Asked on 05 Jan 2020
I'm looking to generate some passive income, what are some low-risk, low-maintenance investments that I can invest in?
Anyone recommending an equity fund doesn't understand what low risk means.
Low risk investments are
2) Fixed Income
3) Government Pensions
That's it. The only 3 products that give you guaranteed returns (or as guaranteed as you can get) and you don't need to monitor.
So for cash you have High Interest Savings Accounts, fixed deposits, money market funds.
Fixed Income you can consider high quality Govt bonds, slightly higher risk would be investment grade Quasi Govt bonds, endowment plans, and annuities.
Government pension you have CPF.
Equity investments, commodities, and even property is not a risk free or low risk investment.
2 more comments
Low risk instruments will include high yielding saving accounts, fixed deposits, bonds, ssb, money market instruments. Endowments may be suitable if you don't mind a very long lock in period.
Can also consider stashaway simple or their low risk portfolios.
If you have absolutely no time, unfortunately it will just be in Fixed Deposits and interest bearing accounts!
Setup regular saving plan for 3 funds portfolio
1) VT using FSMOne RSP
2) ES3 using FSMOne RSP
3) MBH using DBS RSP
If u still think this is too troublesome, go with robo advisor.
Hmmm, just go with either
1) a regular savings plan into index funds or etfs, preferably in more global based indexes. The approach should be low fees (preferably below 1%), regular contribution, so at least you participate and get the average returns of the market.
2) something low risk like higher interest bank accounts (like ocbc 360, dbs multiplier and the like), and some Singapore savings bond.
3) a mix of both.
Personally I keep my reserves and money required for short to medium term in (2), and allocate the remainder to some regular savings plan into stocks (1).
You could do a simple allocation like 50:50, or maybe 33:66 and adjust thereafter accordingly.
For index funds, go with US, global etc that does not particular focus on any industry or sector. The whole point is to participate in the average, so you get returns similar to the average (its not easy to beat the average).
For investments, I would recommend doing a regular savings plan via POSB investsaver or FSMOne. You only need to set it up once, and the rest is automatic. Also, don't forgot about optimizing your savings account using high yield interest accounts like DBS Multiplier / OCBC360 . Standard Chartered Jumpstart. They can potentially yield 1.85% or higher.
This is just my opnion, but i would look at a company/companies that i am familar with in a business that i think will be around for a long time and are paying regular dividends to buy into. It is not low-risk (but what do you mean by low risk anyways). Even if you have no time, you should be able to look at the counter every year to reevaluate. The other 'low risk' investments are really low yielding and arguable are not investments - just parking your money for slightly higher yeild vs leaving it in deposits eg SSB.
So i would say: SGX listed blue chips with decent dividend yield
the reason is, you are starting out so you wouldnt want to be exposed to ccy risk. Blue chips usually are household names and their businesses are familar to you. They are more stable and usually are cash cows which will not scare you unduly due to volatility. Lastly, dividend yields are very encouraging for starting investors who get to see some returns credited back to your account! Hope this helps. You can choose to DCA into an STI index through a RSP as well, but that's abit more passive
Fixed deposits, Singapore savings bonds, Bank's high interest savings accounts. CPF but long locked in time.
These are the safest ones in SG.
Higher the risk, higher the rewards. Invest according to your expectation.
No risk : Cash / Term deposits
Low risk : Bonds / Fixed Interest security
Medium risk : Managed / Mutual funds / Unit trust
High Risk : Shares
Very high risk : derivratives
The term risk does depend on how individual's perspective.
Some may see ETFs as still a risky class of asset but I personally feel ETFs is a less risky asset class as opposed to purchasing individual stocks and it still does give a decent return ~3%.
If you'd prefer something low maintenance, you can consider applying RSP / DCA on ETFs through banks / brokers.
Hi there, some of the options you can consider is bank savings accounts (2%), SSB (2%, lower now actually) and also REITs (5%, but unfortunately it's also overvalued now). You can also consider fixed deposits, or if you are sure you don't need the cash until 55, CPF is a really good way to gain some risk free but reasonably high interest.
The STI ETF is the best way to go It is a diversified counter which spreads its value across 30 large SIngapore companies who are diversified across industries and across geography + it earns 6-7% per annum over the long run with annual dividends.
Better than most investment insurance plans out there- enough said
Hi, maybe not fitting your definitions, i'd recommend anyway to buy and hold (ultra-longterm!) S&P500 ETF, like
Vanguard SP500 (ticker: VOO),
almost no annual fees, decent dividend, long term compound annual growth rate (check long term chart on www.bigcharts.com or yahoo finance ...).
bye, good luck
StashAway Simple. It's brilliant in it's simplicity and yields more or less 1.9% by investing in Money Market/Short Duration bonds.
Since you are a beginner, my question to you is - what do you consider low risk? Are you not willing to lose anything at all? Or are you ok to see your investment fluctuate with the markets. Also, what time span are you looking to leave this investment in?
If you are not willing to lose anything at all then just look at high interest savings accounts, money funds, fixed deposits etc. where you will likely get under 2% return. Maybe fixed income like gov bonds but even that has 'risk'.
If this is a long term investment and by low risk you are willing to see your investment move up and down with the markets then consider low fee index ETF's. But again, this all depends on YOUR definition of LOW RISK.
I phrase it this way as typically when someone is new to investments, their definition of 'low risk' compared to a savy investor is different, so just making sure!
This depends on the person's risk tolerance but as a beginner who wants to invest and yet have no time to monitor the stocks, I would suggest for the person to do regular investments (DCA) using a robo adviser (also a good way to test out his/her emotions when the market goes up/down).
Some forms of low risk investments can be purchasing a wealth accumulation plan from insurance companies, as those kind of plans actually have some form of investments involved on the insurer's end, and the profits from those investments are declared as bonuses which will be added to your policy's cash/ face value on an annual basis
Hope that helps to give you some ideas and alternatives
If you have no time to watch over your investment, then you should not be investing. This is because investment yields only non-guaranteed return and there is absolutely no way where you can only earn return from it without any effort.
Otherwise, you may consider a managed portfolio where you can count on global investment firms like Mercer and BlackRock to give you professional independent advice on what to invest into. Accordingly, a customised portfolio can be created based on your risk profile (low risk in your case).
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