Investing is not a good to do, but a must do. If your money is left uninvested and at the current rate of 2% inflation in Singapore, it will lose 26% of its value in 20 years – from $100,000 to $74,000. With the myriad of information available on investing, how do we get started?
Investing without knowing what is available is like dieting without a plan. Hence, we can start off by understanding the different ways we can grow our money.
1. Singapore Savings Bonds (SSB)
SSB is attractive for its safety and flexibility. The issuance of bonds is equivalent to loaning the Singapore government a sum of money, and they’ll give your capital back to you, with an additional interest! You can redeem your bond at any time, but with lower interest.
With a minimum investment amount of $500, SSBs are suitable for investors who have low capital and are risk-averse. Investors receive an average return of 0.90% per year by staying invested for a period of 10 years. Although the interest rates are higher than that of a savings account in a bank, it is still insufficient to beat inflation.
Having said that, do not belittle the power of compounding. The longer you let your money sit in an account and compound itself, the more money you make.
2. Exchange Traded Funds (ETF)
Instead of investing in an individual company, investing in an ETF gives you a small stake in many different companies. It is a combination of a stock, and a managed fund, providing a great opportunity for diversification. ETFs typically track the performance of an underlying index, such as the Straits Times Index in Singapore, or S&P500 in the US.
Think of ETFs like a set meal we would get from fast food restaurants. At a standard price, we would get the burger, the fries, and the drink, without having to purchase them ala-carte.
Just like how it is more value-for-money to purchase a set meal, the costs of investing in ETFs are generally lower than actively managed funds in the same market of assets.
3. Stocks
Stocks are securities that represent an ownership share in a company. Investing in stocks requires a great deal of time and effort.
From analysing a company’s financial statements, to technical analysis graph patterns, picking the right stock is no easy feat. Investing in stocks can provide potentially higher returns, but the financial jargons may deter us from entering the stock market.
4. REITs
In land-scarce Singapore, property in general makes for a great long-term investment. REITs pay their dividends four times a year. In comparison, a typical company usually only pays dividends once or twice a year. So if you’re an investor who wants to receive a steady, regular stream of passive income throughout the entire year, REITs will do very well for you.
However, similar to stocks, investing in REITs requires a great deal of knowledge. There are six broad categories of REITs: office, retail, residential, healthcare, hospitality, and industrial. Each sector has its own specific characteristics that will affect a REIT’s growth, risk profile, and performance. On top of knowing the type of industry and their dividend yields, other factors to consider would include the property yield, gearing ratio and P/B ratio.
5. Investment-Linked Plans (ILPs)
If numbers and finance ain’t your thing, why not have a professional do it for you? If you want a hassle-free way to grow your wealth without taking up much time, this is the best option for you. ILPs combine life insurance coverage and investment, giving you the best of both worlds.
Gone are the days where people proclaim that “investing is only for the rich”. You can get started with as little as $6 a day (the cost of one McDonald’s meal!) with Investment-Linked Plans offered by AIA.
AIA has a wide range of funds (from low to medium to high risk) managed by world class fund managers. Fund managers with a deep professional understanding of the markets will conduct detailed research – time and resources that an individual investor may not have – before deploying your funds in your chosen asset class. This ensures the fund is performing well against the market’s performance, maximizing your returns of investments.
At AIA, we do the heavy lifting, to make investing easy for you. The projected returns of 8% per annum would allow you to beat inflation comfortably, and bring you a step closer to your savings or retirement goal. With 100% of your premium invested from the start and the option to receive professional investment guidance from AIA, you can grow your savings with ease and focus on what really matters. Contact us here to kickstart your investment portfolio today!
To sum up, it’s never too late to become an investor. Remember that all investments start with the first dollar, whatever your age, income, or outlook. That said, those investing in the long run will have the added advantage to enjoy the lifestyle that others cannot afford.
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