What should I do with $20k spare cash? - Seedly
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Anonymous

Asked on 14 Jan 2020

What should I do with $20k spare cash?

I have about $20k spare cash lying around after taking into account emergency funds, and would like to make it work harder for me, hopefully generate at least 2% interest annually. FD and SSB doesn't look appealing right now.

I'm risk adverse but am open to explore ETF. Would robo-advisors be a good choice?

I also have advice from friends to tell me to use it for down-payment of a property (more for investment rather than to live in it), but I'm not comfortable with the idea of going into debt

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Shengshi Chiam, CFA
Shengshi Chiam, CFA, Personal Finance Lead at Endowus
Level 7. Grand Master
Answered on 14 Jan 2020

You have to share more on your investment horizon and risk appetite.

I think it would also be good if you share if you have consistent monthly savings that you can invest. Being able to invest over a long period of time will reduce the volatility of your portfolio.

Frankly you can assume that all robo-advisors are providing investment products rather than life financial solutions, so I think you should try to read up more yourself to understand more about personal finance matter and how to do things like budgeting, tax optimisation, loans matter etc.

You can read more about personal finance with Endowus!

https://endowus.com/insights/

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Question Poster

14 Jan 2020

Thank you for your reply. I am conservative but willing to explore ETF. I have done my financial planning till end of 2021 as my next tranche of funds will mature (from POSB SAYE and Stanchart Bonu$aver). I recently started a small amount with the DBS Invest-Saver RSP and intend to hold for a long time. I have a window between 2022-2026 before my next tranche of funds mature (endowment) and then from 2027-2029 when my SSB reach maturity. I am thinking that ETFs are more liquid than FD because I will lose any interest if I make early withdrawals from FD, correct me if I'm wrong?
M
Matt
Level 4. Prodigy
Answered on 21 Jan 2020

Some options:

Robo Advisor: Easy, can customize your risk, but there is risk involved. Better sutied for long time horizon.

Fixed Deposit: There are a few which can get you close to your 2% interest goal for 1 or 2 year lockup. Or HSBC has a promo at the moment for 1.75% with 6month lock up.

Stashaway Simple: Some risk, no guarunteed interest rate but could out perform Fixed Deposit with no fee and no lock up.

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Sharon
Sharon
Top Contributor

Top Contributor (Jul)

Level 6. Master
Answered on 21 Jan 2020

Hope you have set aside some cash as emergency fund. 6 months of your monthly income...You can go up to 1 year if you wish. If $20K is what's left, I'll put everything in a portfolio of stocks (10-20 counters). You can use Stocks Cafe to manage it.

I have a strong preference towards REITS, so I'll recommend that. Not all REITS are good (don't just look at dividend yield), so you have to do some research or attend some classes on REITS to suss out which has good management (after all how well the business is doing and its direction depends on who's piloting it), WALE etc. Or the simplest is to go for the big boys.

If you like, you can throw in some blue chip stocks.

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You should go back to the basics by understanding yourself and your goals for your future. By taking considerable time to craft out your future, you will be able to optimise the moneey that you have for its maximal potential; rather than to grow your money without an end in sight.

There are various tools in the market that you can tap onto to help you grow your money. For the most part, I will suggest for you to speak with a professional who is able to help you conduct a detailed cashflow analysis and build goals together with you.

Through this process, you will understand yourself better and learn the various ways on how to optimise the value of your money.

In any case, as an alternative to ETF, you may wish to considere a well-diversified and properly managed portfolio. Here is the latest return from some of the funds: https://www.blog.pzl.sg/aia-singapore-investment-linked-fund-performance/

All things considered, this is not an indication of future performance. Instead, it is more about building a portfolio with some of these funds that are within your risk profile. Thereafter, we will apply the right investment strategies and risk management techniques to help you achieve your goals.

Here is everything about me and what I do best.​​​

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Question Poster

14 Jan 2020

Thank you for your reply. I'm skeptical to engage a professional because I've had bad experiences with them trying to sell me products when disguised as free consultation.
Pang Zhe Liang
Pang Zhe Liang

14 Jan 2020

There are two main ways to approach this, either you spend time to research everything on your own and to hope that there are no blind spots, or to spend time to find a professional who is able to help you through the process. I agree with you that it may end up as a product-sales meeting. That is where you have to understand what you want and your goals. If the recommendation fits your goals, then it is a worthy consideration. Otherwise, there is no value in buying anything that is offered to you. Therefore, always go back to what you want - plan for the long term and work backwards to understand what type of tools that you can use today to help you achieve your goals in the most efficient manner.