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What Are The Best Products For Short, Medium and Long-Term Investors?

Turns caffeine into digestible finance content. You can contribute your thoughts like Ming Feng here.

If you are not a crazy shopaholic, there should be a point where you accumulate a good amount of savings with no idea of what to do.

TL;DR- “Given X years to invest, what is the best investment product?”

Splitting up the investment horizon into 5 years, 10 years and more than 10 years, here are some of the investment product one can look at.

Further Reading: Pros And Cons Of Each Product

Point to note: Taking inflation to be 1.9%, we aim to have our investment returns exceed that percentage.

Investment products for 5 years or less: 

Short-term Endowment Plan

Pros
  • Relatively low risk given that they are products of reputable insurance companies
  • No worry about losing principal sum upon maturity
  • Beats inflation with as little as $1,000
Cons
  • Locks up your cash, illiquid
Returns

Peer-to-peer lending platforms (P2P lending)

Pros
  • Good returns
  • Investor gets back a portion of his investment back every month, offsetting his risk
  • Quick process and everything can be done online
  • Some of the platforms are regulated by Monetary Authority of Singapore (MAS)
Cons
  • Lending to small business which is a high-risk activity
  • Investors are not able to invest as and when they like. Opportunities arise only when there are borrowers.
Returns

Investment products for mid-term (10 years): 

Singapore Savings Bond (SSB)

Pros:
  • No penalty for early redemption
  • Safe (backed by Singapore government)
  • Invest as little as $500
Cons:
  • Rates of return are fixed at time of investment
Returns

Investment products for long-term (more than 10 years):

Central Provident Fund Special Account (CPF SA)

Pros
  • Relatively good returns on interest rate
  • Very safe
  • Low effort
  • If you are in a bad financial situation, creditors can never touch your money that is locked in the CPF. (Not saying it is a good thing!)
  • Tax relief you top up your CPF
Cons
  • Very illiquid as it is locked up till you retire
  • Lacks disclosure, we have no idea what our CPF is invested in.
Returns
  • At least 4% per annum

Investment products for all time frames:

Savings Account

Pros
  • Low risk
  • Very liquid, able to draw out your money anytime
  • Low effort
Cons
  • Interest may be below inflation
Returns
  • 1.5% – 3% depending on the bank and amount of money you deposit with them

Bonds

Pros
  • Relatively good returns. Corporate bonds usually pay out higher interest rates than government bonds
  • Investors get regular coupon payment for their investment
  • Possibility of selling bonds at higher price
Cons
  • Investors may face default risk or credit risk from bond issuer
  • Price of bonds fluctuates
  • Moderate amount of effort required
  • High fees and charges
Returns
  • Depends on the bond investors invest in

Robo-Advisors

Pros
  • Low-cost (0.5% to 1% fees)
  • Diversified portfolio
  • Opportunity to be exposed to the global economy
  • No minimum balance
  • Quick process and everything can be done online
  • Some of the platforms are regulated by Monetary Authority of Singapore (MAS)
Cons
  • Relatively new with little track record
  • Considered relatively high risk
  • Lacks flexibility for investors to make changes to his own portfolio
Returns
  • Depends on the risk appetite of investors, robo-advisor will tailor made an investment strategy for each individual.

Stocks

Pros
  • Good returns (if you know what you are doing)
  • Allows full flexibility for investors to create his own portfolio
  • Rather liquid, able to sell shares as long as there’s volume
  • Allows a combination of growth investing and dividend investing according to investor’s needs and age profile
  • Instruments on the exchange catered to all risk level: REITs and STI ETF catered to mid to long-term investors, growth stocks for those with higher risk appetite
Cons
  • Risky due to volatility
  • Rather high fees and charges
  • High level of effort, complicated and takes time to research
Returns
  • STI ETF – 9.2% total returns year to date
  • Stocks return varies according to investor’s decision (here are some advice from seasoned investors)

Cryptocurrencies

Pros
  • Possible Good returns
Cons
  • Very risky
  • Complicated to understand for now
Returns

Seedly’s Community: “10 Years To Invest, What Is The Best Investment?”

A member of ours opened up this question to the community and here are some of the advice from our very supportive members! Thanks, everyone! 🙂

Yappilee, LM Lim and Zhen Hong
  • Invest in the Singapore Savings Bond
Kelvin Soh and Jan 
  • CPF SA: If you are 45 years old and you are able at least hit $86K, top up your SA for 4% yield.
Jiahui:
  • Try out the robo advisor calculators for your level of proposed risk

screenshot of Autowealth’s calculator

Alisa Kuan
  • Conservative approach will be to stick to Fixed Deposits/Bonds/Endowment insurance
  • Manage your expectations as low risk = low return
Matt Lim and Khuan Yew Cheah:

Our decision when selecting any investment products should depend heavily on 3 factors:

  • How long you plan to invest
  • How much you plan to invest
  • Amount of risk you are willing to take

With these factors in mind, do add the cost of investment into consideration

source: Picture Quotes 

When deciding on a product, the personality of the investor plays a huge part. I guess, in a way you are the hero of your own investment story.


Summary – Choosing Your Investments Based On Liquidity, Risk, Returns And Length Of Investment

 LiquidityRiskReturnsLength
Short-term Endowment
(FWD Endowment, Great205)
LowLowLow
Short
(3 years)
CPF SALowLowModerateLong
Peer-to-peer lending Platforms
(Moolahsense, Funding Societies)
ModerateHighHigh
Short
(Depends on term)
BondsModerateModerateModerateShort/ Moderate
(Depends on maturity)
Singapore Savings Bonds (SSB)HighLowModerateModerate
(10 years)
StocksHighHighHighDepends on investor
Robo-advisor
(Stashaway, Autowealth)
HighHighHighDepends on investor
STI ETFHighHighHighModerate/ Long
CryptocurrencyHighHighHighDepends on investor
REITsHighHighHighModerate/ Long
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