16 July 2013

5000 Singapore Dollars for Investing Plus S$100 a Month?

Source

Why not, I started with exactly S$5000 in November 2012, right now, I have put in S$12735.40 in capital, current return is 3.89%, and it's not even a year, no matter how you look at it, it's still better than leaving it in the bank or buying some stupid investment-linked insurance policy.

If you read the forum posts, look at this part posted by this Dividends Warrior,

Never mix investment with insurance.

Investment is investment.

Insurance is insurance.

My advise. Invest in REITs. With $5000, you can buy:

- 3 lots of Mapletree Industrial Trust (6.6% yield)
or
- 4 lots of First REIT (5.2% yield)
or
- 5 lots of Starhill Global REIT (5% yield)


The red part is the key, most people who signed up for investment-linked insurance ended regretting it, but of course it all depends on how much you think is regrettable, after all everybody has varying levels of risk tolerance.

I remember long time ago, NTUC offered me such a plan, they said I can get up to 3.75% return, let me repeat, I can get up to 3.75% return, get it? The key part is up to, it's not guaranteed and according to my friends who have such a plan, usually they get less than 3% per annum. I remember only about 1.x% is guaranteed, so actually it's not so bad, like I said, it all depends on your risk appetite.

But if you compare that kind of return to our inflation rate, it's quite bad, but still, it's better than leaving it in the bank.

If you follow my blog, you'll know I don't own any life insurance, I'm currently insured with NTUC, it's a term plan, pure protection, it's cheap and good, if shit happens to me, my wife can get S$150000, and I pay about S$50++ a month, reasonable price for peace of mind.

Actually life insurance is not that bad, you get investment returns and you get protection, sounds like a good deal, but the problem is, too much of your cash will be locked away earning way lower than potentially possible.

Like Dividends Warrior suggested, with S$5000, you really can buy a few lots of REITS, these are high yield stocks, you don't have to care too much, of course don't just jump in without looking but once you buy, you can leave it there and collect money once every few months, most REITs pay dividends quarterly.

1 comment:

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