DBS – SCAPE – Issue # 3

Campus Articles || DBS & *SCAPE || DBS & *SCAPE Financial Literacy # 3

In the last issue, we asked you to submit your burning questions for the professionals at DBS. We’ve heard you. Campus has sent the intrepid Ah Boon to meet up with the experts and get your top questions answered!

A wide range of investments is available.

As you are just starting out, investing in unit trusts (aka mutual fund) may suit your needs. A unit trust pools money from many investors to be invested in a variety of assets in order to meet a specified objective. Here are a few good reasons to start with unit trusts:

LOW COST TO START – With a regular savings plan, you can begin investing with $100. At your age, you may not have the lump sum capital you can call your own to do other types of investments.

INVESTMENT OPTIONS – Unit trusts allow you to conveniently invest in international stock markets which you don’t have easy access to with other investments.

EXPERT RECOMMENDATION – Instead of playing guessing games, unit trusts are managed by professional fund managers. You’ll benefit from their expertise and full time attention to investing in the funds.

All investments are subject to risks though. Some examples include market risks, exchange rate risks, equity risks, credit risks. Keep in mind, market forecasts and past performances of a unit trust are not necessarily indicative of its future performance.

You need to be prepared to lose the amount you have invested. Before investing, seek advice from a financial adviser to be aware of all the risks involved and ascertain your financial situation, investment goals, and expected risk tolerance.

Given that there are not many pure gold funds in the market, you can choose to invest in unit trusts that buy the equities of gold companies, or those that trade in gold futures attempting to predict the future price of gold.

Some financial institutions also offer exchange-traded funds that track the returns of a specific index, such as London Gold spot price. Always consider the long-term return when it comes to such
investments.

All we can say is life is unpredictable, so it is imperative to save for a rainy day. You can start by setting aside emergency funds – aim to have 3 to 6 months of salary income in your savings account. You may also minimize the risk of making huge losses by maintaining a diversified investment portfolio that comprises a mix of cash, bonds, stocks and commodities across sectors and regions. Besides reaping the benefits of good performers, a wide selection of asset classes also cushions the negative impact of poor ones.

Good to hear that you’re on top of things!

Buying your insurance policy a few years back may mean your financial objectives and situation have changed. As such, we highly recommend for you to review your insurance portfolio on a regular basis (at least annually) with a financial adviser. You may then evaluate whether you need an update in coverage or benefits. Hence whether to buy another insurance policy depends on your current financial situation.

A Savings Account is your first step to financial planning and a whole new world of kaching$! You can open a Savings Account with or without a cheque book (the latter usually requires a higher minimum initial deposit and maintenance of a higher average daily balance). You can go paperless and opt for e-statements, go shopping with a debit card linked to your account, or even use internet banking and mobile banking to monitor your expenses, pay your bills, transfer funds and make investments, amongst other things.

When setting up an account, first determine your financial goals, formulate a plan and review it regularly. Discipline yourself to put aside a sum of money each month for savings and track your spending. Kick start your plans to invest when you are financially ready and have insurance as protection. With this, you can have a secure balance for your guilty pleasures. Financial planning isn’t a hassle: it’s a strategy to help you manage your kaching$.

This is for information and general circulation only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek advice from a financial adviser regarding the suitability of the investment product, taking into account the specific investment objective, financial situation or particular needs of each person before making a commitment to purchase the investment product. In the event an investor chooses not to do so, he should consider carefully whether the investment product is suitable for him. The opinions expressed are subject to change without prior notice. DBS accepts no liability for any loss whatsoever arising from any use of or reliance on the opinions expressed. Singapore dollar deposits and monies in SRS accounts held by insured depositors are insured by the Singapore Deposit Insurance Corporation for up to S$50,000 in aggregate across specified accounts for each insured depositor under the Deposit Insurance and Policy Owners’ Protection Scheme Act 2011. Deposits under CPF Investment Scheme and CPF Minimum Sum Scheme are separately insured for up to S$50,000 in aggregate for each insured depositor. Foreign currency deposits, structured deposits and investment products are excluded from Deposit Insurance coverage.

Campus Articles || DBS & *SCAPE || DBS & *SCAPE Financial Literacy # 3