8 Ways To Accelerate Your Wealth And Earn More Money In Singapore
From self-discipline to safe and stable investment options, here are eight ways you earn more money through savings and planning
As we spend most our lives hustling, most of us bank on financial independence, retire early (FIRE) to get us through the roughs of working long hours, and even on the weekends. But even as we strive to earn more money, rising costs of living has made this difficult – save for those who know how to invest intelligently and aggressively.
But if you've been a hustler all your life, don't fret, because there are other ways you can make money work harder for you. Here are eight ways to achieve your financial independence dream in Singapore:
Growing your wealth starts with a good savings habit.
Online shopping has made it far too easy for us to ‘add to cart’ and check out at the tap of a few buttons. Rather than chase the minimum monthly spends required to earn yourself higher cashback, remember this: a dollar not spent is a dollar saved.
Besides helping you to spend within your means, a good savings habit can also help you earn more money through higher interest rates. For example, an additional 0.2% p.a. bonus interest for increasing your average daily balance by $3,000 or more a month.
Savings are the bedrock that gives you the financial muscle to take on investments with higher risk, to treat yourself to luxuries every once in a while or even to take a leap of faith and start your own business.
Start building your investment portfolio. This can include growth stocks that are primed for capital gains, blue chip stocks or real estate investment trusts (REITs) that are known to reward investors with high dividends.
However, purchasing individual stocks comes with higher risk and volatility. Besides purchasing single stocks, you can consider investing in a basket of stocks via an ETF or unit trust instead.
Unit trusts, also known as mutual funds, are funds that pool together investors’ money to make investments via a fund that is managed by a fund manager. These funds can be sector, geography, asset type specific.
Unit trusts can offer higher returns compared to the lower risk fixed income products. With unit trusts, you can also select the fund that best suits your investment needs. For example, if your portfolio is lacking exposure to Chinese companies, you could select a unit trust that invests in the leading companies in China.
Bonds, also known as fixed income products, make a popular investment type because they are a low risk product that offer stability, albeit with modest returns. Bonds are often added to portfolios to provide a balance to equities, lowering the overall risk of the portfolio. When you purchase a bond, your principal amount and returns will be distributed periodically until the bond’s maturity.
There are various ways you can invest in bonds in Singapore. You can purchase a bond directly from the market, or when bonds are first launched. You can also purchase a bond Exchange Traded Fund (ETF), fixed income funds or even government bonds, such as the Singapore Savings Bonds (SSB) that are issued and backed by the Singapore government.
With a minimum of S$250,000 investable assets, you might want to start a wealth relationship to enjoy privileges that an investor on the street might not. This could include lower sales charges, preferential interest rate, wealth advisory and a dedicated wealth manager to serve your financial needs.
Interest rates are at their lowest in years, making it prime time for homeowners to refinance their home loan. Refinancing your home loan refers to changing your home loan from one provider to another, onto a different home loan that charges lower interest rates. You can also reprice your home loan, which involves switching to a different home loan package with the same bank.
Why should you go through the hassle of refinancing? The savings on your property is hardly pocket change – they could add up to thousands of dollars in savings.
New homeowners can also take this opportunity to lock in your home loan with a bank. When taking up a home loan, be sure you’re using a savings account that rewards you with additional interest to earn maximum returns.
Before you start running, you have to learn how to crawl. This means having the discipline to save sufficient emergency funds before you start investing. Emergency funds help to provide the safety net you require in case you find yourself out of a job.
You also have to pick the right savings account to stash your cash — one that rewards you with decent interest, in order to protect your savings from getting eroded by inflation.
So why stick to a savings account that pays a mere 0.05% p.a. interest, when you can opt for a higher-yield savings account?
Growing your investment portfolio takes time and effort. However, you can make investing easy to achieve by setting up a regular savings plan (RSP). A RSP involves making a standing instruction to ensure that a fixed amount of money is invested into a specific product each month, regardless of market conditions.
RSPs involve a strategy known as dollar-cost-averaging and helps investors to take away the emotional aspect of investing. A RSP ensures that you regularly make the investments, thereby growing your portfolio slowly and steadily over the years. This can build your portfolio silently in the background as you continue to beef up your knowledge on investing.
Text: Ching Sue Mae/SingSaver
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