I have S$10,000. Where do I Invest?
Wealth is something that slips out of our hands like sand, only the grains are bigger and take more time to slip through. It is something that keeps decreasing with time and according to situations. Some months you save almost half of your salary and sometimes it’s hard to push through the end of the month. Yet people try and save some amount from their overall salary, although they get an unsatisfactory salary. But a true professional is one who knows that money begets money. Saving money is never enough in this decade. One needs to look for different money mechanisms in order to multiply their money. The money you save in that piggy bank of yours will run out someday when you smash the piggy on the wall in desperation.
Allocating a significant part of your savings for investment is always a good plan if you want a better lifestyle or want to create wealth for your future. The investment will always help you create more wealth from the money you already have in your bank account. If you are interested in the market and investment in funds you first need to allocate funds for the job.
Where should I Invest?
You have worked for a few years now and have counted on options for investment of the savings balance you’ve made through those years. You made some side cash so that the savings don’t get exploited during emergencies. Suppose you’ve tried to make a saving of S$500 every month for the last 2 years and now you have accumulated somewhere around S$10000 in your investment fund. Now it’s time to put that money into the market cycle so that all your savings payback.
Keep Your Investments Diverse
Keeping your investments diverse increases the chances of good returns and decreases the risk factor. If you invest all your money in the same fund or stocks, any risk that becomes a reality will make you lose all your money. This will push you back 3 years, as accumulating that money again will be a tough job this time because of economic changes that occur every year. So always invest parts of your money into different sectors. Try to put a larger cut into something that provides heavy returns and has low-risk factors.
Investing in US Equities
If you have a good appetite for risk and need a place you can gain good returns over time, you can go ahead and invest in forex investment schemes. Most of the big players in the game had started by putting in their first few investment funds in US stock exchange. The indexed equity funds that list the top companies of US is a good area for putting in the capital. In the heat of economic upsurge, it could be a fat cow ready for milking. The S&P 500 and the NYSE (New York Stock Exchange) index some of the top public companies that provide great liquidity of assets and controlled volatility, thus reducing the risk of security. So, out of your S$10000 investment fund, you can invest about S$3000-S$4000 depending on the risk you’re ready to take. US equities are a big market and require much larger investment amounts for bigger returns, but for your first investment fund, you can get some returns which you can reinvest in order to increase your wealth.
Investing in Local Bank Holdings
Banks can also be a good investment field. The banking sector is always in sync with local and foreign markets. The Singapore Exchange (SGX) is one such market. Investment in foreign exchange funds can get your returns, but investing in the market of the country you live in can get you more chances of gaining interests and returns on your investment. Shares of the Singapore banking sector have a high yield and the risk factors are low when you invest through banks.
The DBS Group Holdings bank is the largest of the three big banks in Singapore. It is the largest listed company in the Southeast Asian indexes. It has a market value of about $69 billion on its outstanding shares. The company has had a record profit of S$2.89 billion in the year 2018, and it is 23% higher than last year’s 7% profit. So investing in a progressive bank holding can get you good returns on your investment. Now that you have S$6000 left in hand as investment fund you can buy 1 lot of shares. The recent cost per share is about S$23.40 which will amount to about S$2340 for 1 lot.
Investing in Real Estate
Real estate is the no. 1 choice of orthodox Singaporean families for investment. The real estate industry in Singapore is being recreated again to keep it up with technology-driven society. The government is now encouraging public firms to adopt new technologies and fuse them with the real estate industry. So it is a relief for the people who would like to invest in real estate. Recent growths of the Singapore real estate investment trusts points towards a good returning revenue for investors.
The best way of investing in real estate would be REITs (Real Estate Investment Trusts). REITs are investment trusts that allow investors to buy shares in the real estate market portfolios which get their incomes and returns from a number of property holdings. These properties can range from rental residential properties to hotels and even warehouses. A REIT company leases all the holdings under itself and distributes the parts of income and profits to shareholders as dividends. Before you invest in a REIT consider the following points:
- The REIT firm should have a really strong sponsor which will increase the chances of your investments going into better holdings.
- It must have an equitable P/B ratio.
- Sectors and geographical allocation of the assets of the firm (important because the location of a property contemplates its value)
- Quality of the assets the firm is investing in
- Research for the firms that have a better dividend yield
One of the popular REIT firm, that provides a good yield per distributed dividend and also has lower risk factors, is the Maple Tree Commercial Trust. It has two of the most earning commercial properties in Singapore- Maple Tree Business City and Vivocity. Maple Tree, being a popular and strong sponsor can get you about a 5.5% dividend yield.
Investment is something which needs instinct as well as proper knowledge of the steps you’re about to take. The risk appetite of a person while investing should be in constant balance with the knowledge he or she has of the market. Always keep tabs on the market indexes that raises your interests. Prior performances and failures will give you a better idea of how well the stocks, bonds or funds are going to perform in the coming days. When you feel the rod is red, strike it with the hammer.
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