Asked by Anonymous
Asked on 17 Jun 2019
I also have $120+k in Singapore Savings Bonds and I believe the interest rates for SSBs have dropped recently. I have also balloted for the Astrea V bonds already. Apart from insurance or shares in the stock market, any advice on what I can do for savings or investment?
I suggest examining your end goal and objective. What would you like the cash to be used for? If it is to fund your retirement, you may consider moving beyond bonds/saving accounts and start to look at ETF/Unit trusts. (I presume you are not comfortable with the risks that equities have) These investment vehicles will grow wealth in the long run but are subject to risks, hence you also need to examine your risk appetite. If you are risk adverse, consider CPF SA top ups, and also annuities to complement your portfolio
If you are looking at growing the money for something in the near term (e.g. house purchase), then you might not want to take too much risk with it. In this case, bond funds and short term endowments/FDs might be better suited for your goal.
All of this is of course subject to ensuring that you have adequate and proper coverage so that in times of crisis such as critical illness and hospitalization, you do not have to liquidate your assets to pay the bills.
Other uses for the money could also be for SRS where you can enjoy tax relief and invest at the same time. The options are plenty and you should sit down with a consultant to look at all available options and then decide what might work for you.
19 Jun 2019
Hi there, from the list of financial tools you use (bank savings, SSG bonds and other bonds, plus excluding insurance savings and stocks), it seems like you're pretty low risk profile. This is perfectly fine.
Before exploring something else, you may want to do a stock take of what you like to have years down the road, e.g. family planning, property and retirement, and see if you have any shortfall in these areas and park your money accordingly.
Agreed with other answers that inflation must be taken into account; do note there's different rates for different purposes. Core inflation is about 1% to 2% p.a., medical expense inflation on the other hand, was 10% alone in 2018. Property prices also inflate differently, about 3% to 4%p.a. on average over the past few years. So depending on your goals and inflation rates, you may want to shift some of your to-do list early.
Lastly, do keep yourself open. There's insurance savings plans in the market which offer capital guarantee, also have people who know they have a budget to set aside purely for investment. Don't restrict yourself to low risk instruments!
Your current portfolio has only modest gains of around 2% so you are hardly beating inflation..
You could consider long term investments like endowments, RSP, robo-advisors, property to diversify.
If you have already set aside emergency funds, these spare funds could be better utilized.
I notice you are pretty risk averse in your holdings. There are not exposure to investments. What you coudl do is to set up a RSP to invest regularly into funds or shares. Using a long term approach to help you build up your investment portfolio can help you to achieve a better yield. Using the RSP method will help you to smooth out the purchase price of the asset and at the same time decrease your risk.