5 wealth preservation options for the risk averse

If you have zero tolerance for losing $$ in the stock market, then this article is for you. (Image by Lorenzo Cafaro from Pixabay)

US President Donald Trump’s surprise announcement that he is slapping Beijing with 10% tariffs on the remaining $300 billion worth of Chinese goods is certainly worrying for market watchers. And now, all eyes are on China to retaliate. Here’s an infographic on tit-for-tat tariff timeline between Washington and Beijing, thanks to the good folks at ST:

It looks more and more like global recession is coming our way, with Boris Johnson leading Britain out of EU whether there is a deal or not. And Japan sparring with South Korea.

Anyway, for the risk adverse, staying invested in times like this may seem risky. Here are some alternatives to preserve ones wealth.

1. Bonds

Investing in retail and government bonds have been on the upswing in Singapore this past 4 – 5 years. Since its introduction in 2015, the Singapore Savings Bonds (SSB) have become known as a steady and safe instrument to preserve wealth for retail investors. Every month, the government launches a new tranche of SSBs with varying interest rates. They’re pretty low interest, but a safe bet nonetheless, and better than any typical savings account.

Corporations also jumped in on the retail bonds bandwagon: Fraser Centrepoint, Capitaland, Aspial, Temasek Holdings’ T2023 and its subsidiary’s Azalea. And then there was Hyflux’s perpetual bonds which failed spectacularly. So, be warned that retail bonds are not risk-free.

2. ETFs

ETFs have been all the rage in the past decade, with low-risk investors employing investment strategies revolving solely around ETFs to grow wealth. For beginners, you might want to check out POSB bank’s Invest-Saver, a regular shares savings plan with Nikko Am that puts your savings into the STI ETF and the ABF Singapore Bonds Index Fund.

Alternatively, retailer investors can look to trying robo-investor services like Stashaway. You just need to input your investment profile and let AI do the investing for you.

3. Fixed Deposits (FDs)

A risk-free option to preserving wealth typically starts with the fixed deposit. Currently, Maybank is running a National FD promo that gives you up to 2.22% on a 12-month tenure. This is possibly the best deal in the market right now.

4. High-interest saving accounts

OCBC has its 360 account. UOB has UOB1. And DBS has the multiplier account. All fantastic high-yield savings, but they all have a no. of terms to earn the bonus: credit card purchases, salary credit, insurance purchases etc. CIMB has now jumped in with their savings account, that allows one to earn up to 1.5% p.a. with no multiple terms.

5. Endowment plans

Insurance companies such as Prudential and Great Eastern also offer endowment plans with varying tenures and returns that are on par and better tahn high-interest savings accounts. These products typically offer insurance coverage as well.

Investors should always ask themselves what’s their appetite for risk and what are their retirement goals before taking the plunge into a plan that works for them.

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