Monday, September 17, 2007

Questions on Investing in funds

Q: I invested in a China equity and balanced fund. What are the prospects after the Beijing Olypmics?

Share prices in China, traded through the Shanghai exchange, are too expensive. For many shares, the price in Shanghai is more than two times of the price of the same share traded in Hong Kong. It is too speculative. Be careful.

Q: How can I buy government bonds?

You can buy government bonds through a bank or stockbroker. You can get information about the price and yields of government bonds from the MAS website.

https://secure.sgs.gov.sg/apps/fda/sgsBenchmarkIssuesForm.jsp

The current yields are:

5 year 2.44%
10 year 2.7%
15 year 3.09%
20 year 3.24%

Remember. If you invest in government bonds, the yield is locked up for the period. You will not enjoy any future increase in yield. But, you will not suffer any future reduction.

Q: Is it better to invest in a fund using single or regular premiums?

Many insurance companies levy higher charges for investing in regular premiums. It is usually better to invest with single premiums, including recurring single premiums, to enjoy the lower charges.

If the fund have the same charges for single and regular premium, it does not matter which mode you choose.

Q: How can I invest in Singapore equity? Global equity?

NTUC Income has several funds with low expense ratios. You can ask their insurance adviser or visit their business center to talk to a salaried consultant. See the link on the right of my blog.

You may be able to find some unit trusts with low expense ratios as well. A financial adviser can help you.

Q: Is it a good time to invest now? Should I wait for the peak to be over?

It is difficult to make this judgement. I find the current level to be rather high, and am willing to wait for a lower level. In the meantime, I have my savings in short term deposits to earn 2%.

Usually, the stockmarket performs well during the last quarter of the year. I will probably invest early next month.

Q: My financial adviser says that it is good to switch investments (without any charge) to maximise my return. Is this true?

It is usually difficult to make this type of decision. If you do, take a long term view. Do not switch just a few percent change in the unit price of the fund. In a voltile market, the price can change by up to 10% or more, without affecting the underlying trend.

Most people invest for the long term, and do not bother about making the switches.

Q: I like to invest in a fund. How do I find a reliable broker?

NTUC Income has several funds with low expense ratios. You can ask their insurance adviser or visit their business center to talk to a salaried consultant. See the link on the right of my blog.

You may be able to find some unit trusts with low expense ratios as well. A financial adviser can help you.

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