Ok, two slightly different questions here.
The first seems to ask if there is a good alternative to cash on deposit in Singapore. Very, very briefly- there is. Part of my job is to examine all sorts of funds from pretty risky ones to very safe ones. If you’re looking for an alternative to cash you are looking for safety and there are a couple of good ones that can offer this. One returns a steady 7-8% per year and is valued in sterling; another returns different amounts depending on which currency you invest in (about 6% for £, 4% for Sing $) and both are very safe. A full explanation of them would take too long but there are a few more details on page 12 of my firm’s latest newsletter-
http://www.affinity-consulting.com/news ... letter.pdf, and for the 7-8% £ one here-
http://www.patf.co.im/newsiteframeset.htm?Agree=on
The second question is much wider- where should I put my money? I can only answer in generalities but:
You should always try to keep access to some cash as an ‘emergency fund’. 2-3 month’s normal expenditure is a good benchmark.
After that you should ask yourself when you are likely to want to spend this money. If it is going to be in a few years time you may not wish to pay up-front charges to invest in Unit Trusts and risk these going down in the meanwhile. If however it’s going to be a long time before you need it (typically saving up to retire) it is best to invest the money rather than leave it in cash. It is true that there are costs to this, and decisions to be made, but the expected benefits outweigh these costs.
An easy way to work out the growth of your money is to use the ‘rule of 72’. Roughly speaking, money growing at 7.2% pa will double every 10 years. In exactly the same way, money growing at 14.4% doubles every 5 years. Again in the same way, money growing at just 3.6% will take 20 years to double. This is crucial to your plans if you’re a long way off spending the money. All these figures are very rough, but the principle holds:
Return on the money Start 10yrs 20yrs 30yrs 40yrs
0% $100 $100 $100 $100 $100 You’d be daft
3.6% $100 $141 $200 $280 $400 Not very exciting.
7.2% $100 $200 $400 $800 $1,600 Much more like it
14.4% $100 $400 $1,600 $6,400 $25,600 Incredible
You need three things for your final amount to be large (to ‘get rich’):
The amount you start with to be large- This comes from saving your money rather than spending it.
To have a long time for it to grow- This comes from investing from a young age.
For the return on the money to be high- This comes from investing it rather than holding it in cash. Everyone knows how they can get a few percent return- from putting it in a bank rather than keeping it in the cookie jar. To get higher returns you need to take some risks with your money and put it into Unit Trusts, which means that the value of your investment will go down sometimes as well as up. Luckily, over 5/10yrs+ the risk of a sensible, medium risk investment having gone down and not come back up is low. With this kind of investment an expected return of about 7.2% pa is reasonable. As for getting an average return of 14.4% pa or more? If anyone says they can guarantee you this they’d be lying. It can be achieved but it takes careful management, an acceptance of higher risks and a dose of good luck.
All these things you can do yourself, but an adviser will encourage you to do the first two and can certainly help you with the last.
Talking more specifically now is a great time to be investing. Investing from Singapore has never been easier and certain regions of the world, Asia in particular, are growing very strongly and the funds invested into those regions are growing with them. Many Asian funds have averaged over 30% pa returns over the last three years, and the very best performing funds have returned 70% in just one year. Be warned- don’t expect this to continue! But you may as well get in and enjoy the initial growth to offset any future downturns and improve your average long-term return.
