Most of us have this preconceived notion that investing is difficult. That somehow, only really smart people can do investing for themselves, with the rest of us better off not doing anything, or letting our financial advisors do the thinking and take control for us.
This cannot be further from the truth, and also a dangerous way of thinking. Our investments are ultimately, our responsibility.
Thankfully, with the extensive options available to the average person out there today, anyone, regardless of their financial knowledge, can make some good investments by themselves.
#1 Get A Saving Account That Pays Good Interest – No Knowledge Required
If you know how to deposit money in a saving account either through cheque, GIRO, cash deposit or bank transfer, then you already have what it takes to earn good interest on your savings.
There are a few saving accounts out there that pays between 2 to 3% interest per annum on deposits. There is no risk involved, since all amounts up till $50,000 is guaranteed by the Singapore Deposit Insurance Corporation (SDIC).
Read Also: How Safe Is The Money In Your Bank Account
If you are currently earning 0.05% per annum on your saving account deposit, then you got to ask yourself why? Is it so difficult for you to open a bank account that gives higher interest rate? Or are you just so busy in life that you would say no to earning a few hundred dollars, risk-free, just by doing some simple administrative work online.
#2 Buy The Singapore Savings Bonds
Are you afraid of taking risk? Perhaps the thought of losing money in your investment is not something that you can stomach.
You are not alone in feeling that way. Risk aversion is a common behaviour for most humans, especially when it comes to investing. Given the same payoff for two different investing options, one more risky than the other, most people would tend to choose the safer option.
For example, we would prefer to have a 100% chance of earning $10,000, then a 10% chance to earn $100,000.
The Singapore Savings Bonds (SSB) is one of those risk-free bonds that Singaporeans can subscribe to. It is issued and guaranteed by the Monetary Authority of Singapore (MAS).
The SSB should act as the risk-free asset that all other investment should be compared against. If a financial advisor tries to sell you a policy (and there are lots of these policies out there) that gives lower return, say no to it.
If it looks marginally better but comes with more risk and restrictions, then ask yourself if the product is really worth the trouble for you, when the SSB already exists as an alternative.
Here is the hard truth that the people in the financial industry won’t tell you. Nobody gets any commission when a consumer puts his money into the SSB. So no one would try to “sell” you that. Advisors only get their commission when they sell you a product offered by financial institutions.
Read Also: How To Buy The Singapore Savings Bonds
#3 Top Up Your CPF Account
Not sure what else to do to earn a higher return? Why not consider topping up your CPF account instead.
By topping up your CPF account, you stand to earn about 4-5% interest per annum. And that’s not only risk-free but also free of any transection cost. What’s there not to like?
Topping up your CPF account is a great way to set aside money for your retirement. The interest you enjoy is stable and comes without any risk. The longer it remains in your CPF account, the higher the compound interest you would enjoy.
Read Also: Why Investing Your CPF Money Is A Bad Idea
#4 Buying the STI ETF
If you want to invest in stocks but do not know which companies to buy, the Straits Times Index (STI) Exchanged Traded Fund (ETF) would be a good place to begin.
ETF investing is about instead of trying to select a few winning companies that we think and hope would do well; we just invest in all of them and earn an average return from it.
When you invest in the STI ETF, you are not simply investing blindly into every single company on the stock exchange. Rather, because the STI would only include the 30 biggest companies in the market, companies would need to be big enough before they even qualify to have a small weightage in your STI ETF’s portfolio.
Since most of us stay in Singapore and would use the Singapore Dollar, investing in the STI also means we avoid taking on any currency risks.
These are some simple reasons why you can consider investing in the STI ETF, if you really want to gain some exposure to the stock market.
You Can Do These Things On Your Own
We are not saying that all of us should strive to be the next Warren Buffett, or be as knowledgeable as that professional fund manager. Most of us do not work in the industry, and will not have the time or training to ever be as savvy as these professionals.
Yet, it doesn’t mean that we can’t do our own financial planning. As seen above, there are many simple investments we can easily do on our own without needing the help of a professional.
If you need the support of a financial advisor, by all means, find one whom you can trust, and who has your best interest at heart. But make sure he or she is giving you quality advice and solutions that are better and beyond what you can easily achieve by yourself with just a little education.