Advice we gave to our daughter on financial matters

We want our daughter to be self-dependent financially. Therefore we share our knowledge with her to set her on the path of financial independence.

The values of thrift and savings are the starting point. Next, with savings in the banks, what should she do to grow these savings? Current savings interest rate is way below inflation rate, hence there is a need to deploy these savings for higher returns.

Investing in equities and exchange traded bonds

When she was 21 years old, she had an on-line trading account and CDP account to trade in stocks and shares.

The shares she bought were mainly dividend stocks, exchange traded bonds, Reits and ETFs with well-established names. Investments include Singtel, Comfort Delgro, Mapletree Commercial, Nikko AM STI ETF, SPDR STI ETF, Astrea IV PE bonds, Temasek bond, among others.

Regular Savings Plan (RSP)

In June 2017, she applied for POSB Invest-Saver, a regular shares savings plan. Since then she had been putting $100 each month to buy Nikko AM STI ETFand another $100 each month to buy ABF Singapore Bond Index Fund.These two funds provide dividend and interest income.

Singapore Savings Bonds

She invested in Singapore Savings Bonds (SSB) when the interest rates were better, ie three tranches with start dates November 2015, January 2017, July 2018. Held-to-maturity interest rates are 2.78% pa, 2.18% pa, 2.63% pa respectively.

Insurance

My daughter is covered under

  1. GE’s Supreme Health Integrated Shield Plan (IP).
  2. Living Assurance Policy with CRB
  3. Whole life insurance with CB
  4. NTUC Income SAIL single premium plan

Concluding Remarks

By writing this blog, it is hoped that once someone has started work, it is important to manage his/her financial affairs in a responsible way. Investments need not be a gamble. There are investments that carry lower risks. Though equities are riskier assets, stocks purchased could be blue chip stocks with a history of corporate governance and a history of paying out dividends. Because, young people started early in investing, there is a longer time horizon to adjust the portfolio to mitigate the risks of stock investing.

My further recommendation is not to incur personal debts like unpaid outstanding credit card bills. Bank debit card serves equally well instead of credit card. Bank interest on unpaid credit card bills is too expensive.

Copyright © 2018, 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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