We are likely to save or invest because we want money for some future goal. Whether it is retirement, a child’s education, a home purchase, going for that dream vacation or whatever it is that you want, proper investing can help you achieve it. One way of meeting your financial goals is by choosing suitable avenues for investment. Today, there are many different investment products available for you to choose from. Lets look at a few main ones:
They are a safe investment tool; they provide guaranteed returns over the lock-in tenor. Another attractive, albeit fairly unknown advantage with them, is that the interest received from deposits with approved banks like Citibank Singapore or licensed finance companies in Singapore is not taxable.
Gold and Silver Savings Accounts
A Gold Savings Account (GSA) or a Silver Savings Account (SSA) enables a customer to buy and sell gold or silver without physical delivery. Holdings of gold and silver are usually recorded in grams (for gold) or ounces (for silver) and purchased quantities are credited to the holdings account and sold quantities are debited from the holdings account.
You can also use the Ordinary Account Balance and the Special Account Balance (from 1 July 2010, only monies in excess of $20,000 in the Ordinary Account and $40,000 in the Special Account can be invested) in your Central Provident Fund account to invest in gold (not in silver) via Gold Savings Accounts subject to the bank’s rules and the rules of the CPF investment scheme.
Singapore Savings Bonds (SSBs)
Introduced by the Singapore Government in 2015, SSBs are part of a move to make low-cost investment options more widely available to retail investors. They are fully backed by the Singapore Government. You can invest a minimum of $500 and in $500 multiples thereafter. The investment term is up to 10 years. You can redeem them at any point; you will not be charged a penalty. If, you, however, hold your investments for the full term of 10 years your returns are likely to be higher than if you redeem somepoint midway.
To invest in SSBs, you must have an Individual Central Depository (CDP) Securities account with Direct Crediting Service (DCS) activated. You must also have a bank account with one of the participating banks (currently DBS/POSB, OCBC or UOB). You can apply through their ATMs or through DBS/POSB’s Internet banking portal.
Stock Market Instruments
You can also choose to invest through instruments like stocks, bonds, futures, options, exchange traded funds etc. Before you start trading in equities and other stock market securities you will require a securities account or a CDP account with the Central Depository Pte Ltd (CDP) for holding your shares and for settlement of trades.
You will also require a Brokerage or a Stock Trading Account to conduct your trading. Your trading account needs to be linked to your CDP account before you start trading. Generally your stock broker will help you open both a Brokerage and a CDP account.
Unit Trust Funds
A Unit Trust Fund pools money from investors and invests it in a portfolio of assets according to the fund’s stated investment objective and investment approach. A unit trust is a fund which adopts a trust structure. The pool is managed by a team of full time professionals and a trustee is appointed to protect the interests of the unit holders. Citibank Unit Trust – provides unit trust portfolio with overdraft facility managed by most reputable names in fund management
Real Estate Investment Trusts
REITs are instruments that offer investors the opportunity to invest in a professionally managed portfolio of real estate assets. You can invest in a REIT by purchasing units of the trust, in a manner similar to shares of a common stock.
A structured deposit combines a deposit with an investment product. The return on a structured deposit depends on the performance of the underlying financial asset, product or benchmark.
Learn, Plan and Invest
Half the battle is won if you arm yourself with the right knowledge and the MoneySENSE (a national financial education programme for Singapore) website (www.moneysense.gov.sg) is a great place to start with. Once you have the required knowledge, you can plan and go ahead with investing. If you do not have the required knowledge, you can take the assistance of a financial adviser; just ensure that the Adviser you are dealing with meets the criteria laid down by the Monetary Authority of Singapore and the rules under the Financial Advisers Act.