💸What To Do with $100K Saved in Singapore

[00:00:00]Having $100,000 sitting in your bank account is a fantastic milestone.

[00:00:05]Whether you're planning to use it to buy a new house or doing reno in the upcoming years or whether you want to leverage it for your retirement, you are holding a significant amount of financial power. But everybody knows that leaving cash entirely in basic savings account means letting inflation quietly chip away at your purchasing power. The real question is, so where should you put this money? The truth is, there is no single perfect investment.

[00:00:31]The right move depends entirely on your personal situation. What are you going to use the money for? When do you need it back? And how do you feel about market going up and down? To make this simple, let's break down the best strategies for your $100,000 based on three major factors, your time horizon, risk appetite, and your stage in life.

[00:00:50]So the first one is based on short-term horizon, which is between one to two years. In this scenario, your goal is to protect your principal. You need this money soon, perhaps for a down payment on a new home, a major home renovation, to buy a car, or maybe an upcoming wedding. If you need the money back, let's say in 24 months or less, then your number one priority is capital preservation. Make sure that your $100,000 stays at least $100,000, but of course it would be better if you have a little interest. The stock market fluctuates too much in this short term, so you want to avoid it entirely for this bucket. Here are the safest, most reliable places to park your cash right now. The first one would be Singapore Treasury Bills or T-Bills. This is issued directly by the Singapore government. Typically, the horizon would be six month or one year T-Bills, and it is virtually risk-free. Recent auctions show the cutoff yields hovering around 1.48% per annum. It is quite safe and a predictable way for you to lock in a yield for a short period of time. The next option is obviously fixed deposits.

[00:02:01]So, if you're dealing directly with a bank, a fixed deposit is the cleanest option. Usually, promotional FD rates is nowadays between 1.4% to 1.6% per annum.

[00:02:13]Of course, it depends on the bank and the tenor as well. It is a simple set it and forget it choice, though you do face penalties if you withdraw early. And then, the next option would be the Singapore Savings Bonds or SSB. This is also backed entirely by the government.

[00:02:30]So, SSB let you withdraw your money in any given month with no penalty, giving you incredible flexibility. While they are 10-year bonds, the one-year return for the latest month is about 1.46%.

[00:02:44]The next option is cash management accounts. So, this is offered by various digital brokerage and robo-advisors. So, these accounts pool your money into low-risk money market funds. They offer highly competitive yields and daily liquidity, meaning you can pull your funds out quickly if an urgent [snorts] need arises. Next, let's talk about the medium-term horizon, which is, let's say, between 3 to 5 years. So, your goal would be to beat inflation while keeping risk moderate. You don't necessarily need this money immediately, but you plan to use it within the decade, maybe to fund a child's education or to pivot in your career, etc. With a 5-year window, you can afford to let your money work a bit harder. You can take on a balanced approach, combining safe income assets with a conservative touch of market exposure. You can do a barbell or balanced strategy, where you don't need to choose between 100% safe or 100% risky. You could just split the $100,000. So, for example, why don't you put $50,000 into a long-term Singapore Savings Bonds, which steps up in interest over time and could average like 2.11% per annum over 10 years. And then you put the remaining $50,000 into a diversified investment portfolio.

[00:04:01]Another thing you can do is to leverage robo-advisors and multi-asset portfolios. If managing individual investments feel overwhelming, digital wealth platforms can build a balanced portfolio for you. By choosing a moderate or balanced risk profile, your money is split between global bonds for stability and global equities for growth. Over a 5-year period, this smooth out minor market bumps while outperforming traditional bank interest.

[00:04:26]Now, let's talk about long-term horizon, which is 5 to more than 10 years and beyond. Your goal here would be to maximize compounding growth. This is the money that you are setting aside for, let's say, early retirement, long-term wealth building, or generational legacy.

[00:04:43]If you do not need to touch this $100,000 for the next decade, then inflation is your biggest enemy. To protect the purchasing power of your wealth, you need to step into the world of investing. Historically, over any 10-year period, a diversified equity portfolio typically can outperform cash significantly. There are several options. One option would be to leverage uh globally diversified index funds or ETFs. Instead of trying to pick winning stocks, you can invest in the entire global economy. There are plenty of low-cost exchange-traded funds or ETFs that track major indexes such as the S&P 500 or the MSCI World Index, which allow you to own a tiny slice of hundreds of the world's most successful companies.

[00:05:30]And then for those who love regular passive income, Singapore real estate investment trusts and also blue-chip shares on the SGX are a popular staple.

[00:05:40]They allow you to invest in major commercial properties, shopping malls, and data centers, paying out regular dividends that you can reinvest to let your wealth compound even faster. Or you can also consider SRS or supplementary retirement scheme. If you are a high earner looking to lower your income tax bracket, consider putting a portion of your cash into your SRS account.

[00:06:02]However, do not leave it there as idle cash earning the base 0.05% bank rate. Instead, use the SRS funds to buy long-term ETFs, real estate investment trust, or single premium insurance products to grow your nest egg tax efficiently. Now, let's talk about how to balance your life stage and risk appetite because when you are talking about investment, time horizon is only half of the equation. Your personal circumstances matter just as much. To make it clearer, let's take a look at these two examples. Let's say the first profile would be somebody in their 20s or 30s and they are a working professional. They are young, still employed with decades of earning potential ahead. So, the strategy for this person, they can comfortably adopt a growth-oriented approach. With time on their side, they can tolerate the stock market's volatile days because they don't need to liquidate their portfolio anytime soon. Their $100,000 might look like an 80/20 split. So, for example, $80,000 in global index or ETFs for long-term compounding and $20,000 in high-yield savings or cash management funds as a robust emergency buffer. And then the second profile would be somebody who is nearing retirement or already retired. The situation is they need to preserve a lifetime of savings relying on their portfolio to supplement daily living expenses. And of course, the strategy for this profile would be very different. This individual will naturally learn toward an income and preservation approach. Protecting the core $100,000 is paramount alongside generating predictable monthly or quarterly cash flow, their split might look entirely different. Let's say $60,000 laid across safety bills and SSBs for guaranteed income, and the rest of $40,000 in stable dividend-paying blue chips or high-quality bond funds.

[00:07:58]But there are some practical tips before you start. So before moving a single dollar of your $100,000, please keep these three golden rules in mind. Number one, keep your emergency fund separate.

[00:08:10]Do not invest your very last dollar.

[00:08:12]Ensure you have at least 6 to 12 months of daily living expenses sitting safely in a high-yield savings account before even allocating your $100,000 investment sum. Because at the end of the day, you know, investment carries a level of risk, right? There's a chance that you might lose some or even all of the money, so you need to be very careful.

[00:08:33]And then the second rule that you need to put in mind is avoid the all-in temptation. If you are investing in the stock market for the long term, know that you don't have to deploy $100,000 in a single day. Consider dollar-cost averaging or DCA method, where you invest a set amount of money over a year or two. For example, let's say put $5,000 a month, or you can even go faster if you have the risk appetite.

[00:09:00]This will help to take emotion out of the equation because you basically just put the money according to your schedule instead of depending on how the market is doing. And then the third rule that you need to pay attention to is understand what you're buying. Never invest in a financial product just because a friend or an online influencer recommended it. If you can't explain how the product works or how it makes money in simple sentences, please take a step back and stick to simpler transparent options like T-bills or broad market index funds or fixed deposit, etc. So for example, if let's say you're not comfortable with idea of crypto, then don't invest on it. Or if you really feel courageous, then put a limit on it.

[00:09:45]So, for example, let's say maximum like 5% or something like that. But, don't invest on something that you don't understand. And of course, this video is for educational and informational purposes only. Please consult a certified professional financial planner before making any investment decisions because at the end of the day, I'm just some random person talking on YouTube.

[00:10:06]You should not trust me 100%. Thank you so much for watching and I'll see you in my next video. Bye-bye. To support my work, you can give a one-time tip by pressing the thanks button, pick the money that you want, and click buy and send. Or you can also press the join button for exclusive contents and monthly membership. Your support means a lot to keep us independent. Thanks for watching and I'll see you in my next video. Bye-bye.