Thursday, December 6, 2007

Investment or Inflation???

Just checked that the interest rate for Singapore Fixed Deposit to be 0.825% and 0.500% for Savings account. How pathetic. Didn't we read that the inflation to be 5% next year? You'll lose 4.5% if you continue to keep all your money in your savings account.

So what can you do? Let me share with you the types of investments

From Lowest Risk to Highest Risk

1) Savings account with highest interest rate.
There are always promotions but my favourite is still the Standard Chartered esavers account.
Interest Rate = 1.2%-1.9% daily rated.

2) Singapore SGS Bonds.
Check out with SGS. Can buy via Fundsupermart.
Yield around = 1.2-3.1% depending on years to Maturity.

3) Money Market or Cash Fund
Check out with NTUC Income, Lion Capital or Fundsupermart. They are basically short-term bonds with duration as short as 2 years. Very low risk investment.
Expected Returns = 2-3%.

4) Bonds Unit Trust
Diversify between local and Global Bonds
High Yield Bonds from Emerging Countries gives higher returns with higher risk
If US interest Rate is to go down, Bond yield may goes up and may affect the bond prices too
Projected Returns = 3-4% p.a

5) Endowment Policies
Give the money to Insurance companies. They invest for you and you get some amount of guaranteed returns. There are insurance component also.
Projected Returns = 4-4.5% p.a locked in over 5 to 10 yrs.

6) Foreign Currency Fixed Deposit
For as low as $10,000, you can convert your money into Foreign Currencies and earn a higher interest. Some currencies such as AZ Dollars is able to fetch 6.75% p.a interest. However, currency risk applies. If AZ weakens against S$, then you may lose some. Some transaction fees applies.
Projected Returns = Negative to even 10% p.a depending on currency movement

7) Equties Unit Trust
75% Global Diversified; 25% Theme, country Specific is recommended
Projected returns - volatility expected but can expect around 6-8%p.a over a period of 10 yrs.

8) Shares
Some people had made a fortune with Shares. Recent volatility had indeed scare many away.
Projected Returns - Can lose all your money in extreme events but can gain several hundred percent if you pick the right penny stocks over long term.

9) Warrants and Deviratives
You enjoy the gearing and leveraging effect from these investment instruments for higher returns than shares. However, it is more volatile than shares.
Projected Returns - Can lose everything, but can gain upto 50% in a few days

10) Property
You got money, can try punting the property market. Some people are already laughing their way to the bank. But if you cannot finance, then you'll be in trouble.

11) Ponzi Investments
Argue with one of my clients recently as he invested into Sunshine empire which he claims guarantees 100% returns in around 14 months. Some of my friends tell me to put money into Swiss Cash. Anyway, these are likely ponzi investment scheme. Better avoid.

12) 4D, Toto and Casino
Either you win big time or lose everything. Returns within minutes!!!

The list is not exhausive. These are simply some investment plans for simple man like you and me.

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