Tuesday, 12 April 2016
I think you will agree with me on this.
People who succeed with money do two things very well:
First, they have a huge capital either by saving a lot or making a lot.
Second, they put 100% of their effort on improving their financial literacy and activity that grows their wealth. In short, they know what others don't.
They know what financial capital is and how the magic of compounding returns can grow their money like a bean sprout over time.
They also know human capital depreciates and financial capital appreciates as they aged and hence tapping on the right capital to work at different stages of life is a smart move.
And best, they even know there are plenty of Singapore investment options out on the street that would grow their wealth which the general public know nuts about.
You might probably be thinking:
"What... the only investment option I know about is stock and isn't it a rich man lottery ticket?"
#FaceMeetsDesk
How do I know?
Because I heard this over and over and over and over again... and it always disturbs me without fail.
So I knew I have to do something
I'm not here to talk. I'm here to show.
Here's what I have for you: 17 Singapore Investment options showing you the benefits of each options. Plus an highly actionable step-by-step guide.
But before that:
Whatever you read & learn from here.
Please do NOT take immediate action.
Do your own diligent.
(My facts and data could be wrong even I have triple checked it.)
Other than that we are good to start. You ready? Good.
Let's dive right in!
Thrive Leads Shortcode could not be rendered, please check it in Thrive Leads Section!
What You Will Learn:
1. Invest in Strait Time Index(STI ETF)
How To Buy STI ETF?
How To Open SCB Brokerage Account
STI ETF Investing Strategy
2. Use Share Builder Plan To Automate Your Stocks Investment
How To Set Up Share Builder Plan Via Online
3. Gold Investment
How To Buy physical GOLD?
How To Buy Gold ETF(SGX:087)
4. Make 10x Interest Returns Via High Saving Account
5. Park Your Excess Money In A Fixed Deposit
6. Make 5% Risk-Free Interest Via CPF Special Account
How To Make Voluntary Contribution To CPF via Online
How To Transfer CPF OA to SA via Online
7. Get 50% Tax Concession with Supplementary Retirement Scheme (SRS)
How To Invest in SRS Account?
8. Singapore Government Securities(SGS)
How To Buy Singapore Government Securities(SGS)?
9. Invest in Retail bonds
How To Buy Retail Bonds?
10. ABF Singapore Bond Fund Index(ABF ETF)
How To Buy ABF ETF
11. Singapore Savings Bonds
How To Apply For Singapore Savings Bond?
12. Invest in Preferred Share
How To Buy Preferred Share?
13. Make 20% Returns With Singapore Crowdfunding(Debt based)
How To Invest In Debt-based Crowd Funding
14. Invest In A Portfolio Of Properties Via Singapore REITs
How To Buy Singapore REITs?
15. Unit Trust Investment
16. Receive Regular Retirement Income From Annuity Insurance
How To Buy Annuity Plan?
Step #1: Annuity Plan Secreening
Step #2: Get your Quote & Advice
17. Use Endowment To Save For Your Future Big Ticket Item
How To Buy Endownment Plan?
1. Invest in Strait Time Index(STI ETF)
Do you want to invest in just one stock that makes you a part-owner of the 30 largest companies in Singapore?
I know you do and that stock (unit) is: STI ETF
Two things you need to know:
#1. STI is known as Strait Time Index. It tracks the performance of the general stocks market by holding a basket of Singapore’s top 30 largest companies by market capitalization.
#2. ETF is known as Exchange-Traded Fund. It makes it possible for us to invest in the market index. This fund is created to replicate the performance of STI, and it is traded on the stock exchange. Hence it is called Exchange-Traded Fund.
This differs from the unit trust you are normally exposed to which is commonly promoted by financial advisors as those funds (unit trusts) are not traded on a stock exchange.
Why STI ETF?
By investing STI ETF, it is as though you are investing in the economy of Singapore. Why? Because those are typically the kind of companies that contribute to our nation’s GDP! They are not normal companies but big corporations.
Corporations that can affect the inflation rate of the country by rising prices on their goods and services. We know what inflation is and how it reduces our purchasing power. What you can buy with $100 since 10 years ago is less than what it is today. Your standard annual salary increment is not a pay raise that you get for 12 months of work but rather is a made up of your dollar value loss as a result of inflation.
What causes the inflation? Supply and demand, supply of goods and services produced by the huge corporations and the demand of consumers. People like you and me, and the foreign talents that build wealth to our nation. Increasing population coupled with the influx of foreign labor means the demand for goods and services will increase continuously, so is the rate of our inflation.
Investing in STI ETF means being a part-owner of the companies that produce the supply. When the demand is high, corporations are able produce more to meet the increasing demand and hence generate higher revenue for the investors. You benefit from rising share prices.
When the market faces with worldwide shortage of supply with increasing demand, corporations are able to charge higher prices as the unmet demands are willing to pay more, hence generate higher profitability. You benefit from the rising share prices.
On inflation, corporations are able to pass down the cost to the consumer by charging at higher prices of their economic output therefore without undermining their profit margin, you as an investor benefit from owning businesses that affect the inflation.
So who holds the short end of the stick if both corporations and investors do not “suffer”?
Well, as you might guess, the ones do not invest and put their money on a deposit that pays nominal interest rate that can't even make up for the erosion of money value that inflation brought.
Now what makes me so sure that STI will increase and investors will nearly always make money over the long term?
The answer is a simple one, because there is a fundamental reason to it. That's the increasing population’s growth of our sunny island. White paper aims to bring us to a 6.9 million population’s nation, and not 3.9 million.
Growing population means growing consumption which leads to higher revenue for corporations who produce them.
So who produces them? That's right! BIG corporations in the Strait Time Index.
This is come SPDR on their performance page.
The average performance of STI ETF over the past 10 years is 5-6%(it used to be higher but was dragged down by the recent plunge).
This is come SPDR on their performance page.
Before you decided to invest, a good rule of thumb is to be willing to take a 50% drawdown of your investment value within a period of 1-2 years in case of a market crash.
A good investment time horizon for stocks investment is somewhere between 5-10 years.
With that in mind, here's how to invest STI ETF:
How To Buy STI ETF?
Step #1: Open A Brokerage A/C & CDP
I'm using SCB and I encourage using SCB for capital size below $100K as there is no min. commission of $25 (industry standard).
How To Open SCB Brokerage Account
Official Site: SCB Online Equities Trading
Requirement:
- You need to open an Esaving account with min. deposit of $1,000
- They might require you to do a CAR:
Application process:
1. Bring $1,000 cash with you and head down to one of the standard chartered bank's branch.
2. Tell the receptionist "I want to open a securities trading account."
3. Get your queue number... once your turn is up, they will get you to fill up the application form to open both SCB E$saver A/C and brokerage A/C. The representative will ask for the cash $1,000 to open the savings accounts.
4. He/she might ask you to do a CAR(HACK: fill in the right things and will get the right results)
5. If they ask whether you want to open oversea a/c, just say "yes" as there is no extra charge(you never know when you will need it)
6. Wait for letter of confirmation letter and you are ready to invest!
NOTE: Only for SCB we do not need to have CDP A/C as SCB will be the custodian of your shares.
Step #2: Choose an ETF Provider: Nikko or SPDR
Source: STI ETF The comprehensive guide - BigFatPurse
SPDR is a far better option, here's why:
Larger AUM, hence more liquidity
Lower management fee because of its larger AUM
More reputable
Lower tracking error i.e more accurately replicating the performance of the Strait Time Index.
Step #3: Login to your SCB account and transfer the balance from Saving a/c to trading a/c
Enter your username & Password:
For the first-time user, you'll have to transfer the balance from your saving account to trading account if not you can't buy shares as your trading a/c is ZERO:
Click "transfer Between Own Accounts":
Select "E$saver A/C", and make sure the amount to be transferred is to "Securities Settlement account SGD":
Lastly, enter the amount you want to transfer, hit "next" and you are done!
Step #4: Head over to SCB Online Trading platform and submit your order
Hit "Online Trading":
Then click "Place a trade":
The SPDR STI ETF code is "ES3", enter it and then fill up the quantity and price.
Once done, hit "next":
You will receive a SMS confirmation once your order is filled.
STI ETF Investing Strategy
(Lump Sum Vs Dollar Cost Averaging)
Dollar-cost averaging just means taking risk later — Vanguard
"Should I invest in lump sum or in parts-by-parts?"
A commonly asked question. According to a Vanguard's study, lump sum investing works 2/3rd of the time. Because under inflationary environment market rises most of the periods and collapses infrequently. And when it collapses it often lasted only 1-2 years which is too short for DCA to work well.
Solely on investment perspective, lump sum investing offers the greatest investment risk & reward.
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2. Use Share Builder Plan To Automate Your Stocks Investment
Want the above returns but not the above hassle?
Or tell me is there any of the following statements that sound familiar to you:
"I don't have time, because I want to watch ‘Descendants of the Sun.’”
"I just started out working, my capital is small, how do I invest?"
"I'm planning for my children’s university fund for the future."
“I'm too tired after work and weekends are for leisure and family’s time.”
"I have a life."
Then let me introduce you: Share Builder Plan
This investment plan allows you to build a portfolio of Blue Chips Stocks with as little as $100 per month:
(It's completely hassle-free, and the initial set up is quicker than you can finish saying the word: Cute Cat!)
So what's exactly is SBP?
SBP is a GIRO arranged fixed dollar amount monthly investment plan that uses an investing method called Dollar Cost Averaging. By investing a fixed dollar amount monthly in STI ETF means you will be buying more shares when prices are moving down and less when prices are moving up.
This removes the anxiety of hoping to buy at the best price and guessing about the market’s direction as Dollar Cost Averaging would averaged out your investment cost.
Anyway, why bother about picking the right stocks or getting the timing right where the average investors have shown to perform badly against the market index over long run.
Today we have 4 Share Builder Plans providers in Singapore:
POSB vs OCBC vs POEMS vs Maybank Kim Eng: Which Regular Savings Plan Should You Choose? — By MoneySmart
Which One Should You Choose?
Note that you are using Share Builder Plan as an investment plan to invest in STI ETF rather than buying it directly as shows in list #1.
So cost is what you need to consider as it will eat into your returns (which is deducted from your dividend).
Quick Solution:
For cost effectiveness, choose POSB or Maybank if your monthly investment amount is less than $500.
And, choose OCBC or POEMS if your monthly amount is $500 or more.
On note of that, POSB allows only full redemption whereas the rest allow for partial redemption.
Throughout the 4 providers, POEMS is the only one that has the option to opt for dividend reinvestment. As for the rest of the providers, dividends will be credited to your designated bank accounts.
Refer to below for more reading resources:
RSP WARZ: POSB vs OCBC vs Phillip - By GMGH
STI ETF Monthly Investment Plans Comparison - By BFP
All about STI ETF! By Eye of the Storm
Alright, next I will show you how to set up your monthly investment plan.
How To Set Up Share Builder Plan Via Online
I will use POSB as an example:
Step: 1 Login to your online savings account
Step 2: Head over to More Investment Services
Step 3: Click "Set Up Exchange Traded Fund..."
Step 4: Select your Account and fund name: NIKKO STI ETF
You must tick the 3 "links" as I highlighted if not the error will pop out when you press "next"
Confirm your detail is correct, then click submit
And you are done!
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3. Gold Investment
Everyone knows what inflation is (even the donkey in my backyard knows), and that's the general increase in prices of goods and services.
As I have covered above, a large part of it is explained by the law of supply and demand. However, this considers one part of the equation that is goods and services, but misses out the other side of the equation.
Want to make a guess?
Answer: the value of money.
Prices can raise NOT because of the general increase in prices of goods and services as explained by supply and demand, but because of the decrease in the value of paper money. Consequently you need to pay more money to exchange for the same amount of goods and services as the value of your money depreciates.
A quick history lesson: In the past, every dollar created was backed up by a fixed quantity of gold. Money was then seen as the ownership of gold that was stored in the country’s reserve. The value of money was tied to the value of gold. People and corporations used money in exchange for goods and services. No one would doubt the value of money since each dollar created has to be backed up by gold in the reserve. This era was known as the “Gold standard.”
In August 15, 1971 president Nixon of the U.S ended the gold system and since then entered into our present fiat dollar system.
This is where money is not backed up by any tangible unit but mere market confidence alone. The confidence that the value of money would not deviate much from its actual dollar amount when buyers and sellers make transactions. This is all good so long the authority does not abuse the system by artificially producing money out of thin air with the effort of passing a bill.
But as we know, the rest is history. Money has been created furiously by leading nations to stimulate their economy.
When markets lose confidence in the value of money. It will look for an alternative. And it happens to be gold. Why gold? Because it was used in the past during the gold standard so why not in the future? In addition to that, gold was also commonly used as an medium of exchange throughout the history of many countries.
Hence the natural tendency of humans is to believe that gold might be the money of the future. That’s what made the price of gold rises whenever a policy is passed that would depreciate the value of dollar.
To buy gold is to hedge against the loss of confidence in paper money and believe gold is a better representative than the printed notes itself. Some put it “Gold is an universally accepted currency.” But I wonder what would the response be if I head down to a car dealer and ask “Can I pay by gold?”
Perhaps pointing the direction of the nearest gold exchange is a kind gesture of response.
You: “But wait… What you are explaining is in the perspective of USD and not SGD. We didn't have a gold standard. We didn't print money to artificially stimulate the economy and the bulk of our money is in SGD, but why are people buying gold for investment in Singapore?”
GV: Monkeyism
4 Common Ways To Buy Gold In Singapore: Physical, ETF, Certificate & Savings
#1: Physical gold --> Gold Bar and Gold Coin
Gold Bar, prices are taken from UOB Gold Price:
ARGOR CAST BAR
11 March 2016 - Price 5654.00
CAST BARS11 March 2016 - 56,051.00
PAMP GOLD BARS11 March 2016 - 1800.00
Gold coin, prices are taken from Bullion Star:
Canadian Gold Maple
1 troy oz (31.1 gram) - 2016 SGD 1,787.48
Canadian Gold Double Maple 2007
1 oz1 troy oz (31.1 gram) - 2007 SGD 2,033.59
Australian Kangaroo Nugget
25 gram (0.804 troy oz) - 2016 SGD 1,622.23
American Gold Buffalo
1 troy oz (31.1 gram) - Various Years SGD 1,814.48
Enter your text here...
1 troy oz (31.1 gram) - 2016 SGD 1,808.48
And more over here.
How To Buy physical GOLD?
Option #1: UOB Headquarter. Head down to Gold Department at UOB Main Branch and tell the counter you want to buy gold.
The daily price is listed here:
Option #2: Bullionstar though online order:
There are three delivery method: 1. Pick up, 2. Courier and store in their Vault Storage(click here for more info)
Giraffe's Tip:
UOB Gold prices are sightly higher than BullionStar but it comes the benefit of a tighter spread.
Do not tear the seal when you bought physical gold as it might be one of their criteria for resales.
Additional readings:
How I Buy Physical Gold In Singapore By 15WW
#2 Gold Exchange-Traded Fund(ETF)
ETF as explained earlier is a fund that's traded on the stock exchange. The investment objective of gold ETF is to replicate the performance of gold price by using its pool of money to buy gold.
As an investor, to buy gold ETF is to have investment exposure on gold without needing to own physical gold.
SPDR is the only Gold ETF provider in our SGX:
SPDR Gold Shares (O87)
How To Buy Gold ETF(SGX:087)
Step #1: Login Your Brokerage Account
Step #2: Enter Stock Quote: "087"
You will received a confirmation SMS once your order is filled.
And you are done!
#3 Buy UOB gold certificate
Gold certificate is like the money that was used during the gold standard. In today's world you can see it as a share just that instead ownership of the company. This is an ownership of gold that stored in UOB's vault.
Note the charges:
#4: Invest through: Saving account or Bullion Savings Program
UOB gold savings account:
Bullion gold Saving program:
My advice is to ignore these two gold saving programs as there are plenty costs involve unless you have extensive knowledge on it. The best gold investment options are either physical gold or gold ETF.
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4. Make 10x Interest Returns Via High Saving Account
Alright, this is not an investment option as your capital is guaranteed by the bank. And it's even backed up by government for $50,000 under the Deposit Insurance Scheme.
I included this because it’s still a money-growing option that you certainly wouldn't want to miss.
Why?
Because we are talking about 10x different as compared to your typical savings accounts!
Fair enough? Good. Let's get started.
There are 10+ savings accounts now on the market with newer ones more confusing than the previous, so there are two things I look at:
1. Hassle-free, no complex term and condition. It must be SUPER easy to understand and easy to qualify i.e crediting salary.
2. No Candy Crash game-points like system by making you spend more to "unlock" higher tier of interest rate (Well, it's sort of dumb that you'll end up spending more than you get from interest :::AWW::::: that's how the industry work)
Alright, alright, I know, some of you may have family and are already qualify for those criteria with your current monthly spending. If that's the case, it's even better, because these options reward for that as well.
4 High Interest Savings Account In Singapore: Easy To Understand, Easy To Qualify and Hassle-Free
#1 BOC SmartSaver is a savings plan for BOC Multi-Currency Savings (MCS)
"BOC SmartSaver is a savings plan for BOC Multi-Currency Savings (MCS) account holders to earn bonus interests on top of prevailing interests when you fulfill the required criteria. Introducing a smarter way to earn up to 3.55% p.a. with BOC SmartSaver."
Site: BOC SmartSaver
Salary credit bonus + base = 1.25% interest rate min.
Base can be increased to 0.40% if you crossed $50,000 deposit and that brings you 1.40%.
For more info: Bank of China’s SmartSaver Appealing... by Investment Moat
#2 OCBC 360 account
Site: OCBC 360 Account
Salary credit bonus + base = 1.25% interest rate min.
Plus another 1% on the amount of increase from the previous month's balance i.e Mth #0: $20,000 and Mth #1: $25,000... 1% * $5,000.
For more info: OCBC 360 Account: A Heavy-Hearted Update by 4HWW