Proper financial planning is important if you wish to formulate and achieve your financial goals; goals may include a car, a house, education, retirement planning etc. One way of meeting your financial goals is by choosing suitable avenues for investment. Today, there are many different investment products available for you to choose from. Lets explore a few:
Unit Trust Funds – A Unit Trust Fund pools money from investors and invests it in a portfolio of assets according to the fund’s stated investment objective and investment approach. A unit trust is a fund which adopts a trust structure. The pool is managed by a team of full time professionals and a trustee is appointed to protect the interests of the unit holders.
Real Estate Investment Trusts – REITs are instruments that offer investors the opportunity to invest in a professionally managed portfolio of real estate assets. You can invest in a REIT by purchasing units of the trust, in a manner similar to shares of a common stock.
Structured Deposits – A structured deposit combines a deposit with an investment product. The return on a structured deposit depends on the performance of the underlying financial asset, product or benchmark.
Gold and Silver Savings Accounts – A Gold Savings Account (GSA) or a Silver Savings Account (SSA) enables a customer to buy and sell gold or silver without physical delivery. Holdings of gold and silver are usually recorded in grams (for gold) or ounces (for silver) and purchased quantities are credited to the holdings account and sold quantities are debited from the holdings account.
You can also use the Ordinary Account Balance and the Special Account Balance (from 1 July 2010, only monies in excess of $20,000 in the Ordinary Account and $40,000 in the Special Account can be invested) in your Central Provident Fund account to invest in gold (not in silver) via Gold Savings Accounts subject to the bank’s rules and the rules of the CPF investment scheme.
Insurance cum Investment products – Whole Life Insurance provides life-long protection for your dependants in the form of a death benefit upon the death of the insured.
Endowment Insurance products combine savings with an insurance protection component and are often marketed to help you meet a financial goal like paying for your children’s education, or to build up savings over a fixed policy term.
Insurance-linked Investment Policies have both life insurance and investment components. Your premiums are used to pay for units in investment–linked sub-fund(s) of your choice. Some of the units you buy are then sold to pay for insurance and other charges, while the rest remain invested.
Insurance products may also provide tax relief.
Stock market instruments – You can also choose to invest through instruments like stocks, bonds, futures, options, exchange traded funds etc. Before you start trading in equities and other stock market securities you will require a securities account or a CDP account with the Central Depository Pte Ltd (CDP) for holding your shares and for settlement of trades.
You will also require a Brokerage or a Stock Trading Account to conduct your trading. Your trading account needs to be linked to your CDP account before you start trading. Generally your stock broker will help you open both a Brokerage and a CDP account.