Asked by Anonymous
Asked on 19 Jul 2019
I don't mind putting it in a high i/r bank account. However if there isn't one where should I invest this money?
If you are conservative, you can dump it into your CPF OA and earn 2.5% risk free, which can be used to pay the tertiary education fees of your child under the CPF Education Scheme. However, do note that it will only be for approved public universities(NUS, NTU, SMU, SUTD, SIT, SUSS, NAFA, LAS). Do read more about it here: https://www.cpf.gov.sg/Members/FAQ/schemes/other-matters/cpf-education-scheme#faq2196412
As Hariz mentioned, you can also consider the route of putting it into short-term endowment products. Do note that they usually have a minimum sum to put in, as well as a maximum cap. Here is an article, albeit dated, covering them in more detail:
Some recent 2019 plans:
If you are more aggressive, you can channel it to Stashaway, a Robodvisor via SRS which would let you save about $500 for your annual income tax(assuming you are working and drawing the average salary of 4k). However, if a recession was to happen, this may negatively impact your portfolio although stashaway will try to minimize the impact to it.
Lastly, if your child is going into a local U, you can consider taking up a 0% loan(https://blog.seedly.sg/tuition-fee-loan-local-universities/) and using the time period that he is still in school, continue to be vested. With a longer time period, you can be more confident of taking higher risk for greater returns:)
All the best!
Top Contributor (Dec)
Do you need the money in exactly 5 years?
If yes, you may not want to expose your self to a lot of volatility and should go for guaranteed products instead.
Currently there are short-term endowment products that provide 2.45% guaranteed compounded return for 5 years. LIC and Singlife are two such companies providing such policies.
Anything that is guarantees you 2-2.5% returns per year over 5 years would be good enough to invest in.
It really depends on what you want to do with the money.
As a gift when he/she turns 21? Funds/Stocks.
For university education? Bonds/Fixed D.
I will spread my 5000 into investment of $200 per month and invest into an 100% equity portfolio with Moneyowl. Why I choose Moneyowl is their parentage with Ntuc and I feel more confident that my money will be safe. I choose a 100% equity portfolio by investing in the index or enhanced index using DFA funds as my child has a more than 20 years time horizon to ride through the markets. Although their cost is not the lowest but what they charge is 0.65% per annum is comparable to other robo advisers and I prefer a hands-off approach and their auto-correct rebalancing. The platform fee is charged by ifast and I think it's not fair to add in when comparing with others. Although I hope with more people investing, moneyowl can strike a better deal or absorb the platform at least for the people who believe in them in the first few years of operation. With markets increasing unpredictable and volatile, even if next time my child doesn't know how to stock pick, she will be fine earning market returns.
Given the market situation and inflation between 3% - 10%. We're better off hedging the market vs riding it down. Especially when you have a shorter time frame.
My suggestion would be gold in physical coins, an asset you can hold in your hands, coins have a better resale value than other gold products. Companies like bullionstar sell gold bullion coins at a percentage above market value and they also buy coins off customers. Try not to buy into gold accounts as they add another level of risk related to the holding company.
There you go, inflation resistant, suitable for the choppy short term market that we are facing.
Also try to have an exit value, for example you needed the monies to grow at 4% yearly, you'd want to exit or redeem your investments at any time they reach $27,000 to eliminate any further risks.
In my opinion, chasing 4% to 6% profits vs resisting 3% to 10% inflation is a no brainer in a short term view. Higher upside.