If you find that interest rate is too low in Singapore and you wish to earn a higher interest rate by investing in foreign currency, e.g. Australian dollar, you should be aware of the following:
- You have to bear the risk of currency fluctuation
- You have to incur the cost of converting your Singapore dollars to the foreign currency and to convert back to Singapore dollars on maturity
My preference is to invest in blue chip shares, REITS or the STI ETF. You can find shares that give an attractive dividend yield of 3% or higher and enjoy the benefit of capital appreciation. Although these shares may be risky in the short term, the risk is reduced considerably for a long term investor. These concepts are explained in the FISCA workshop on financial planning. Register here.
2 comments:
Currencies are even more unpredictable than stocks and shares.
Only could gauge the countries that are commodity based, like the Aussie and the Kiwi, when commodity prices drop, these currencies drop as well,
right now hard commodity prices have more room to decline, so better lay off these two currencies for time being. The Kiwi is a follow cat of the Aussie, but may deviate as NZ is an agricultural based economy. The
most recent low for Kiwi vis a vis S$ is about NZ0.93/0.94 to S$1, maybe this the benchmark support for those who is keen on Kiwi.
It is important to tell everyone a simple rule:
Invest with money that you do not need for the next 2 or 3 years.
This is very, very important fact.
If you have spare cash, go ahead and invest in currenies, shares or ETFs but please understand that you may not see it ever again or you have to wait for2 or 3 years
( sometimes even more than 10 years )
No suka, suka, ok?
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