Last updated on June 3rd, 2019 at 09:21 am
Before elaborating on where you can invest for the short term, I have some personal beliefs:
A short term investment should prioritize protecting your capital.
If paper losses are made, there is little time to recover. This rules out speculative investments with little certainty in gaining.
A short term investment should be done only after you have tapped on high interest opportunities.
These include accounts like the DBS multiplier account/ OCBC 360 Account / BOC Smartsaver account which will allow you to earn a risk free 2+% interest.
Beyond these, lets move to answer the million dollar question which is finding the best short term investment.
You may have been saving up to get a bigger car for your family.
Or you may have been saving up for an opportunity to upgrade your house.
In any case, there are ways to grow these savings and help you get closer to reaching that intended sum of money.
Is it investing into STI ETF?
The chart above is the price of STI ETF (ES3).
It has been a sea of red for the last 12 months.
Is it a good idea for short term investments? Probably not. Better for a long term investment and only if you are comfortable with the performance risk.
Is it investing into Singapore Savings Bond (SSB)?
You can purchase it via ATM/online banking and it is principle + interest guaranteed.
Unlike a Fixed Deposit, you do not need to wait for a maturity before selling it.
Do you know that SSB rates have been rising?
If you bought an earlier tranche. 1 year ago the Mar18 tranche only paid 1.57%p.a after 3y
What you can do is to sell and recycle into this newest tranche Feb2019. You get an extra 0.41%p.a
The good part of the Singapore Savings Bond is that withdrawal easily online and it will be credited back at the start of the following month.
This is my $10k amount that I sold off for housing needs.
Is it ELASTIQ by ETIQA?
The greatest benefit of this Elastiq plan is if you use it as a FLEXIBLE SAVINGS WALLET.
It gives interest (known as crediting rate) at 2.02%p.a guaranteed and it is given monthly.
You can read my blog post on it for full details but it sure is not bad.
Is it bond funds?
There are many bond funds in the market.
To be a short term investment, look for those “short duration bonds” (which are less influenced by interest rates).
They deliver a consistent return of 2-4%p.a. Returns are non-guaranteed.
These 2 bond funds have an exceptionally strong track record of low volatility.
- United SGD Fund Cl A Acc SGD: Fund invest mainly into short term bonds.
- Nikko Am Shenton Short Term Bond (S$): Fund invest into short term bonds and is diversified geographically.
I’d touch more on the red line, Nikko AM shenton short term bond fund.
In the last few months, it has been gaining rapidly.
Kind of reflecting the overall global interest rate hike.
From the factsheet, a simple explanation means they have invested into A- (very high quality) bonds that mature in 14mths from now with average 3.58%p.a coupon.
If short term interest rates continue to rise, the average coupon they can get from investments should rise.
Looking to start investing?
Check this video above on what to look for before investing!