Wednesday, December 18, 2013

Money: In retrospect

Young couples (like we once were :P) are always tempted to spend a little more than they need to in the early days of their marriage. Extensive traveling, fine meals, anniversary and birthday gifts are par the course for any middle-class couple "before the kids come". But therein lies the problem.

By the time we actually settle down to manage adult affairs, like retirement planning, or  begin to have caregiving duties, we find that perhaps we should have saved up while the carefree days were still happening. A new mother told me recently that she wanted to stop working so that she could devote all her time to her baby. This would mean a significant drop in their family income. Ah, the price of love...and it got me wondering what the ways there are to mitigate this situation.

I suppose, a passive income stream from investments could help to boost the father's salary. Some of the relatively safe options I looked up are:

  • REITS - Happy to note that Cache Logistics is giving me 6% this year :) 
  • High yield bond funds - Such as UOB GEM Bond fund often give up to 5% a year
  • STI ETF - Gives only about 3% in dividends but it also may have capital gains
  • Short-duration bond funds - Fullerton Short-duration Bond fund actually pays out 1-3% a year, and it is also safe enough for me to use it as a saving vehicle. 

But alas, all these require a fair amount of capital before the yield becomes significant in any way. And so friends, if you are a young couple setting up your home, it would be wise to start building your investment capital first, and enjoy the fruits later, rather than spending everything too early. As for me, it is kind of late, but never too late to start :P

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