Income on various asset classes

I had received bank statements covering period ending 31 December 2012. In these statements, banks disclosed total interest amounts paid on your accounts for whole of last year.

What did I get by way of interest income? $6.83, $6.72, $14.35, $145.44 for my various savings and autosave accounts. The rates of return range 0.05% to 0.15%. Really pathetic.  This is the environment of low interest rates for your money placed with banks.

Fixed deposits fared better than savings accounts but still low return. Rate of return was 0.98% per year.

Structured deposits with financial institutions followed next with return ranging 1.0 to 2.25% per year.

Investing in bonds and preference shares on Singapore Exchange gave returns of between 2.15% to 4.7%.

Dividends received on Singapore equities provided a return of 3.42%.

There is a strong reason for investors to park some money in dividend-paying equities. One cannot ignore equity as an asset class despite it being volatile. It does not make sense to off-load all equities when prices are good in the hope of buying them again at low prices. Firstly, investors cannot time entry and exit from stock market for optimum capital gains. Secondly, different company stocks are not equal and do not move the same way. It will be much better to keep some stocks with good dividend paying records in your portfolio and not to sell them. Then wait passively for these stocks to pay you dividends over the years. This beats the bank interest rates anytime.

Copyright © 2013, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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