SINGAPORE: A 23-year-old Singaporean student recently found himself inheriting a substantial sum of S$400,000 from his grandparents. He then asked the Reddit community for “investment strategies” and tips on protecting his money.
In his post, he outlined his initial plans and asked the Redditors about their thoughts: “My plan: $100K in Singapore Savings Bond (SSB); $200K (lump-sum) in SPYL; $100K cash? (please provide recommendations).
Some of my own thoughts: Factoring inflation for a housing loan in future, should I put $200K in SSB instead of just $100K? Is lump-sum into just SPYL ETF a risky move?”
In concluding his post, he expressed gratitude to his grandparents for establishing a generational wealth fund for him and emphasized his intention to honour their legacy by prudently using the funds.
He added, “They did not manage to tell me much about their investment strategies, but they always told me that being humble and seeking wisdom from the experienced is most important.”
Tips and strategies suggested by Redditors
Keen to help the young student, numerous Singaporean Redditors took to the comments section to share their financial strategies and tips.
Avoid Financial Insurance Products
Not wanting the student to make the same financial mistake they did, they cautioned him against buying “Financial Insurance Products.” One Redditor said, “Whatever you do, don’t buy insurance financial products, especially ILPs.”
They also told him he should never listen to his FA “friends” who promised him great returns, as this is probably just a scheme to siphon his wealth.
However, if he’s set on having insurance, they advised him to opt for a policy that covers unforeseen expenses like accidents, hospitalization, and “Death, Critical Illness & TPD Insurance (Term).”
Avoid disclosing inheritance to friends or relatives
To protect his funds, a few Redditors mentioned that he should be highly cautious about whom he reveals his inheritance.
They said this information should always be kept private as much as possible, as there’s a big chance some of them would try to leech off him.
One Redditor shared, “Biggest vultures are your relatives! I was in a similar situation when I turned 21 and my parents ‘ estate released $900K to me. First to come begging were my sisters and their partners, then ‘good’ former friends…
Then other relatives say they will help me invest. Till I found out that they put it all in their name. None ever paid me back. Now I tell no one.”
Another commented, “Also, don’t reply to any pm here on reddit and try not to disclose the exact sum to others publicly unless you want to be lending for someone’s kid or business without a contract.”
Avoid Day Trading
A few also mentioned that he should never get tempted to day-trade or time the market, as this is essentially gambling, and odds are he’ll lose his money.
Read also: Singaporeans share the worst financial mistakes they’ve ever made in their lives
Set aside an Emergency Fund
Before diving into the intricate world of investing, some suggested that he should first establish an emergency fund.
This way, he can ensure financial stability and support himself in case of unexpected job loss without touching his savings or liquidating his investments.
One Redditor proposed setting aside approximately S$100,000 for the emergency fund, while others suggested aiming for an amount sufficient to sustain him for at least 6 months.
Invest money in SPYL or VWRA
In terms of investing, many people agreed with his initial plan to allocate a significant portion of his funds to SPYL (SPDR S&P 500 UCITS ETF USD Acc).
One Redditor said, “SPYL: Great choice! I would personally prefer a more globally diversified fund like VWRA, but I also think that SPY would still be a decent choice… don’t touch it till you want to start living on the funds.”
Another commented, “Portion around 50-60% of it and invest it into either SPYL( or CSPX/VUAA for slightly more tax-efficient funds) or just VWRA for greater diversity and hands-free. Put at most 8-10% into individual stock /PLTR.”
Read also: S’porean shares his inspiring journey from poverty to financial stability
Invest in learning
Others pointed out that learning is the most important investment he should focus on.
They highlighted the importance of increasing one’s understanding of finance, investment tactics, and market dynamics to achieve long-term financial success.
Moreover, some mentioned that he should also focus on learning new skills. One Redditor advised, “Invest in yourself by learning new skills. 400k won’t sustain you; it’s your ability to make money that will sustain you.”
Read related: Singaporean advises younger generation “to focus on enhancing their skills rather than learning about investments”