned, for 4-5%, there's nothing safe. The only possible safe is CPF SA (RSTU). As long as they dont adjust the rates, it 4% annually and additional 1% for first 60k.

For safe options (capital guaranteed), fixed deposits, high interest savings account is usually 1-2% p.a.

Followed by bonds (capital guarenteed unless bankrupt). SSB is out of the picture now since its lower than FD/HISA... Corporate bonds around 3%.

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