5 best financial products to start investing

It is common knowledge that to achieve financial independence, you need to save and look for ways to increase your income. Money saved won’t do any good unless they are strategically assigned toward investments that help you enhance those savings and secure your future. Investments are crucial to obtaining financial freedom. No healthy financial plan is complete without investments.

In spite of its importance, many people are wary of investments. Common reasons given include the risk factors associated with investments and the lack of knowledge about financial products to invest in. Whatever your reason, a strong investment portfolio is vital for a secure financial future. There are different types of investments and not every product comes with huge risks. Today, we give you some financial products to invest in that cater to every risk profile.

1.    Singapore Savings Bonds

Are you new to investments? Do you want to play it safe with your first investment? Then Singapore Savings Bond (SSB) is the perfect choice for you. This financial product is issued by the Singapore government to offer its populace with a safe and flexible savings option. SSB demands a minimum amount and provides the flexibility of holding it long-term or redeeming it earlier.

All you need is $500 to invest in SSB. Plus, you can reap benefits for up to 10 years or redeem it early, if you hate the feeling of your money being locking in without having to worry about early redemption penalties. However, you need to give a month’s notice if you wish to take out the money anytime. You can earn an interest of up to 3% if you hold your investment till it matures (10 years). This investment option is risk-free but may get you low returns.

2.    CPF Special Account

Are you seeking high returns on investment at no risk? Then you may want to consider planning for retirement through your CPF Special Account (CPFSA). The CPFSA pays you an interest rate of 4%. Additionally, the interest rate is absolute regardless of the market conditions in Singapore. This allows you to reap risk-free returns on your investment. Plus, the amount you top up your CPFSA with is also tax deductible. However, if you are not okay with parting with your money for a long period, then this option is not suitable for you. Unlike SSB, you cannot withdraw the money from your CPFSA until the age of 55.

3.    Corporate Bonds

Gone are the days when corporate bonds were limited to accredited investors. Today, anyone interested in investing in bonds issued by companies can do so. Most of these companies are also listing on Singapore Stock Exchange. By buying bonds, you are lending money to companies in return for interest. In simple terms, you are buying the debt issued by these companies. The benefit of going for corporate bonds is that the company has to mandatorily pay the interest, or else they will go into default. You need to research well to ensure the company you invest in is reputed. Corporate bonds can offer good returns, as well as flexibility to redeem your investment, but they also come with a small amount of risk.

4.    Straits Time Index (STI) Exchange Traded Funds (ETF)

If you are one of those investors for whom the stock market appeals to, but do not know where to start, then you need not look further than the Straits Time Index Exchange Traded Funds. The STI ETF was created to mirror the performance of blue-chip stocks on the Singapore Stock Exchange (SGX). One of the benefits of investing in STI ETF is that you get access to a diversified pool of top 30 stocks on SGX. This is because better companies automatically replace companies that do not perform well on STI. This investment option is also great for those who do not have time to monitor the market or stay abreast with the corporate trends and announcements. While you can reap good returns, you must be ready to take risks if you want to invest in STI ETF.

5.    Real Estate Investment Trusts (REITs)

Property investment is always prefer by Singaporeans. In a city like Singapore, real estate investment is seen as a profitable investment product for long-term and short-term benefits. In the long run, it is seen as a revenue-generating asset that also beats inflation. In the short run, the real estate investment brings you passive income through dividend payouts. Real Estate Investment Trusts or REITs offer investors access to property investment. You do not need millions of dollars to earn passive income. You can select different types of REITs like industrial, commercial, and healthcare. Just like STI ETF, investors will have to bear risks to reap the benefits of investing in REITs.

While these were stock investment options, you must not forget about keeping some money aside for emergencies. Emergency funds and insurance are other vital investments that protect you from a financial crisis. Risk is an inevitable part of life without which you may not be able to grow. The same applies to investments. Make sure you consult a professional financial planner to help you devise a strong, low-risk investment portfolio.


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