If I have 30k worth of savings for marriage and I'm planning to get married in the next 3 to 4 years. Should I be investing that money or keep it in a bank?

Question

Should I be investing that money in ETF (a robo advisor) and potentially grow that money? Or should I just keep it in a savings account. I'm fine with a loss of max 2k if investing.

YJ · Accepted Answer

Option: safest to risky

1) Fix deposit (1%+)
2) high yield account eg. Dbs multiplier- 3.8% max (T&C)
3) Money market fund (0.x%)
4) bond UT (3%+ p.a.) monthly dividend (very stagnent). Eg pimco fixed income.
5) equity fund (3%+ p.a.) monthly dividend (some growth). Eg. UOB global quality fund

If only $30k wont suggest ETF, if you only willing loss $2000. There is a potential to grow higher but if there is a correction portfolio can down 30%.

With very low risk investment, typical return is 3%+. So around $3.6k+ after 4 yrs. Is it acceptable?

Choon Wang · Answer

Hi there!

I usually ask myself two things before I invest:

1. How long can I stay invested before withdrawing?
2. How much can I afford to lose?

In your case, if you need the money in the next 3-4 years, it is best to invest it in very low-risk instruments with high liquidity. You can take the risk to invest in ETF and returns can potentially be more rewarding. Liquidity is also not an issue for most ETFs. However, should there be a significant market correction in 3-4 years, you won’t have that much time to allow your investment to recover. The extent of market correction is not something we can control and I’m certain everyone knows it is not sensible to realise the loss during such a time.

Assuming you’re fine with a loss of max $2K, that is about 6.67% of your total $30K capital, which seems to suggest your risk tolerance is relatively low. Investing in instruments such as ETFs in the next 3-4 years is possible but your risk tolerance will have to be bigger.

In my honest opinion, you can consider going for lower risk instruments such as cash funds offered by Singlife and Endowus accounts. Though the returns are not as high compared to ETFs, they are much lower in terms of risk. You could consider investing in ETFs for a longer term goal such as retirement.

I hope my thought process helps you!

Jiayee · Answer

$2,000 / $30,000 is approx 6.67%. Given your short investment horizon and conservative risk appetite, you can invest in portfolios with a greater proportion of fixed income assets and a lower proportion of equities. However, if you plan to invest through a robo-advisor, you need to take into account the platform's fees. Fees are charged throughout the period your money is invested, regardless of profitability.

If I were you, I will keep this money in cash management or insurance savings.

If I were you, I will keep this money in cash management or insurance savings.​​​