Yahoo Finance 5 Investments In Singapore That Caters To Every Investor’s Risk Profile
Some of the most frequent comments we hear whenever the topic of investing is brought up is how people hate taking risk, or that they are not sure what to invest in, or that they want to invest, but don’t have the time to manage their investments.
Regardless of your excuses reasons for not investing, it has to stop soon. To help you with that, we will highlight five types of investments that should fit into your criteria.
Not all of them may be suitable, depending on what you comfortable with. At the very least however, one or two should be investments that you can consider.
# 1 Singapore Savings Bonds
Suitable For: Investors who do not want to take any risk, but want to earn a (small) return.
If you are a newbie investor who absolutely refuses to take any risk, nor do you want to part with your money, then the Singapore Savings Bonds (SSB) is the perfect product that you can “invest” in to get your feet wet.
The bonds, which are backed by the Singapore Government, are as risk-free as they come. In addition, there is no penalty for early redemption of the bonds. That means you can take the money out anytime you want given a 1-month notice.
Here are the interest payables depending on how long you hold the bonds for (maximum tenure, 10 years).
# 2 CPF Special Account
Suitable For: Investors who want higher returns but do not want to take any risk. However, they do not mind not having access to their money until retirement.
Many people want to plan for their retirement in Singapore without taking any risk. But aside from the 2.44% per annum (over 10 years) that you can earn from the SSB, what else could you do without taking risk?
A simple instrument for Singaporeans to tap upon would be to top up their CPF Special Account (CPFSA). With a risk-free interest rate of at least 4%, the CPFSA is the easiest way you can build up your retirement funds without taking any risk.
For every $10,000 you top up in your CPFSA at the age of 30, you will be able to receive back $26,658 at age 55. The consideration here is that unlike the SSB, you cannot withdraw the money in your CPFSA until the age of 55 with the exception of making CPF approved investments.
Top up made to your CPFSA will also be tax deductible.
Read Also: 4 Ways To Exploit The Government For Your Financial Well-Being
# 3 Corporate Bonds
Suitable For: Investors who want higher returns but only want to take a small risk. They do not want to put their money into CPF because they want the flexibility of using it for the future.
Unlike the past, where investing in corporate bonds were only meant for accredited investors. Regular folks like us can now invest in the bonds issued by good companies.
For those of you who do not know, think of a bond as money you lend to a company in return for interest. Most investors would naturally want to lend only to trustworthy companies.
Some of these companies have issued their bonds on SGX. By buying these bonds, you are essentially buying the debt issued by these companies, rather than ownership within the companies itself.
Unlike dividends, where companies are not obliged to pay it out to shareholders, interest for bonds issued by companies must be repaid. Failure to do so would mean a company has gone into default.
Here is a snapshot of the interest rates you can expect to earn from some of the companies who have listed their corporate bonds on the SGX.
Source: StockFacts
A simple way of reading the interest is to look at the percentage (%) shown in the counter name. For example, Hyflux is giving a 6% per annum while Genting Singapore is giving 5.125% per annum.
Read Also: Buying Corporate Bonds In Singapore
# 4 STI ETF
Suitable For: Investors who want to earn the market return and do not mind taking more risk, but they do not know which stocks to buy
If you are one of those who follow business news and wonder how you can earn the stock exchange return being talked about, then you need not look any further than the Straits Times Index (STI) Exchange Traded Fund (ETF).
The STI ETF was created to mirror the performance of the biggest stocks on the Singapore Exchange (SGX). The good thing about the STI is that it is self-selecting. Companies that are bigger and better will automatically replace companies that do not perform well on the STI.
By buying the STI ETF, you automatically get investment exposure into a diversified pool of the top 30 stocks on the SGX.
As with all stocks, investors can expect higher returns in the long run but must be prepared to take on higher risks.
Read Also: Step-By-Step Guide To Investing Into STI ETF
# 5 REITs
Suitable For: Investors who want to invest in properties to earn passive income
In Singapore, it is easy to find people who love investing in properties. Whether it’s your recently married friend who bought a HDB flat as an investment, or your uncle whom is a self-proclaimed property tycoon owning multiple condominium units, everyone seems to know of at least one person who are avid property investors.
You do not need $1 million to start investing in properties. Real Estate Investment Trusts (REITs) offer the best way for retail investors to get into the property game. Investor can select different types of REITs such as industrial, commercial and healthcare REITs.
Similar to investment in the STI ETFs, there are risks that investors would need to bear such as rising interest rates. There is also no guarantee that their investments would pan out.
Read Also: 5 Things You Need To Know About Investing In REITs In Singapore
What some other investments that Singaporeans can consider? Share your thoughts with us on Facebook.
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