Here are the steps you should take to wisely invest your S$100,000:
Let’s dive right in!
Before we go further, you will need to understand why you want to invest in the first place. What kind of goals are you looking to achieve? What timeframe are you looking at? How audacious or risky should your targets be?
Here are some common examples of financial goals to get you thinking:
● Retirement planning
● Buying your first home
● Providing for elderly parents
● Setting up your child’s education fund
● Protecting your wealth from inflation
Your goal will motivate you to keep growing your nest egg, as well as determine the strategy to take when investing your hard-earned money.
Protecting yourself from downside financial risks is important when trying to secure your financial goals. The last thing you would want is for a small hiccup to derail your plans. However, there’s no need to get into a big fuss about it. Here are some tips that can add some guardrails to life’s curveballs.
1. Ensure you have an emergency fund
Always set aside an emergency fund before you start investing. These funds can be used to cover situations such as unexpected repair bills or a sudden loss of income. .Generally, you should save 6 to 9 months of expenses – check out our guide to learn more
2. Pay off any high-interest debts
Taking on debt may have enabled you to improve your quality of life in the immediate term, but holding on to debt, especially high-interest debts, is a recipe for financial disaster. Whether it is a personal loan or credit card loan, we should prioritise their repayment before investing. Compounding interests should benefit you instead of becoming a burden; high-interest debt can quickly snowball out of control.
3. Insure yourself against life’s uncertainties
You may not need the most expensive and premium insurance plan, but having adequate insurance helps prevent you from needing to empty out your savings account for a medical emergency or accident. Look into these policies to safeguard you and your family from potential financial difficulties:
- Critical illness coverage
- Hospitalisation insurance
- Life insurance
If you’re not already savvy to the many investment options available to you in Singapore, then it’s a great time to review what’s out there. While not an exhaustive list of options, these would act as a good starting point to conduct your investment research.
Of course, if all of this looks like Greek to you, speak with a financial adviser who can help better define suitable options for you.
As we saw in the table above, each investment option comes with its own pros that are appealing in their own way, and cons which may make you think twice. What options you choose will depend on a variety of factors including your financial goals and your risk appetite. An investor’s goal is generally to meet the level of expected returns with minimal risks.
What’s the best way for you to achieve a well-balanced portfolio that can spread out your risks and offer you a better chance of stability during a volatile economy? Diversification.
Diversifying your portfolio means having a variety of instruments that would perform dissimilarly in different market conditions – this aims to maximise your returns or minimise your losses at any given time.
One way of allocating your assets is using the Bond-to-Stock ratio. A common one being the 100 Minus Age rule. This rule comes with a sliding allocation scale, where your allocation in bonds is equivalent to your age, and while your allocation in stocks is 100 minus your age.
Whether you have S$100,000 or just S$100 to spare, these strategies can be applied to help take you one step closer to achieving your financial goals. With unit trusts for example, you can also consider setting up a Regular Savings Plan (RSP) to invest a fixed amount of funds every month to grow your wealth quicker. And remember, the best time to begin is today.
However you choose to invest your money, be sure to review and optimise your financial strategies on a regular basis. If you need help with your investments, do check in with a financial adviser , who will be able to provide you with the advice and information you require. If you’re fired up and ready to go, check out what Standard Chartered has to offer.
References
1. CPFB | Retirement Sum Topping-up Scheme
2. CPF Investment Schemes
3. CPFB | Retirement Sum Scheme
