What does it take for one to get wealthier in Singapore? Here are eight ways to get one, nay, eight steps closer to the holy grail of personal finance.
Financial independence, retire early — also known as FIRE — is a popular financial goal of many.
From robo-advisors, digital banking, CPF, Supplementary Retirement Scheme (SRS), or through the help of your financial advisor, there are dozens of ways a savvy Singaporean can plan for and work towards financial independence.
The Singapore government is also paving the way to help Singaporeans better track and take charge of their finances, particularly with the launch of SGFinDex, a service that helps individuals consolidate all financial information from different financial institutions and government agencies, onto a single platform.
If you’re looking for ways to make your money work harder for you, here are eight ways to help you achieve your financial independence dream in Singapore.
1. Have a good savings habit
Growing your wealth starts with a good savings habit.
Online shopping has made it far too easy for us to ‘add to cart’ and check out at the tap of a few buttons. Rather than chase the minimum monthly spends required to earn yourself higher cashback, remember this: a dollar not spent is a dollar saved.
Besides helping you to spend within your means, a good savings habit can also earn you higher interest rates. For example, Citi Wealth First Account rewards you with an additional 0.2% p.a. bonus interest for increasing your average daily balance by $3,000 or more a month.
Savings are the bedrock that gives you the financial muscle to take on investments with higher risk, to treat yourself to luxuries every once in a while or even to take a leap of faith and start your own business.
2. Purchase a stock or three
Start building your investment portfolio. This can include growth stocks that are primed for capital gains, blue chip stocks or real estate investment trusts (REITs) that are known to reward investors with high dividends.
However, purchasing individual stocks comes with higher risk and volatility. Besides purchasing single stocks, you can consider investing in a basket of stocks via an ETF or unit trust instead.
3. Diversify by investing in unit trusts
Unit trusts, also known as mutual funds, are funds that pool together investors’ money to make investments via a fund that is managed by a fund manager. These funds can be sector, geography, asset type specific.
Unit trusts can offer higher returns compared to the lower risk fixed income products. With unit trusts, you can also select the fund that best suits your investment needs. For example, if your portfolio is lacking exposure to Chinese companies, you could select a unit trust that invests in the leading companies in China.
4. Receive coupons from bond investments
Bonds, also known as fixed income products, make a popular investment type because they are a low risk product that offer stability, albeit with modest returns. Bonds are often added to portfolios to provide a balance to equities, lowering the overall risk of the portfolio. When you purchase a bond, your principal amount and returns will be distributed periodically until the bond’s maturity.
There are various ways you can invest in bonds in Singapore. You can purchase a bond directly from the market, or when bonds are first launched. You can also purchase a bond Exchange Traded Fund (ETF), fixed income funds or even government bonds, such as the Singapore Savings Bonds (SSB) that are issued and backed by the Singapore government.
5. Stand on the shoulders of professional wealth managers
Starting with a minimum of S$250,000 investable assets, you might want to start a wealth relationship to enjoy privileges that an investor on the street might not. This could include lower sales charges, preferential interest rate, wealth advisory and a dedicated wealth manager to serve your financial needs.
If you’re not yet part of Citigold, Citibank’s premium and privilege banking solution, it could be an aspiration to strive for. Citigold gives you exclusive access to Citi’s wealth insights that keep you updated on the latest global market developments, using market research reports and articles that dive deep into various investment themes.
You will also receive the support of Citi’s relationship managers – doesn’t it feel good to be backed by a team of wealth experts, instead of taking a step in the dark on your own to achieve your financial goals?
Ready to fast track your wealth? Get acquainted with exclusive Citigold privileges, from personalised wealth advisories to a dedicated Relationship Manager – all to close the gap to your financial milestones.
6. Capitalise on low interest rates
Interest rates are at their lowest in years, making it prime time for homeowners to refinance their home loan. Refinancing your home loan refers to changing your home loan from one provider to another, onto a different home loan that charges lower interest rates. You can also reprice your home loan, which involves switching to a different home loan package with the same bank.
Why should you go through the hassle of refinancing? The savings on your property is hardly pocket change – they could add up to thousands of dollars in savings.
New homeowners can also take this opportunity to lock in your home loan with a bank. When taking up a home loan, be sure you’re using a savings account that rewards you with additional interest to earn maximum returns.
Enjoy preferential interest rates, with legal subsidy when you refinance your mortgage loan as a Citigold Client! T&Cs apply.
7. High-yield savings accounts for your emergency funds
Before you start running, you have to learn how to crawl. This means having the discipline to save sufficient emergency funds before you start investing. Emergency funds help to provide the safety net you require in case you find yourself out of a job.
You also have to pick the right savings account to stash your cash — one that rewards you with decent interest, in order to protect your savings from getting eroded by inflation.
So why stick to a savings account that pays a mere 0.05% p.a. interest, when you can opt for a higher-yield savings account?
Let’s take Citi Wealth First Account as an example of one such savings account which rewards you with bonus interest for your financial decisions and banking relationship.
By spending $250 per calendar month on your Citibank Debit Mastercard and increasing your account’s average daily balance by at least $3,000 per month, you can earn yourself a bonus 0.4% p.a. in interest.
To earn an additional 0.8% p.a., you can make a conscious effort to invest, insure or borrow with Citibank.
The higher interest rates apply on the first $50,000 of your balances in your Citi Wealth First account. However, if you’re a Citigold client or a Citigold Private Client, this goes up to the first $100,000 or first $150,000 respectively. Imagine checking the boxes of each criteria, you may earn up to 2.8% p.a. on your savings.
8. Set up a regular savings plan
Growing your investment portfolio takes time and effort. However, you can make investing easy to achieve by setting up a regular savings plan (RSP). A RSP involves making a standing instruction to ensure that a fixed amount of money is invested into a specific product each month, regardless of market conditions.
RSPs involve a strategy known as dollar-cost-averaging and helps investors to take away the emotional aspect of investing. A RSP ensures that you regularly make the investments, thereby growing your portfolio slowly and steadily over the years. This can build your portfolio silently in the background as you continue to beef up your knowledge on investing.
Bonus: Build your wealth with Citigold
Here’s how you can take your wealth to the next level by being part of Citigold:
- Wealth insights to better plan your next move: Analytical market trends to help you stay tuned to wealth growing opportunities
- Access a host of liquid assets and investments: Various savings and deposit accounts, plus investment vehicles to achieve financial goals according to your risk profile and time horizon
- Personal ‘concierge’ for your financial goals: An on-demand Relationship Manager to consult on your unique financial standing and craft the perfect portfolio
- Receive up to $6,826 cashback: An immediately rewarding experience if you join Citigold in 2021! Terms and conditions apply.
Citigold and Citigold Private Clients also enjoy access to the beautiful Citi Wealth Hub, a newly opened wealth advisory hub located in the heart of Orchard Road made specially for Citigold clients to access a team of experts in one single location. Wealth advisory aside, you’ll also be treated to gourmet coffee, TWG tea and signature chocolate bon bons made exclusively for Citi Wealth Hub.
Check out what Citi Wealth First has to offer and if Citigold might just be what you’re looking for!
This article is written in partnership with Citibank.
Read these next:
Fixed Deposit vs Singapore Savings Bond (SSB) vs Savings Account: Where To Put Your Money?
Guide To Singapore Savings Bond (SSB): Is This The Right Investment For You?
Uniquely Singaporean Things We Do To Accumulate Wealth
Pros And Cons Of Keeping Your Savings In Your CPF Special Account
Dollar-Cost-Averaging vs Lump Sum Investing In Singapore: Which Should You Choose?
By Ching Sue Mae
A flat white, an adventure-filled travel and a good workout is her fuel. This Manchester United fan enjoys sharing knowledge on personal finance while chasing the dream of financial independence.