Anonymous
Im 34 this year with $340k in savings. i am thinking of applying to buy $200k in SSB and put the rest in a UOB one account. the uob one has decent interest for the first $75k only so i was thinking SSB is a good safe place to park the money and has better interest than fixed deposits. is this a good idea? are there better ways of investing? i've only just learnt about salary accounts and ssb etc (mountain tortoise) so if theres a better way of investing, please advise.
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Hariz Arthur Maloy
07 Jun 2019
Independent Financial Advisor at Promiseland Independent
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From broader perspective, we should address the risk and return objectives, and personal constraints such as time horizon, liquidity needs and taxes. Here are more details:
Risk - what types of risk are you willing to take? how much risk to take for each risk categories?
Return - what is your return expectation? Are you satisfied with ~2% return from SSB and UOB account?
Liquidity needs - do you need to have liquid cash to buy houses, support children education, etc?
Time horizon - take into account your age. The longer the time horizon, the higher the capacity to undertake riskier investments given that there will be enough time for the market to recover if your portfolio suffer bad returns in near future.
So there are a lot to consider, and the focus should be on the investor personal circumstances rather than the merits of the instruments.
Given that you are still young and have a decent saving rate ($340k in savings by age 34), I would expect that you have the capacity to undertake riskier investments to increase the returns. Equitiy and real estate are good asset classes to look into, but should be approached with care. Invest in your own knowledge should give the best return! โโโ
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If the above are the only two things you're doing, you're barely beating inflation. Inflation is about 2% per year, and the above method probably gives you 2.2-2.5% per year.
So money not really growing a lot.
You're still young, and can take exposure to the equity markets. 30+ years before you probably retire so there's a lot of room for some higher risk instruments.
If you're totally adverse to risk, CPF SA account or private annuities could be another way to get 4% and higher returns.