Spare cash for investment?

Invest in a diversified portfoilo of companies. One of the easiest would be the S&P 500 index, locally, your best bet would be the SPDR STI ETF- it covers the 30 large singapore companies and is rather diversfiied in its industrial sectors (such as property, banks, telecos and Miliatry Defence contractors)

Hi Tay,

Congrats on your journey into parenthood!

If you have set aside emergency funds for contingencies, then you can take a longer term view with the money. I'm looking at 5 or more years. Go for a diversified portfolio, and out of your monthly income, consider budgeting say, $500 a month to add on to your portfolio to grow it faster.

Options are plenty, you have ETFs and UTs which will immediately diversify your holdings. I would not recommend stocks in view of the fact that when the baby arrives, you will likely not have time to monitor your holdings. So either invest in markets, or find a good fund to go into. Let time and compounding be your friends, not foes. If you intend to invest for retirement, your horizon can be longer, but I would also suggest that you consider building your guaranteed income streams as well through annuities.

Additionally, I would recommend that you do not invest all $40K now. Keep say, $10K as a contingency warchest, over and above your SSB holdings. This strategy is important in investing as you will want to have 'bullets' to deploy when market opportunity presents itself.

There are plenty of decent ETFs,funds and annuities on the market, so take this time to read up and decide. As my friends who are parents can attest to, once the baby arrives, you won't have time for anything else. By then, your investments/annuities should be set up to auto run via GIRO/DCA.

Hi Tay, firstly congratulations on your coming first child! ⁣
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Regarding where to invest your spare cash of $40K, it depends on the following:⁣
1. Your time horizon - how long can you invest this money for?⁣
2. What is your objective for this money?⁣
3. How is the rest of your financial portfolio like? E.g. with a baby on the way, have you already made plans for adequate insurance covers for the both of you as well as baby? Where else have you already invested (apart from SSB)?⁣
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The above 3 questions are important, and it is best to approach it in the above manner. ⁣
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However, for a generalised answer and assuming: ⁣

you have a time horizon of 4-5 years, ⁣
that you will be comfortable with returns of 2.5-6% /yr (depends on the portfolio you choose), ⁣
and that you will not have a lot of time on your hands to monitor investments (especially with baby coming), ⁣
I will recommend a Managed investment Account. A Managed Account is a type of fee-based investment management product where the investment manager will invest on your behalf. A Managed Account could invest in a portfolio of different asset classes or it could be a range of stocks within a particular asset class. Previously Managed Accounts were more for the high net worth. Now it is also available to retail clients.

Instead of starting to invest, I will strongly recommend both of you to have a detailed understanding on your personal cashflow as well as on the household level.

This is because with a first child coming your way, there will be a lot of expected and unexpected expenditure and time off work that both of you will need to take into consideration. Therefore, the more prepared we are, the better we will become. I have explained how to do it here: https://www.blog.pzl.sg/understanding-your-pers...

Once you are sure on the real spare cash that you all are willing and able to set aside, know what is the outcome that you wish to achieve. This is done with the help of the following questions:

1. What is your capital? In your case, $40k

2. How will you want to invest your capital? E.g. lump sum or an amount on a regular basis

3. How long will you want to stay invested? E.g. 10 years

4. What is your risk appetite? E.g. How do you feel about short-term volatility?

5. What is your objective for investing?

With this in mind, you can look into different channels such as bonds, ETF, shares, blue chips, and unit trust. Personally, I built my first pot of wealth through the latter.

Of course, it takes time to understand the pros and cons of each tool. More importantly, it is how and what we do to each tool to let them complement one another to fulfil your wealth accumulation needs.

Thereafter, make adjustments whenever necessary by executing the right investment strategy and risk management technique. By the time your child needs it for tertiary education, your portfolio will be ready for use.

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