Investing offers the opportunity to grow your wealth, and as Warren Buffet (one of the world’s most successful investors) said, “Successful investing takes time, discipline and patience.” Be it to fund your child’s future education, cushion your retirement or to beat inflation, there are perks to investing for the long term. Read on to learn more about long-term investment benefits and options.
Note: There’s no absolute rule but long-term investing for individuals tends to fall within the range of at least seven to 10 years of holding time.
4 Benefits of long-term investing
1. Reduced emotions and risks
Money is a sensitive topic as it can elicit many emotions. When it comes to investing, emotions can be dangerous as you may be led to make irrational decisions, especially in the midst of short-term market volatility. Such emotional trading will in turn affect your investment performance.
A strategic long-term investor would not panic sell during stock market dips, especially in the early years of his/her investments. This is because investing long term allows an investor to have a broader perspective and more objectivity.
Holding your investments for an extended period can allow you to ride out temporary market downswings that you don’t need to be overly concerned about, hence reducing the risk of making rash decisions that will affect your overall returns.
2. Lower costs
Trading shares can be expensive as there are transaction fees and stamp duty, etc. that eats into your potential returns. Long-term investing can help you to reduce the overall costs of investing as you likely trade less while holding on to your investments longer. While we are on the topic of transaction fees, did you know that Tiq Invest Investment-Linked Plan (ILP)’s management charge fees are one of the lowest1 at 0.75% in the market?
3. Better long-term returns
Investing long term also allows you to earn compound interest, which can contribute to better long-term returns. Simply put, compounding refers to earning returns on your returns, and not just the initial amount that you deposit. Hence, the longer the duration, the more returns you get from the benefits of compound interest.
For example, you invest $1,000 today with a nominal return of 5% p.a.. After 10 years, your investment would have grown to $1,628.89 with a compounded return of 63%, While past results are no guarantee of future returns, you should note that historical data also shows long-term investments generally outperform the market, if given enough time. Think of it as delayed gratification.
4. Less time-consuming
Like many things in life, there’s no shortcut to investing. Trying to predict the short-term movements of share prices takes significant time and effort. For example, professional traders scrutinise charts and make extensive analyses to identify potential stocks to buy and sell over the short term.
Are you able to put in the same hours to monitor your investments? Chances are, you have a primary job that takes first priority.
Nonetheless, if you invest long term, you can focus on your life goals instead of worrying about the daily movements in share prices. Long-term investing is less time-consuming as the hard work is mostly done once you identify a good investment choice. It’d be even better if your portfolio is managed by professionals. 😉
F.Y.I. Tiq Invest ILP is managed by the local expertise of Etiqa Insurance with advisory from OAC Singapore Pte Ltd, together with the global investment experiences of reputable Funds Managers like Dimensional Fund Advisors, PIMCO Global Advisors (Ireland), BlackRock Global Funds and Lion Global Investors. Learn more here.
Long-term investments for consideration
Here are some popular long-term investments for consideration. Prior to investing long term, you should understand your investment goal(s) and time horizon (i.e. how many years do you want to invest / how many years before you need the money). You should also be aware of the risks inherent in investing in different assets.
|Types of Investment||Things to know||Risk level|
|Stock (shares or equities)||– Investors become shareholders of a company when you purchase this.
– You earn potentially high returns (when/if the company grows) through dividends or capital gains when you sell the shares at a higher value than when you purchased it.
– Investors must be savvy enough to evaluate a company’s performances and its stock value
|Bonds||– Investors become the “creditor” of an organisation when you purchase this.
– Generally a low-risk investment tool especially if they are part of a fund, bonds are debt instruments issued by companies and governments to raise funds by borrowing from investors. E.g. Singapore Savings Bond (SSB),
– Returns are relatively lower, earned through interest income (aka coupon) or capital gains when you sell the bonds at a higher price than when it was purchased.
|Life insurance||– An investment that you get for others who depend on you. Your named beneficiaries (usually your loved ones) will receive the benefit of the plan.
– This works as a backup plan for your family. In case of an insured event where you lose your ability to earn a regular income, the beneficiaries will get a lump sum payout.
|Investment-Linked Policies (ILP)||– A hybrid product that combines life insurance and investment, ensuring a payout in the event of death, even if the policy isn’t performing well.
– The premiums paid are invested into sub-funds selected by the investors, who also decide how much of it goes into protection coverage or investment.
– Managed by professional fund managers, you can earn higher potential returns. Learn more about Tiq Invest ILP now!
|Property investment||– One of the most popular ways of growing money in Singapore, property investors are also known as homeowners.
– Investors can generate passive income by leasing out the property or selling it at a higher price than when it is purchased.
– High taxes, stricter restrictions and other risks are likely to affect returns.
|Real Estate Investment Trust (REITs)||– A collective investment scheme that pools your money with other investors’ to invest in a multi-property portfolio.
– This includes estate assets that generate income, such as offices, shopping malls, hotels or serviced apartments. The revenue (mostly from rental income) is then distributed at regular intervals after accounting for the relevant management fees.
REITs are less risky and more affordable as compared to investing directly in a property. They are also more liquid, as they are listed on the stock exchange and can be invested in and sold off the same way as stocks.
Minimise risks with a diversified portfolio
When investing long term, a diversified portfolio can help to reduce the volatility of your portfolio over time. The more experienced long-term investors may diversify their investment portfolio across the type of investments, classes of securities, in different industries, interest plans and tenures.
Before you start feeling overwhelmed, there are hybrid products, e.g. ILP offer life protection and wealth accumulation. Digital ILPs such as Tiq Invest also provide a number of packaged funds with diversified risks. This allows investors to tap on opportunities with a mixture of asset classes (fixed income & equities) designed to maximise returns at a risk level you are comfortable with.
Here’s the mixture of ILP Sub-Funds under Tiq Invest:
- Global Short Fixed Income Fund
- Global Investment Grade Credit Fund
- Asian Tiger Bond Fund
- Emerging Markets Bond Fund
- Infinity Global Stock Index Fund
Check out Tiq Invest Packaged Funds & Prices here!
Ready to commit for the long term?
The idea of investing may sound intimidating, and anything ‘long-term’ may sound even scarier, especially for those of us who just don’t like commitment. However, investing is actually easier than you think, especially with Tiq Invest, which allows you to have access to cash anytime, anywhere, whenever you need it – free of charge2 and no lock-in period.
You don’t need a lot of money to start investing. With just S$1,000, this hassle-free digital ILP offers life protection and wealth accumulation. For those who are keen in long-term investing, consider setting up regular top-ups from S$100 monthly. Known as the dollar-cost averaging strategy, this investment strategy helps you to spread out your risks and ride through volatility.
To get started with Tiq Invest, you simply need to decide on your preferred packaged fund out of the four specially curated investment packages (to match your risk appetite) and how much you want to invest.
It’s good to know that 100% of the single premium paid and all top-ups will be invested into your selected packaged fund, according to the sub-funds allocations – unlike some traditional ILPs. What this means is you’re essentially getting complimentary 105% guaranteed insurance protection3 – a backup plan for your loved ones in case of unfortunate events such as death.
That’s not all. Learn more about Tiq Invest ILP now.
1 Based on the available digital Investment-Linked Plan (ILP) as at 02 November 2021. This comparison does not include information on all similar products. Etiqa Insurance Pte Ltd does not guarantee that all aspects of the products have been illustrated. You may wish to conduct your own comparison for products that are listed in www.comparefirst.sg.
2 The minimum partial withdrawal amount is S$200. After partial withdrawal, the minimum account balance must be at least S$200.
3 Refers to single premium plus ad-hoc and recurring top-up paid to date less withdrawals less any fees and charges applicable.
Information is accurate as at 6 April 2022. This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K).
Tiq Invest is an Investment-linked Plan (ILP) which invest in ILP sub-fund(s). Investments in this plan are subject to investment risks including the possible loss of the principal amount invested. The performance of the ILP sub-fund(s) is not guaranteed and the value of the units in the ILP sub-fund(s) and the income accruing to the units, if any, may fall or rise. Past performance is not necessarily indicative of the future performance of the ILP sub-fund(s).
A product summary and product highlights sheet(s) relating to the ILP sub-fund(s) are available and may be obtained from us via www.tiq.com.sg/product/tiqinvest. A potential investor should read the product summary and product highlights sheet(s) before deciding whether to subscribe for units in the ILP sub-fund(s).
As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you. This content is for reference only and is not a contract of insurance. Full details of the policy terms and conditions can be found in the policy contract.
This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg).
This advertisement has not been reviewed by the Monetary Authority of Singapore.
Tiq by Etiqa Insurance Pte. Ltd.
A digital insurance channel that embraces changes to provide simple and convenient protection, Tiq’s mission is to make insurance transparent and accessible, inspiring you today to be prepared for life’s surprises and inevitabilities, while empowering you to “Live Unlimited” and take control of your tomorrow.
With a shared vision to change the paradigm of insurance and reshape customer experience, Etiqa created the strong foundation for Tiq. Because life never stops changing, Etiqa never stops progressing. A licensed life and general insurance company registered in the Republic of Singapore and regulated by the Monetary Authority of Singapore, Etiqa is governed by the Insurance Act and has been providing insurance solutions since 1961. It is 69% owned by Maybank, Southeast Asia’s fourth largest banking group, with more than 22 million customers in 20 countries; and 31% owned by Ageas, an international insurance group with 33 million customers across 16 countries.
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