Short term investment advice

[powersuper]

Hi,

Wonder if anyone can advise?

Im saving up for my future house, and I have a lump sum. Im self employed, so what I'm holding is cash, and I have no plans to place it into CPF.

I'm planning to get a HDB, assuming it's $500k, so I plan to save $100k in cash to settle this payment.

The reason why I want to save the downpayment for my flat is because since I'm self employed, I want to be able to have piece of mind to have my funds park elsewhere after saving the first 20% in cash (remember that I have no CPF).

Now I also understand that for HDB I only need to pay 5% on booking and then the following 15% only on TOP.

My question is this:
1. Currently for my lump sum, what should I do with it? Thinking of putting in a 1 yr fixed D at 1.3%.

2. Also,for my 100k target, 75k (15% of my downpayment) will only be needed on TOP, so I have maybe 4 - 5 yrs to park this sum aside. What should I do with it?

Thanks all!

In sg context there is not a lot of options for you. The first 25k you need it soon put in a 1 year FD is definitely the way to go.

For the remaining 75k my only advice is to split them into 4-5 portions buying a combination of stat board, government or AAA blue chip company bonds expiring in 2018-2019 time frame.

But with the current super low interest environment, don't expct too much. The yield to maturity of these bonds are all <3% now also.

Do not buy strange things like FX deposit, structured products, unit trust or stocks as these are unpredictable and might be bad timing when you need it. Also avoid products by insurance agents as these usually incur huge termination cost if you need to take out earlier.

[Kopi]

If more than 2 years, go for Endowment. Safe heaven for sure, but expect only about 2%++ , forget about the predicted 4-5%. The real rate that most people get is 2%+.

This is the lazy way, a hardworking way is FD a portion and the rest in various bond funds.

[propertyhomeinvest]

Hi! Why not try to invest in condos. It is just like any business, you will have competition that's why designing your unit is very important. And make sure your unit has one unique feature and this can be as simple as a big sofa, a bigger LCD TV and etc. I'm planning to buy a Highline Residences Condo. It is spacious and the amenities is quite very good. However, it is important to make a background check first!

[Kopi]

If you want something safe, please avoid certain investment.

Practice your own caution TS "powersuper" . you are warned!

[lazyplane]

Originally Posted by powersuper

Hi,

Wonder if anyone can advise?

Im saving up for my future house, and I have a lump sum. Im self employed, so what I'm holding is cash, and I have no plans to place it into CPF.

I'm planning to get a HDB, assuming it's $500k, so I plan to save $100k in cash to settle this payment.

The reason why I want to save the downpayment for my flat is because since I'm self employed, I want to be able to have piece of mind to have my funds park elsewhere after saving the first 20% in cash (remember that I have no CPF).

Now I also understand that for HDB I only need to pay 5% on booking and then the following 15% only on TOP.

My question is this:
1. Currently for my lump sum, what should I do with it? Thinking of putting in a 1 yr fixed D at 1.3%.

2. Also,for my 100k target, 75k (15% of my downpayment) will only be needed on TOP, so I have maybe 4 - 5 yrs to park this sum aside. What should I do with it?

Thanks all!

Hi,

Let me see if i understand your above points correct

1. Future purchase - HDB / property
2. Current asset - Cash. Estimated 100k n required only in 4-5 yrs
3. Looking for safe and good return.

This is what i will do :

1. Do CPF top up for both myself . You mentioned you were self employed.
Why ? Good interest 2.5% and very safe, and later when u buy your HDB, your CPF OA gets drained completely anyway.

I know the above may get alot of people saying CPF is no good etc. But think about it. You r getting good interest and u dont face the same issues as what people are saying that your money is locked up. (your money is going to the purchase of the house! )

2. Consider the above for your spouse as well or family member whom you are buying the property with

3. Point 1&2 should be able to park 50k at least . The other 50k, it depends.
You think you can make good returns in stock market ? Able to ride out the need to liquidate at a loss ? Well, then use the other for that. If i am in your shoes, i will do around 10~20k on this (max). I will try for 2 years. If i cant get decent returns or even make loss, i will liquidate and do option 1&2 abov.

4. Remaining 30k, lock in FD. I think insurance linked capital products FD should be the best interest rate . but need around 4~5 years to get good returns. Why insurance FD and not CPF ? Well, this is bucket can also help provide the temp cash when required unlike CPF and insurance is insurance. No one know what happens and by buying insurance FD , you are essentially buying an insurance product that can provide the flexibility if your life goals change. Revisit this amount if you realise you can do well in pt 3.

Ok.. that my contribution for the above. Have a fun journey !