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Budgeting 101

Alternative Tools To Manage Your Wealth

 

Use all the tools out there to manage your wealth – don’t just think of stocks and foreign exchange!

Over lunch, one of our DollarsAndSense team member had a conversation with an analyst, Evelyn (not her real name) from one of the largest credit rating agencies around.

Marcus:  I’m sure you’ve some awesome wealth tips. Any advice for people like me who have just started working?

Evelyn: To be honest, I do not really keep track nor have any specific wealth preservation methods. I just passively buy into the Singapore Straits Times Index (STI) on a monthly basis.

Marcus: Oh, that’s a good way of preserving wealth what, no?

Evelyn: Yeah, you could say that. But my goal is to just beat inflation. I don’t need to be a multi-millionaire from my investments.

Marcus: Huh? You just want to beat inflation and you’re investing in the STI? Isn’t the risk that you’re taking slightly excessive?

Evelyn: Yeah, but I do not specifically know any products that would suit my preference. It is tiresome to do research on those things after a day’s work as well.

Marcus: Hmmmm….

The topic then changed to where lunch should be the next day as Raffles Place is filled with good food, but with a hefty price.

Overview

This conversation got us thinking, that even some finance professionals do not understand the instruments are most suited to their individual financial planning. We can only wonder how the non-finance savvy individuals fare.

Hence, the team decided to do a little research on financial instruments that are easily and readily accessible to Singaporeans. To our amazement, there is an abundance of tools available at our fingertips. Most of us just ignore them.

What are available in Singapore?

Using United Overseas Bank’s (UOB) website because it offers one of the simplest snapshot of what’s available to Singaporeans.

No. Instrument Risk Simple?
1 Singapore Government Securities Conservative Yes
2 CPF Investment & SRS Account Conservative Yes
3 Structured Deposits Conservative Yes
4 Gold & Silver Savings Account Conservative Average
5 Bonds Conservative to Aggressive No
6 Unit Trust Conservative to Aggressive No
7 Foreign Currency (FX) Margin Trading Moderate to Aggressive No
8 e-Margin Trading Aggressive No
9 Futures Aggressive No
10 Securities Trading Aggressive No
11 Currency-Linked Investments Aggressive No

The “Simple?” column indicates whether is the instrument is complex or simple to comprehend  

From the above table, we arrived that there are at least 10 other types of instruments other than equities (securities trading) that are easily and readily available.

Adding to your normal savings and fixed deposit accounts, these instruments are enough to ensure that an average Singaporean will achieve better financial planning and goals in the future.

Conclusion

Equity investing has stolen the limelight, as multiple successful stories on that are widely publicized. The likes of George Soros, Warren Buffet, Jim Rogers and many other successful investors have made a fortune from putting money into equities and foreign exchange. Unlike these people who have great insight and foresight, most of us average Singaporeans are unable to react and leverage the market as efficiently.

Rather than thinking of making it big in equities, which requires you to monitor and understand the companies you are buying into, managing your current wealth with simpler tools would be a better solution. With discipline and a full understanding of what you need, you get closer to being a millionaire than if you relied solely on equities which are highly volatile.

DollarsAndSense intends to launch a series of articles with regards to the above 11 tools that are available to Singaporeans. Hence, if you have any queries on any of the above tools, feel free to drop us a comment at the end of this article or Facebook message us.

Don’t worry; we aren’t representatives from any banks or companies trying to sell you any products. We just hope to increase the financial literacy of our fellow countrymen. And we thought a good way would be to introduce products that are easily available and quite simple to understand.

 


 
 

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