Where Will You Put 50K?

Where Will You Put 50K? Recently, one of my readers asked if I have SGD 50K right now, how would I diversify it? Like the old saying goes “Never put all the eggs in one basket“.

Diversification means that you should allocate your investments among various financial instruments, industries, and other categories based on your available budget. This reduces the risk of losing all your capital in the event the investment suffers a permanent or temporary loss.

To diversify, we need to consider our risk appetite. Are you a low risk, medium risk or high risk investor?

I consider bonds, fixed deposits, money market funds (unit trusts) and short term endowment plans as low risk financial instruments. Since they are considered as low risk, the returns are also lower.

High risk financial products which provide you with higher returns are stocks, Forex and cryptocurrency. There are also unit trusts with a higher return but the volatility is higher which means the unit prices can fluctuate a lot.

I am a medium risk investor. As such, I will seek a balance between a mixture of low risk and high risk financial products. In the event of an unpredictable stock market crash, I know that I will not lose all of my capital.

So, let us come back to the question on “Where Should I Put My 50K?”.

I will choose to put 10K into Singlife Account, 20K into Dash-EasyEarn and invest the rest of the 20K in the Singapore stock market.

Singlife Account

Singlife Account is an insurance savings plan that was launched in November 2019. There are no monthly fees, no regular top ups required and no lock in period.

Why do I only place S$10,000 in the Singlife Account? The reason is because only the first S$10,000 earns you a return of 2.5% per annum.

Singlife Account Scenario

Dash EasyEarn

Similar to Singlife Account, there are no monthly fees, no regular top ups required and no lock in period. I will place the next S$20,000 in the Dash EasyEarn which earns you a return of 2.0% per annum for the first year.

The maximum deposit allowed for Dash EasyEarn is S$20,000. If you make the maximum deposit of S$20,000, you will receive a return of S$400 for the first year.

Dash EasyEarn

Stock Investment

For the balance of S$20,000 that I have, I will buy 4 stocks or REITs in the Singapore stock market. The investment amount into each stock is limited to S$5,000 each.

I am a medium risk type of investor and thus I never looked at stocks with dividend yield more than 10%. Below are the criteria that I used to identify dividend stocks.

  • Current Yield (%) >= 5 and <= 10
  • Price / Earnings <=20
  • Price / Book <= 3
  • Market Capitalization >= 1B

Refer to What Stocks To Buy In August 2020 for the list of stocks that was identified by the screener.

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