Investing Wisely

When we sees the word, “Investment”, we often think that this is for the rich only. The Bible also talks about being faithful with what the Lord has entrusted to us and being accountable to Him for the decisions we make (Matthew 25:14 – 30). We need to secure our finances and do our homework before making any decisions in investing our money in the various investment instruments. Listed below are some of the investments you may consider.

a) Stocks & Shares: When you buy a stock from the Stock Exchange, you are indirectly investing in the stock of the company. But when you buy a Mutual Fund/Unit trust, you are entrusting someone else to make decisions for you and you do not have any control over what to buy or sell.

Most common stocks returns come in the form of dividends and capital appreciation (increase in the share price) but not all of the stocks are the same. One way is to see how well the company’s prospects is tired to the economy.

Exchange Traded Funds is like a Mutual fund/unit trust but differs from it. It is traded in a stock exchange and tracks an index (example,S&P 500 Index, Nikkei Index) rather than trying to beat it actively. By owing an Exchange Traded Fund, you get the diversification of an index as well as the flexibility of trading it like a stock. This means you can purchase or sell the stock at any time.

b) Real Estate: The idea of owing another home as an investment is a dream in most of our minds, especially in affluent Singapore. You can purchase a property and rent it out as a tenant. As a landlord, you are responsible for paying the mortgage, taxes and the costs of maintaining the property. Hopefully, the rent paid to you can cover your monthly expenses on the property. Hopefully, you can sell the property when the price goes up. However, you may need to handle some unpleasant experiences like the tenant calling you in the middle of the night because of an electric blackout in the apartment.

c) Land Banking: The concept of Land banking is relatively new in Singapore and there have being a number of unpleasant scams in the past. Land banking is the purchase of raw land with the intention of holding it until it is profitable to sell it. The increase in the land value comes from the conversion of the raw land to residential or commercial use.

Investing in land banking is investing in a tangible asset as opposed to stocks or bonds but there are also risks involved. The investment could turn out to be a scam or the plans to develop the land in the foreign country did not materialized. What if you need the cash urgently? We need to be cautious and do our homework before we invest. Among the more reputable land banking company is Walton International

d) Gold & Silver: Gold has been around for a long time and has been recognized as a safe haven in times of economical instability. It is an excellent hedge against inflation over the long term. Prior to 1971,the US Dollar was pegged to the Gold standard at a fixed price (example USD35 = 1 oz of Gold). However, on 15th Aug 1971, President Nixon ended this system. Since then, gold has successfully preserved wealth compared to paper money as the value of the dollar is constantly eroded by inflation.

Silver, the poor man’s gold is another great tool to hedge inflation. The price of silver ranged from $3 to $6 per oz in the 1970s & but the price began rising rapidly in 1979 to $50. Silver has more usage than gold and is used in industrial goods like batteries and electronic products. However, the stockpiles of gold are growing but the silver stockpiles have shrank dramatically. Physical silver can be bought as a 1 kg silver bar, silver coins at most precious metal shops.

Francis Pang

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