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How to Plan S$100,000 Wisely in Singapore? Unit Trust Proposal with Case Study

Having SGD 100,000 in your savings account is a significant milestone, and it opens up opportunities to grow your wealth further. To make the most of this sum, planning your finances wisely is essential. One effective way to do this is by investing in Unit Trusts. This article explores two popular Unit Trust options: Dividend Payout Funds and Equity Funds, and presents a case scenario of a married couple diversifying their investment to manage risk.

Understanding Unit Trusts

Unit Trusts are investment funds that pool money from multiple investors to purchase a diversified portfolio of assets. This collective investment allows for greater diversification and professional management, making it an attractive option for individual investors.

 

Option 1: Dividend Payout Fund (known as “Financial Property”)

Dividend Payout Funds are designed to provide regular income to investors through dividends. These funds typically invest in companies with a history of paying dividends, offering a steady stream of income. 

There are a few key factors in deciding which fund to choose that best suits individual’s risk profiles.

This can be particularly appealing for those seeking regular cash flow without selling their investment. This is like investing in real estate property that comes with regular rental income and without risks of bad tenant or property maintenance issues. 

Pros:

  • Regular income through dividends.
  • Less volatile compared to pure equity funds.
  • Suitable for conservative investors.
  • Suitable for short-term investment plans
  • Suitable for regular income flow preference

Cons:

  • Lower potential for capital appreciation.
  • Dividend payments can fluctuate based on company performance.

Option 2: Equity Fund

Equity Funds focus on investing in stocks, aiming for capital growth over time. Choosing the right fund with diversified portfolios is the key!

These funds are more suitable for investors looking for higher returns and are willing to accept higher volatility.

Pros:

  • Potential for higher returns.
  • Benefit from market growth.
  • Suitable for growth-oriented investors.
  • Suitable for long-term investment plans to reduce risk.

Cons:

  • Higher risk due to market volatility.
  • No guaranteed income.

Case Scenario: Diversifying Risk with Both Options

Let’s consider the case of Anna and Ben, a Malaysian married couple in their mid-30s with two children. working and residing in Singapore. They work and reside in Singapore, with Ben being a senior engineer in the semiconductor industry and Anna a chartered accountant in a multinational company. 

They have SGD 100,000 in their savings account and are looking to invest wisely to secure their financial future.

Investment Strategy:

Anna and Ben decide to split their investment between a Dividend Payout Fund and an Equity Fund to diversify their risk.

  1. Dividend Payout Fund: SGD 50,000
    • They allocate half of their savings to a Dividend Payout Fund. This investment provides them with a steady stream of income through regular dividend payments. The consistent cash flow helps them manage daily expenses and contributes to their children’s education fund without tapping into their principal investment.
  1. Equity Fund: SGD 50,000
    • The remaining half is invested in an Equity Fund. This part of their portfolio aims for long-term capital appreciation, aligning with their goal of building a substantial retirement fund. While the equity market can be volatile, they are comfortable with the risk, knowing it can potentially yield higher returns over time.

Outcome:

By diversifying their investment between a Dividend Payout Fund and an Equity Fund, Anna and Ben create a balanced portfolio. They benefit from the regular income of the dividend payouts while still having the potential for significant growth through their equity investments. This strategy helps them achieve their short-term financial needs and long-term goals.

Conclusion

Investing in Unit Trusts with SGD 100,000 can be a smart move if done wisely. By understanding the different options available, such as Dividend Payout Funds and Equity Funds, and diversifying investments, you can manage risk and work towards your financial objectives. Anna and Ben’s case scenario demonstrates how a balanced approach can provide both stability and growth, ensuring a secure financial future for their family.

Ready to start planning your investments? Consider your financial goals and risk tolerance, and explore the possibilities that Unit Trusts offer. Your future self will thank you!

Contact me now for a personalised investment proposal for you! 

Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Published By:

Lidwina Teo 维娜

With over 5 years of experience in client service industries, I come to understand and appreciate the importance of high-quality customer service and customer experience. The key is to always prioritize the best interests of customers, ensuring their needs and expectations are met with professionalism.

The passion for client service extends into my current role where I strive to deliver personalized financial planning services. With more than 150 business partners in our company, I can help you achieve your financial goals by analyzing various financial products and offering tailored financial advice. 

Contact me now to request for a quotation or schedule a coffee session for further discussion. See you soon!

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In compliance with the Personal Data Protection Act, Financial Alliance Pte Ltd (“FAPL”) seek your consent to collect and use your personal data (e.g. name, NRIC, contact numbers, mailing addresses, email addresses and photograph) for the purposes of and in accordance with FAPL’s Data Protection Policy, which can be found on FAPL’s website at https://fa.com.sg/data-protection-policy/.

根据《个人数据保护法》，鑫盟理财私人有限公司征求您的同意向您收集并使用您的个人信息。鑫盟理财将根据公司的个人数据保护政策所阐述的用途使用您的个人资料（例如姓名，证件号码，联系电话，邮寄地址，电邮地址和照片）。 该政策可在本公司网站上查寻，网址为 https://fa.com.sg/data-protection-policy/.

By submitting this form, you are deemed to have read and understood FAPL’s Personal Data Policy.

提交此表格，即表示您已阅读并理解鑫盟理财私人有限公司的个人数据政策