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Anonymous

Asked on 27 Dec 2019

Is it possible that I have too much money in savings accounts?

Hi, I've recently had the time to review the financial status of my family and I realised that most of my money is stuck in saving accounts. I made some efforts to maximise the yields of these accounts such as OCBC UOB and CIMB but that's about it. The interest generated is at most 2 percent. I've been buying ETFs regularly for the past 4 years and that amounts to only about ten percent of my total assets. I'm not sure how to take this further, but SSB and REITs are on my mind.

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Junus Eu
Junus Eu
Level 9. God of Wisdom
Answered on 13 Jan 2020

Totally possible, and I believe I'm the same situation as you (apart from cash held up in property) given that I have sold most of my stock positions.

Now that the rates are creeping down (esp my previous fav Citi Maxigain), its time to start re-investing.

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Chiam Min
Chiam Min
Level 5. Genius
Updated on 10 Jan 2020

I would suggest that you look into other investment instruments such as fixed deposits (on par interest rates or higher but shorter tenure period than SSB) or REITs instead of SSBs. Given the current (and rather low) interest rates for SSB these years, your money may not be fully utilized in SSBs.

In terms of investing in REITs, it's good to get a basic knowledge first before delving further into any investment. Mapletree Commercial Trust could be a REIT that you could look into.​​​

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Stanley Lim
Stanley Lim, Co-founder at Value Invest Asia
Level 4. Prodigy
Answered on 03 Jan 2020

Cash is the lowest return asset but also the most liquid. So do have enough cash for emergency purposes. But beyond that, it is better to start investing in higher return assets like stocks or properties

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Bjorn Ng
Bjorn Ng
Level 9. God of Wisdom
Answered on 13 Jan 2020

Well, of course. What you have been investing in, technically are low risks investments, hence the amount you are getting back isn't that much. If you would like to expand that, definitely SSB & REITs are good options, but TBH but are not attractive anymore..

I think it's definitely okay to hold on to more cash, and not deploy them just because you want to put it elsewhere. That clashes with investing as investing is about buying a business at fair value, not just because when you have the spare $ (might lead to overvalued/value trap at that point)

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Billy Ko
Billy Ko
Level 7. Grand Master
Answered on 13 Jan 2020

Absolutely. Even though many say you can never have too much of money, but I'd like to re-word that to you can never have too much of ASSETS.

Although cash is the most liquidable asset, it is not the highet return-generating asset.

In times where inflation peaks over your bank's savings account interest rate, your assets is in fact being eroded if you aren't able to generate a higher return as compared to inflation.

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Choon Yuan Chan
Choon Yuan Chan
Level 9. God of Wisdom
Answered on 13 Jan 2020

It is possible in your scenario. In fact many Singaporeans are in such dilemma. That said SSB and REITS which you have recommended are good avenues to start.

However should you progress and understand your own risk profile, pherhaps the STI ETF is one good method to park money, earn dividends over the long run while holding it

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 10 Jan 2020

Maximising yield of bank savings interest is akin to picking the low quality, low hanging fruits.

The reason why i find its low quality is because changes in these "high-interest" bank savings account policy is subjected to frequent changes and ever-stringent conditions tied to it, with a $X amount cap to it. But Singaporeans tend to send of lot of time fretting over it as bank savings represent the lowest risk (low-hanging) without the need to delve into seemingingly more "treacherous" DIY investing.​​​

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I'd probably only hold my emergency fund and 1-2 month's of income as cash and invest everything else. Any monies required in 3 years would be invested in guaranteed products and not in equity or any volatile investments.

You can probably afford to invest more if you have longer term goals like retirement. I'd suggest investing in a globally diversified portfolio of funds that matches your risk profile.

You can choose to work with a financial advisor if you aren't sure how to diversify and allocate your assets for specific goals.

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Savings accounts are safe as it bears low risk. I believe you have heard of this phrase before: low risk low returns, high risks high returns. If you are willing to bear a higher level of risk, you may look into equities, unit trusts or even forex to generate higher profits however, do learn the skills know how before getting into these markets as they bear high risk.

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Firstly, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/

Next, we will need to understand yor needs and goals for the future. From there, we will perform detailed calculations on the amount that you need for each goal. Thereafter, we will evaluate on the tools available to help you reach your goals, e.g. investing in bonds, equity or a managed portfolio.

If you are into investing, then you should ensure that you have a properly diversified portfolio. Additionally, we can make use of advice from global investment house such as BlackRock and Mercer to add value.

All things considered, I will suggest you to speak with a professional who is able to sit down and listen to you, before brainstorming on how to build common goals together and to make things work.

Here is everything about me and what I do best.

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