There are many products out there. So where do a zero-knowledge person in investing starts? There is no right or wrong answers on which products to place your money on. As mentioned in my third post on Financial Freedom, it all depends on understanding the products and gauge whether that particular products fit into your risk appetite.
Time deposits are low risk and pay extremely low interests rate. It is ideal for someone who doesn't like to take risk and want something that earns slightly higher than placing them in the bank saving account.
Foreign currency deposits are another type of financial products which one needs not spend time monitoring. One would need to choose wisely which foreign currency to place your deposits. For sure you would not want to place your deposit in a depreciating currency. Another consideration is the forex loss/gain when it reaches maturity. You can consider AUD as it has been maintaining it's interests rate about 4% to 4.5% over the years (please note this is in context of taking Singapore as comparison).
Other low risk products will be Singapore Government Bond, Statutory Board Bond and Singapore Government Securities. As we all know, Singapore Government are quite trustworthy and they will not let it collapse. However they ain't paying coupon rates as good as 10 or 20 years ago.
Next in line will be unit trust and structure deposits. You would need to know what are the underlying products of unit trust and structure deposits. Are these products tag to blue chips, currencies, commodities, gold, ETF, stocks etc? Are they looking at Asian market, European market etc.
Trading shares as an investor (long-term) or trader (short-term). If you buy shares for dividend, then you may have to study the annual report, know the industy etc to ensure the company will pay you dividend later. Do note that the annual report may not longer be reliable for deriving those important ratios for company whose business nature is on project basis. The new accounting standards require recognition of revenue upon completion and no longer on percentage recognition, hence will result extreme flucuation in the margins. It may affect the ratio computation and trend may not exist for investor to make wise decision.
Forex trading has been getting popular recently in Singapore. This is a highly risky product. I would advise anyone who are interested in forex trading, to attend some classes first before entering into this. Otherwise you would regret. You can consider attend some classes from Terraseeds where the trainer will tell you the truth about the pros and cons on forex trading.
You may consider the following products with 1 being low risk and 10 being high risk.
- Time Deposits
- Foreign Curreny Deposits
- Singapore Government Bond
- Statutory Board Bond
- Singapore Government Sercurities
- Unit Trust
- Structured Deposits
- Corporate Bonds
- Shares Trading
- Forex Trading
The above order may differ due to economic situations locally/globally and personal risk appetite. As such it is for reference only. Don't rush into it just because people around you are into it. Take your time to understand the financial products even if it means giving up an opportunity for making profit. Remember the MARKET IS ALWAYS THERE!
No comments:
Post a Comment