Asian woman pouting with a laptop in front of her.

SINGAPORE: In a recent social media post, user u/WestgateLaksa sparked a discussion about financial strategies and investment decisions. The 27-year-old woman asks if it’s always ‘bad to hold lots of cash’ and “why expose myself to losing money when I can keep it safe?”

She revealed hitting a milestone in her savings account, reaching S$200,000 after years of diligent work and saving. In addition, she shares she uses OCBC 360 and is gaining interest of S$600 monthly.

Despite having various investments, including stock picking via a brokerage, blue-chip investments through a bank, and involvement with a robo-advisor, she noted that “overall they’re not doing great.”

She stated that she mainly made investment mistakes during the Covid period. “I realise this current state discouraged me from allocating more money for investment, bcs why expose myself to the chance of losing more money when I can keep it safe. But I also know that in general, keeping cash means not beating the inflation in the long run,” she wrote.

Seeking advice from the online community, she presented three options:

  1. Keep the S$200,000 in the bank and explore safer options like long-term bonds,
  2. Keep the S$200,000 in the bank and prioritise higher-risk investments like stocks or,
  3. Be aggressive by reducing cash, forgoing monthly interest, and investing more.
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In response, user Roguenul noted that the post author’s mistake might be because she’s checking her balance too often. He stated, “The textbook answer for long-term investing is buy S&P500, hold for 20-30 years and never check it until you’re ~5 years away from retirement.”

He added “Research has proven that people who forget/lost their account passwords enjoy higher returns than people who do not. Because they don’t check their account and get emotional.”

“The definition of “investing” is to buy and hold long-term, not buy then panic short-term whenever it drops a bit. (Obviously, you have to invest in safer things like S&P ETFs. Individual stocks have much higher volatility, but the weighted average performance of the 500 biggest US companies – that is more stable and less risky).”

Speaking of long-term investing, a 31-year-old Singaporean who shared his journey from poverty to financial stability is a good example of how looking at investments long-term is the key to “financial stability,” As he said, “building wealth is a marathon, not a sprint.”

But what about those starting out? When it comes to investments, knowing where to “wait it out” is also just as important. Let’s talk about some investment options in Singapore.

What are the investment options in Singapore?

SingSaver highlights 7 types of investments in Singapore and some useful tips for Singaporeans aiming to maximize their financial gains.

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1. CPF Investment Scheme (CPFIS)

CPFIS is the most common investment scheme in Singapore. It allows CPF monies for various products like insurance, fixed deposits, bonds, unit trusts, and shares. There are two options:

  • CPFIS-OA uses Ordinary Account balance, requiring S$20,000 to be set aside. Investments include unit trusts, ILPs, bonds, and shares with specific limits.
  • CPFIS-SA uses Special Account balance, with S$40,000 set aside, excluding certain investments.

If returns are not much higher than the CPF OA or SA default interest rates of 2.5% and 5%, respectively, it is advisable to maintain the CPF accounts undisturbed for steady and risk-free growth.

2. Supplementary Retirement Scheme (SRS)

SRS is a voluntary scheme for retirement contributions (up to S$15,300/year) with tax relief. Optimise gains by diversifying into bonds, Singapore Government Securities/Singapore Saving Bonds, fixed deposits, shares, unit trusts, and single premium insurance plans.

3. Singapore Savings Bonds and T-bills

SSBs offer steady returns, and Singapore T-bills provide short-term stability with attractive interest rates. Use SSBs against inflation and T-bills for short-term stability.

4. Real Estate Investment Trusts (REITs)

REITs are managed funds for real estate investments, offering growth and steady income. When investing in REITs, consider popular malls since they continue to attract and get high-paying tenants. Also, retain REITs that have steady dividends.

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5. Exchange-traded Funds (ETFs)

ETFs offer diversified investments without buying individual stocks. Use ETFs to reduce risks from overexposure to a particular market. In addition, ETFs have lower fees compared to unit trusts. Facing high fees? Add more ETFs to pay less.

6. Robo-advisors

Robo-advisors, driven by algorithms, offer a hands-off investment approach. This is the best investment scheme for people who don’t want to think too much. Split investments across two to three robo-advisors for simplicity and check it after 6 to 12 months.

7. Stocks

Stocks represent ownership in a company traded on the stock exchange. Consider stocks for capital gains or dividend returns. It is versatile for various purposes, from short-term gains to portfolio balance. Reading stock tips and learning from professional traders can help, but hands-on learning with stocks is necessary.

Remember Roguenul’s advice: “The definition of “investing” is to buy and hold long-term, not buy then panic short-term whenever it drops a bit.”/TISG

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