Doing Good with Your Money: What is Impact Investing?

Impact investing is all about putting your money to work for good. It’s an investment strategy where the aim isn’t just to make a profit but also to create positive social or environmental change.¹

Unlike traditional investments, which focus purely on financial returns, impact investing looks to strike a balance between earning money and making a difference.

The main goal is to back projects and organizations that address social and environmental issues while still providing solid financial returns.

Examples of Impact Investing Areas

Impact investing spans a wide range of sectors and activities, including:

Renewable Energy: Solar, wind, and other renewable energy projects to combat climate change.
Affordable Housing: Supporting housing projects that provide affordable living options for low-income families.
Healthcare: Initiatives that improve access to medical services in underserved communities.
Education: Educational programs and technologies that enhance learning opportunities for all.
Microfinance: Financial services to individuals and small businesses who lack access to traditional banking.
Sustainable Agriculture: Farming practices that protect the environment and support local communities.

Impact investing has recently gained momentum as more investors seek to align their portfolios with their values and contribute to societal and environmental progress.

Impact Investing in Singapore

Singapore, known for its strong financial sector, has many opportunities for impact investing.

Here are some areas where you can make a difference as an impact investor:

Renewable Energy Projects

Investing in renewable energy projects like solar and wind farms can help Singapore meet its sustainability goals based on the Sustainable Development Goals for 2030 (SDG).²

These projects reduce carbon emissions and promote the use of clean energy. By investing in solar panels, EV cars, and other green technologies, you can help Singapore move towards a more sustainable future.

Social Enterprises

According to the British Council’s global social enterprise surveys, there are an estimated 2,660 social enterprises in Singapore.³

Social enterprises in Singapore tackle issues like unemployment, poverty, and healthcare accessibility. These enterprises support businesses that aim for both financial sustainability and positive social impact.

The enterprises often create jobs for marginalised communities, develop affordable healthcare solutions, and innovate products and services that benefit society.

Green Buildings and Sustainable Real Estate

Green building projects and sustainable real estate developments focus on energy efficiency and eco-friendly materials. Investing in these projects helps reduce the environmental impact of urban development.

Singapore has ambitious green building targets as stated in the Green Plan 2030,⁴ making this sector ripe for impact investments. Sustainable real estate projects aim to reduce energy consumption, use renewable resources, and enhance the overall sustainability of urban areas.

Green Bonds

Green bonds are a popular way to invest sustainably in Singapore. These bonds are issued specifically to fund projects that benefit the environment. Singapore has been actively promoting green bonds through various initiatives, including the Monetary Authority of Singapore’s Green Bond Grant Scheme.⁵

This scheme offers financial incentives to encourage the issuance of green bonds, making it easier for companies to raise funds for eco-friendly projects. Investing in green bonds is a great way to support sustainability while aiming for solid financial returns.

Evaluating the Impact of Your Investments

Before you start with impact investing, it’s important to do your research. Look at how your investments might help society and the environment and make sure they match your own goals. Talking to financial advisors who are familiar with sustainable finance can be helpful. They can point you in the right direction according to your goals and values.

Questions to Consider:

What are the primary social or environmental issues the investment addresses?
How will the investment measure and report its impact?
What is the expected financial return, and how does it compare to traditional investments?
Does the investment align with your values and goals?

Final thoughts

Impact investing offers a unique opportunity to make your money work for both profit and purpose. By investing in projects and organisations that tackle social and environmental challenges, you can generate financial returns while contributing to a better world.

Whether you’re interested in renewable energy, education, or sustainable real estate, impact investing in Singapore provides a range of opportunities to align your investments with your values.

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References

A Beginner’s Guide to Financial Planning

Why Do You Need a Financial Plan?

Everyone aspires to live their ideal life one day, whether it’s early retirement, pursuing the exciting path of entrepreneurship, or travelling the world.

To turn them into reality, strategic financial management is key.

A financial plan serves as a roadmap you follow to get from the current Point A to your envisioned goals at Point B, having money work for you rather than against you along the way.

While financial planning may initially overwhelm beginners, it is a critical step toward securing financial success and meeting your short to long-term goals.

In this blog, we simplified the process of personal financial planning for those who are new to this journey. Read on to get started!

Understanding Your Financial Plan

To craft your financial plan, an important first step is to gain a comprehensive understanding of where you want to be and where you’re currently at.

This involves a two-fold process: goal setting and evaluating your current financial situation.

Setting Your Goals

Begin by envisioning your short-term and long-term financial goals.

Here are some prompts to kick-start your investment journey:

What do you want to achieve in the next few years?
What about the next decade or more?
What does your ideal lifestyle look like?

Whether it’s buying a home, funding your child’s education, or retiring comfortably, when you define your goals, you mark an endpoint on your roadmap that you can head towards.

Consider applying the SMART criteria for goal-setting: Specific, Measurable, Achievable, Relevant, and Time-bound. This ensures your goals are clear, quantifiable, realistic, aligned with your values, and have a defined timeframe.

Well-defined goals provide a clear purpose for your financial decisions, guiding your investment choices, savings strategies, and overall financial behaviour.

Assessing Your Current Situation

Next, take a comprehensive look at your current financial status.

This includes assessing your:

Cashflow
- Income: Salary, side income, and any other money inflows.
- Expenses: Monthly bills, groceries, and discretionary spending.
Net Worth (Total liabilities – Total assets)
- Asset: Savings, investments, retirement funds, etc.
- Liability: Loans and credit card debt, etc.

Knowing where you stand enables you to tailor your financial plan to address specific needs and challenges. It helps identify areas that require attention and determine your countermeasures such as debt reduction, expense management, or optimising investment strategies.

From here, you can personalise your financial plan to bridge the gaps between your current standing and goals.

5 Things to Consider in Your Financial Plans

In this section, we listed a few crucial building blocks that form the larger foundation of financial planning to give you a headstart.

1. Emergency Funds

Establishing an emergency fund is like creating a financial safety net.

It ensures that unexpected expenses, such as medical emergencies or unfortunate layoffs, do not derail your progress toward your financial goals.

Given the high cost of living in Singapore, try aiming for three to six months’ worth of living expenses.

It adds a layer of stability, allowing you to stay on course with your planned savings and goals.

2. Debt Management

Dealing with debt is a common challenge for beginners in Singapore.

These liabilities might include credit card debt, student loans, and mortgages.

Prioritise paying off high-interest debts to effectively manage your financial situation. High cost of living aside, high-interest debts are another factor draining your financial resources.

So, find ways to effectively reduce your debt, and soon you’ll be able to allocate more funds toward your goals.

3. Investment to Generate Funds

Smart investing has the potential to grow your wealth and generate additional income for your goals.

In Singapore’s diverse financial landscape, whether it’s through stocks, bonds, or other investment vehicles, allocating your funds wisely can generate consistent long-term returns that you contribute towards your financial goals.

By aligning your investment strategy with your risk tolerance and financial objectives, you maximise the impact on your long-term financial plan.

Check out our basic guide to investing to learn more about the different investments offered in Singapore.

4. Insurance Coverage

Insurance serves as a protective shield against unexpected financial challenges.

There are three main types to consider:

Life Insurance: Provides financial support to loved ones in the event of your passing.
Health Insurance: Safeguards against medical expenses, such as MediShield Life that covers basic healthcare costs.
Property Insurance: Protects your home and assets from unforeseen events like fire or theft.

These insurances mitigate the financial impact on you due to unforeseen events such as illnesses, accidents, or property damages..

With an added layer of security, you can pursue your goals with confidence.

5. Tax Planning

Tax planning is a proactive approach to minimise your tax liability.

You can optimise your tax situation and leave more resources at your disposal by strategically managing your income, deductions, and credits.

Because reduced tax burdens free up more funds for savings, investments, and achieving your financial goals.

With smart tax planning, you can enhance the efficiency of your overall financial plan, charting a smoother route to your goals.

When Should You Start?

Embarking on the journey of financial planning for the first time may seem daunting, but it’s a big step towards reaching your ideal life and bigger goals.

If you want to get more serious with your financial future, consider talking to a financial advisor in Singapore who can provide personalised guidance and plans based on your financial goals.

Financial planning is a continuous process, and with each step, you gain greater control over your financial destiny.

The key is to start now, stay committed, and adapt your financial plan as your life evolves!

We hope this article helped you in your investment journey. Share this with a friend who might need it too.

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_{The views expressed in this media do not necessarily reflect the views of PFPFA Pte Ltd (“PFPFA”). The information provided herein is intended for general circulation and not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use will be contrary to local laws or regulation. You should also note that the information presented does not have regard to the specific investment objectives, financial situation or the particular needs of any specific individuals; and therefore, may not be appropriate to your individual needs. You should seek the advice of your financial adviser representative or a professional before making any commitment to purchase or invest in any investment product.}

Smart Saving Tips To Practise in Your 20s

Stepping into your 20s might feel like a mix of exciting possibilities and confusion. You’re learning about yourself, making big decisions, and dealing with money matters too.

The truth is most young adults find it challenging to save and build their wealth. So, you’re not alone. However, with strategic planning and smart decisions, you can steer clear of potential financial pitfalls in the future.

In this article, we’ll talk about five saving habits and one bonus tip you can practise in your 20s that will make a significant impact on your financial future.

1. Build a Savings Mindset

Developing a savings mindset means shifting away from the ‘spend now, think later’ approach and looking at saving as an investment in your future well-being.

One way to get into the habit of saving is to have a clear goal to work towards¹, such as saving S$6000 for your wedding.

Then, view your savings as a regular monthly expense. Set aside a fixed portion of your income before spending on anything else.

You can also track your weekly income and expenses to help you stay on top of your saving goals.

A saving mindset will take time to develop but it will no doubt lead to a more secure financial future.

2. Budget Smarter with Technology

Budgeting is like having a roadmap for your money. It helps you see how much you’re earning, where your money is going, and how much you can save.

However, most of us tend to struggle with budgeting because keeping track of our expenses with old-school spreadsheets can be a headache.

But budgeting apps, like Household Account Book, Spendee, Wally, and Dobin², have made tracking expenses easier.

Budgeting apps categorise spending, helping you identify areas where you can potentially save money. They also allow you to set realistic budgets for different expense categories, making it simpler to manage your finances effectively.

Whether it’s groceries, entertainment, or utilities, you can use budgeting apps to help you stay on track with your financial goals.

3. Automate Savings and Payments

Setting up automatic payments can be a real lifesaver, especially if you have many bills due each month. It saves you time and keeps you from stressing about remembering different due dates.

Consider automating payments for loans, bills, and regular expenses through your bank. With automation, you could tackle high-interest debts first, which will significantly reduce your overall interest charges.

Additionally, you can run your savings on autopilot by scheduling automatic transfers. This way, you’re consistently and effortlessly building your savings.

However, it’s important to always review your automatic payments regularly. Cancel outdated subscriptions or services that you no longer use to free up more cash.

4. Negotiate Your Loan Terms or Bills

Think about it this way: if you can handle hearing a “no”, there’s no harm in asking for a discount. You might not realise it, but many bills can be negotiated.

Negotiating your bills can significantly impact your finances, helping you keep more money in your pocket. Start by negotiating interest rates on loans, especially home loans, as banks might have better rates to offer.

Additionally, do not hesitate to reach out to your service providers to discuss potential discounts. Landlords and utility companies may also be open to negotiation, which can result in significant savings that add up over the months and years.

Remember, every dollar saved is a dollar you get to keep.

5. Take Advantage of Tax Benefits

To maximise your tax benefits and save more in your 20s, understand what tax breaks are available to you. Find out tax deductions or credits that apply to you, such as educational expenses or life insurance reliefs.

You can put as much as you can into tax-friendly accounts like the Supplementary Retirement Scheme (SRS) or Central Provident Fund (CPF). Saving into tax-friendly accounts can lower your taxable income or make sure your interest is tax-free³. This way, you’re not only paying lower tax but also building a solid financial base for your future.

With some careful planning, you can make the most out of your income.

6. Bonus Tip – Invest Wisely

In your 20s, your age is your edge when it comes to building wealth through investments.

Because starting early means your money has more time to grow and work for you.

However, it’s important not to jump into the market without a well-thought-out plan.

There are different investment options available locally, such as mutual funds or ETFs (exchange-traded funds). You can also take advantage of the various CPF investment schemes, which offer several ways to diversify your money that would fit different risk tolerances. However, it’s always important to consider your financial goals, capacity, and risk tolerance before investing.

Check out this introduction to investing and learn how to optimise your CPF savings for more tips.

Final Thoughts

When you’re in your 20s, the financial landscape can seem daunting. But it’s also filled with opportunities for smart financial moves.

We hope that with these tips, you will be able to make good money choices, build a strong financial foundation, and reach your money goals.

Remember, every dollar saved and invested today is an investment in your future. With a little discipline, these habits will pay off well into your 30s and beyond.

We hope this article helped you in your wealth accumulation journey. Share this with a friend who might need it too.

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References:

Optimising your CPF Savings for a Secure Retirement

In a country like Singapore, where the population is rapidly ageing, starting early with retirement planning is essential. This is especially important when considering the increasing life expectancy and the rising cost of living.

One way to begin planning for retirement is by leveraging the Central Provident Fund (CPF). All Singapore Citizens and Permanent Residents who are employed in Singapore can access this mandatory social security savings scheme funded by contributions from employers and employees.

Let’s look into what the Central Provident Fund (CPF) is:

What is CPF?

The Central Provident Fund (CPF) is the default retirement scheme for Singapore Citizens and Permanent Residents to save for retirement. It covers healthcare, home ownership, family protection, and asset enhancement.

How do CPF Contributions Work?

Workers have a portion of their salary deposited into their CPF accounts every month. This happens automatically, with the money divided into three accounts.

Employers also contribute a percentage of the employee’s pay to their CPF accounts.

The combined contributions from both sides are credited monthly to the employee’s CPF accounts, following set percentages based on age, salary limits, and the annual CPF limit.

What are the Different Types of CPF Accounts?

There are three main accounts: the Ordinary Account (OA), Special Account (SA), and MediSave Account (MA).

Each account serves different purposes in helping individuals meet their financial goals through different stages of life.

The Ordinary Account (OA)

This account is primarily used for housing, insurance, investments, and education expenses. It allows you to save for your housing needs, including down payments, mortgage payments, and related fees.

The Ordinary Account (OA) can also be used to pay for insurance premiums, such as those for the Dependants’ Protection Scheme (DPS) and Home Protection Scheme, which provide a safety net for family members.

You can also explore investment opportunities through the CPF Investment Scheme (CPFIS). It lets you diversify through financial products like ETFs, unit trusts, and annuities. It even supports education financing for yourself, your children, spouse, siblings, or relatives.

Special Account (SA)

This account was introduced mainly for retirement savings and investments in retirement-related financial products. It offers higher interest rates than the OA which allows your retirement funds to grow faster.

The SA is great for building a solid financial foundation for retirement. It allows you to have sufficient savings to sustain your lifestyle during your golden years. Additionally, the SA provides less volatile financial products like unit trusts and annuities to help you grow your wealth.

MediSave Account (MA)

The MediSave Account (MA) is focused on healthcare expenses and health insurance coverage. It allows you to save on medical costs, including hospitalisation, day surgery, and approved outpatient treatments.

Your MA funds can also be used to pay for health insurance premiums such as Integrated Shield Plans and Medishield Life. It also supports medical expenses for approved dependents.

How to Optimise Your CPF Savings

1. Start Investing Early

The longer your money remains in an interest-earning account, the more opportunities it has to grow through compound interest.

For instance, let’s say you begin saving S$100 monthly at 25 years old and achieve an average annual return of 4%. By the time you turn 65, your savings could have accumulated to over S$116,000.

However, if you delay saving until you’re 35, you would need to save S$170 each month to reach the same amount by 65.

Similarly, you can also leverage the power of compounding with your CPF savings. Currently, you can enjoy rates of up to 5% per year if you’re under 55 and 6% per year if you’re over 55.

This gradual but steady growth will help you out for retirement planning. By starting young, your CPF compound interest will have a more significant impact on your savings.

2. Maximise CPF Contributions

The Voluntary Contribution Scheme in Singapore lets people add extra funds to their CPF accounts to speed up the growth of their retirement savings.

The Full Retirement Sum (FRS) is twice the amount of the Basic Retirement Sum (BRS) and can offer higher monthly payouts that encompass rental expenses as well. It’s determined based on your age when you turn 55 and remains unchanged throughout your lifetime.

Even if you’ve already reached your Full Retirement Sum (below 55) or Enhanced Retirement Sum (over 55), you can still add more funds under the Voluntary Contribution scheme.

You can also spread out any extra contributions among your Ordinary, Special, and MediSave Accounts.

3. Transfer your OA savings to SA

Your CPF Special Account (SA) offers higher returns with a 4% interest rate compared to the Ordinary Account’s (OA) 2.5%.

If you have extra savings in your OA, you could consider moving them to your SA to earn a higher interest rate. However, once you transfer the funds, it’s a permanent decision. It’s best to evaluate your financial goals and capacity before proceeding.

Additionally, before the age of 55, you can transfer your OA savings to your SA up to the Full Retirement Sum to take advantage of the higher interest rates. Cash top-ups to your SA can also help you reach the Full Retirement Sum and offer tax relief of up to $8,000 yearly.

4. Things to Consider When Using Your CPF to Buy A Home

Owning a property requires careful management of your OA funds. Balancing mortgage payments and retirement savings is crucial since 20% of monthly income goes into CPF accounts.

You may use Ordinary Account (OA) funds for down payments, stamp duties, legal fees, and loan payments. However, if you ever sell the property, you must repay OA funds used, plus 2.5% yearly interest.

The Voluntary Housing Refund (VHR) scheme lets you withdraw OA funds for housing expenses and repay them gradually to avoid interest losses upon sale.

If you are planning to own an HDB flat soon, check out our article on budgeting for your first HDB flat.

5. Take advantage of CPF LIFE

The CPF Lifelong Income For The Elderly (CPF LIFE) Scheme is a life annuity program, offering Singapore Citizens and Permanent Residents a continuous monthly payout throughout their lifetime.

You have the flexibility to start receiving your monthly payout at any time, starting from your payout eligibility age up until age 70.

Who Qualifies for CPF LIFE?

You will automatically be eligible for CPF LIFE if you meet the criteria:

You are a Singapore Citizen or Permanent Resident born in 1958 or later.
Your Retirement Account holds at least $60,000 six months before reaching your Payout Eligibility Age (PEA).

If you qualify automatically, the CPF board will notify you before you turn 65 with available options for your payouts.

If you’re not included automatically, you will receive monthly payouts until your savings are depleted. You also have the option to enrol voluntarily, anytime between 65 and one month before you reach 80, when you’re ready to start receiving your payouts.

Final thoughts

Remember, retirement planning is unique to your personal goals. Each step today shapes your financial future tomorrow.

By optimising your CPF savings, such as taking advantage of compound interest, making voluntary contributions, and considering fund transfers, you can speed up your retirement savings and build a strong financial base for your later years.

We hope this article helped you in your investment journey. Share this with a friend who might need it too.

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References:

Grow Your Money in Singapore: An Introduction to Investing

In a rapidly changing global economy, the need for Singaporeans to strategically invest their money cannot be understated.

While traditional savings are safe and practical, they often need to generate substantial returns to stay ahead of inflation.

Beyond the conventional wisdom of saving for the future, investing offers a viable pathway to wealth creation, financial security, and your unique goals.

In this article, we’ll answer some of the frequently asked questions about investing and provide simple tips to get you started on your journey.

What is the difference between saving and investing?

Saving enables you to achieve financial goals such as a short getaway or a wedding. It also helps you prepare for emergencies, like unexpected medical bills or a punctured tire. Typically, you would keep your savings in a checking account or fixed deposit account, so you can access it readily. Savings are generally low-risk, but the interest rates received are also low.

Investing, on the other hand, helps you reach long-term goals like weddings, homeownership, and retirement. There are more risks involved, as investments are generally more vulnerable to the market’s whims. But by investing in financial assets, such as stocks or bonds, you might be able to grow your money passively over time. This can help you keep pace with inflation.

Why Invest in Singapore’s Current Landscape?

Singapore has an array of investment opportunities, ranging from stocks on the Singapore Exchange (SGX) to bonds, Real Estate Investment Trusts (REITs), and more. Plus, its strategic location and extensive business networks make it easy to access global markets.

With a vibrant investment landscape encompassing sectors such as fintech and startups, Singapore has many avenues for wealth accumulation.

Investing is one way for Singaporeans to counter inflation and achieve their life goals. Whether it’s homeownership, children’s education, or retirement, by making sound investment decisions, Singaporeans can pave the way for long-term financial stability and prosperity.

How much do you need to invest?

Many Singaporean brokerages allow you to start small, even with S$10 per month. This is fantastic for beginners to ease into investing.

There are two common approaches to investing: Dollar Cost Averaging and Lump Sum Investing.

Dollar-cost averaging is to invest a set amount of money regularly. This can help you balance out the effects of market ups and downs. The Monetary Authority of Singapore (MAS) recommends investing at least 10% of your income¹. If you earn S$5000, you can invest S$500 every month. However, this also depends on your monthly expenses and goals.

Lump Sum Investing is to invest a large sum of money all at once. A lump sum could amount to S$10,000, S$50,000, S$200,000, or any substantial sum based on your circumstances. This might be ideal in circumstances such as a windfall, inheritance, idle funds or attractive investment opportunities. The best approach and the right amount depend on your goals and comfort level.

Investment Tips for Beginners

Set Clear Goals

Your investment should serve a purpose. Whether it will be used to finance your child’s further education or your retirement, investment goals provide direction and a benchmark for your investment decisions. With a clear investment goal, you can determine the type of risk you are equipped to take. We go more in-depth in this step-by-step guide on how to set investment goals.

Build a Rainy Day Fund

Before you dive into the world of investment, it is wise to set up an emergency fund that covers 3 to 6 months of your living expenses. This financial safety net helps ensure that unexpected expenses won’t derail your goals and investment plans.

Stay Informed

Stay curious and plugged into market trends, economic indicators, and regulation updates to help you navigate the market’s ever-changing landscape. Knowledge is power in the dynamic world of investment. As a well-informed investor, you’ll be better equipped to weather changes and seize opportunities.

So, take the time to explore educational resources from financial institutions and trusted websites to lay the groundwork for making smart choices later in life.

Start Small

Be in tune with your risk tolerance.

Start with an amount that you can comfortably contribute towards your investment portfolio regularly. Your commitment can be as small as channelling 10% of your monthly income towards your investments. As you gain experience, you can explore more opportunities and diversify your investment portfolio.

Conclusion

Singapore’s vibrant financial landscape offers diverse opportunities for building your financial future.

Building your wealth with investments is a marathon, not a sprint. It involves diligence, continuous learning, and a holistic long-term view.

It is always a good idea to consult a financial advisor before making investment decisions. Financial advisors can help you create a tailored investment strategy that aligns with your unique circumstances and goals.

Now that you’ve unlocked the basics, the next step is to explore! Check out our article on the 5 Investing Mistakes to Avoid (That Even Seasoned Investors Make!).

We hope this article helped you in your investment journey. Share this with a friend who might need it too.

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Reference:

Basic financial planning guide | Monetary Authority Singapore

Investment Goals: A Comprehensive Step-By-Step Guide

Why Set Investment Goals?

Navigating your finances for the first time can be daunting.

But if you are serious about achieving financial security, setting investment goals is a good place to start.

Knowing your goals can help guide your investment plans.

Think of it as a roadmap you can refer to when making decisions with your hard-earned money.

Perhaps you need to grow your wealth to afford your children’s education. Or purchase your first HDB flat.

When you know what you need your money for, you won’t risk getting carried away, investing in the next big stock without a solid strategy, or simply letting your money sit idle in the bank.

Instead, your investments start becoming a strategic tool that works for you.

In this article, we’ll cover a few aspects to consider when setting your investment goals and how to move forward from there.

How to Set Your Investment Goals?

For starters, think of new experiences and life chapters you look forward to achieving.

Your investment goals could be anything that requires an expenditure, such as further studying, starting a family, going on an annual vacation, or taking a year off to pursue a business idea.

One of the most common investment goals is securing the peace of mind provided by a retirement fund. It’s a milestone that requires a significant financial cushion if we desire a lifestyle without financial worries one day.

To make smart investment decisions, you will benefit from being clear on your goals.

Let’s take a look at how you can do that.

Timeline

Categorise your goals. Typically, your goals will fall within one of these three timeframes:

Long-term goals (10+ years from now) – e.g. Retirement fund, a child’s college fund.
Mid-term goals (5+ years from now) – e.g. Buying a car, starting a family
Short-term goals (1+ years from now) – e.g. A vacation, down payment for a HDB flat

According to your goal’s proximity, you can start determining the level of risk you are comfortable taking.

The longer timeframe you have, the more opportunities your money can grow in the market. And the more you can take advantage of compound returns.

Risk Tolerance

Assess your risk tolerance carefully.

Factor in your current commitments and timelines.

While young investors might be able to stomach more risks, having a shorter timeline can demand a more stable approach.

For example, if your short-term goal is to tie the knot in the next two years, going with a lower-risk, liquid investment such as short-term bonds, fixed deposit or a savings account might be a better option.

On the other hand, higher-stakes equity investments may potentially yield higher returns over the long term, making them a suitable option for goals with further target dates, such as retirement.

Financial Resources Available

Before planning your investment, take stock of your resources.

Ask yourself: How much savings can I devote right now? In what proportions should I invest?

Re-evaluate your goals and timeline accordingly, ensuring they align with your current financial capabilities.

Emergency Funds

Build an emergency fund to weather rainy days.

Generally, emergency funds consist of 3-6 months’ worth of living expenses.

Having a safety net where you can quickly access your money will bring you peace of mind when unaccounted challenges crop up.

What to Do with Your Investment Goals?

Craft a sound strategy that regards your goal’s estimated expenses, timelines, risks and market conditions. Here are some tips:

Asset Allocation

Generally, it’s best to set up lower-risk assets before considering stocks with higher volatility.

A good rule of thumb is to diversify your investments to protect your wealth against the market’s unpredictability. So include pension funds, stocks, bonds, real estate, exchange-traded funds (ETFs) and unit trusts in your considerations.

If you depend on only one asset class, you are exposing your goals to costly risk.

Regular Contributions

Set up a systematic investment plan. Contribute a portion of your income regularly so you are inching towards your goals consistently.

You can refer to a dollar-cost averaging strategy to mitigate the impact of market volatility.

Or automate a monthly contribution to retirement accounts such as the Central Provident Fund (CPF) or a private pension fund.

Tax Implication

Don’t overlook the impact of taxes on your returns.

Look for tax-efficient strategies to safeguard your returns.

In Singapore, you can take advantage of tax-efficient accounts, like the Supplementary Retirement Scheme (SRS).

Financial Advisor

Seek guidance from an expert who understands the local market to make an informed decision.

A financial advisor in Singapore can provide personalised guidance based on your financial goals and advise you on investment options available locally.

Review and Adjust

Regularly review your portfolio. Once every quarter or twice a year.

Use your investment goals as benchmarks, measuring if your investments bring you closer to your financial goals. Check the performance of your portfolio to see if they need any adjustments. If your financial situation evolves, you might have to update your approach.

Remember, the investment landscape in Singapore has specific opportunities and regulations that may change from time to time. So, staying informed about the local financial market is important as well.

Takeaway

Wealth building relies on your investment goals greatly.

Anchor your investment plans by knowing your goals, setting a timeline, and understanding risk tolerance.

Rather than investing aimlessly, navigate the market with your well-structured plan and stand a better chance at securing a stable financial future.

So, stay informed and confidently let your investments work towards your dreams.

We hope this article helped you in your investment journey. Share this with a friend who might need it too.

👋 Need additional advice and support on navigating your financial planning? Book a complimentary consultation with us.

Book a call

The views expressed in this media do not necessarily reflect the views of PFPFA Pte Ltd (“PFPFA”). The information provided herein is intended for general circulation and not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use will be contrary to local laws or regulation. You should also note that the information presented does not have regard to the specific investment objectives, financial situation or the particular needs of any specific individuals; and therefore, may not be appropriate to your individual needs. You should seek the advice of your financial adviser representative or a professional before making any commitment to purchase or invest in any investment product.