Place common Singapore savings and investment options on the triangle and give a reason for each placement.
Take a blank page, or start a new slide or a drawing app, and sketch a triangle big enough to write inside. Write "return" at the top point, "safety" at the lower left and "liquidity" at the lower right. These three corners come from Lesson 5.1, "Every place you put money trades risk, return and liquidity". Allow about 25 minutes for the whole exercise, plus extra time for reading product pages.
You draw this because advice about money usually arrives one option at a time. A relationship manager, a colleague or a finance video will each show you their option at its best. Seeing that option next to seven others tells you more than any one person's recommendation. When someone next suggests a product, find its spot on your triangle and judge it by where it sits among the rest as well as by what you were told.
The eight to place are a savings account, a fixed deposit, Singapore Savings Bonds, Treasury bills, an index ETF, a single stock, an endowment plan and private property. You need only enough detail to put each one somewhere sensible. The investing track covers every one of them in depth, beginning with the course "Bonds, T-bills, SSBs and fixed deposits".
Read the lower left corner as safety, meaning low risk. Read that way, more is better at all three corners.
It is hard to put a dot in the right place by eye, so give each option three scores first: low, medium or high for return, for safety and for liquidity. Then move the dot towards the corners that scored high and away from those that scored low. An option that scores medium on all three sits in the centre.
These scores are your own judgement. Two careful people can place the same product slightly differently, and that is acceptable as long as each of them can give their reasons.
Look up each of the eight with the same three questions:
How does it pay? What can go wrong? How do you get money out, and how fast?
For the first question, the possible answers are interest, a discount you get back at maturity, dividends, bonuses, rent, or a movement in price. For the second, look for a fall in price, the issuer or institution failing, a loss from getting out early, or a return that does not keep up with inflation. For the third, the money may be available the same day, only when a term ends, after a sale on an exchange, or once you find someone to buy.
Take your answers from official sources. Start with the product page from the bank or issuer. MAS runs the pages for Singapore Savings Bonds and Treasury bills, SGX covers anything listed, and IRAS covers property taxes.
Do not write current rates on the triangle. They move every few weeks or months. The way a product pays you and ties up your money seldom changes, and the position on the triangle is about those two things.
If you are not sure about a placement, draw a question mark next to it and note the source that would answer it. A question mark you are honest about helps you more than a confident dot in the wrong spot. When every option is placed, write a one-line reason beside each.
Jun Hao, who first appeared in Lesson 1.4, went through the options in order. His result shows how the method works. It is not a ranking of the products.
He placed the savings account on the line joining safety and liquidity and scored its return low. You can take the money out the same day, SDIC covers eligible deposits up to the limit, and it pays the least of the eight.
His fixed deposit sits near the safety corner, with liquidity scored low to medium. It has the same insurance as a savings account, and the bank pays more because the money is locked in. If you break the deposit early, you get reduced interest or none.
Singapore Savings Bonds also went near safety, a little further towards liquidity than the fixed deposit. The Singapore Government backs them, and you can redeem them in any month and keep the interest earned so far. The cash does not arrive the same day, though, and he did not know how long it takes. That became question mark 1, noted as "check redemption timing on the MAS page".
He put Treasury bills next to the fixed deposit. The Singapore Government sells them at a discount and repays the full amount at maturity, and there is no early redemption. To get cash before maturity you would have to sell through a bank in the secondary market, possibly at a lower price and with few buyers. He decided to treat that money as locked up until maturity.
The index ETF went between return and liquidity without reaching either corner, and he scored its safety medium. You can sell it on SGX during trading hours and receive the cash a few working days later. Its price follows the market and can drop a long way. Because the fund holds many companies, one company failing does little damage.
A single stock went close to return and a long way from safety. A widely traded share is easy to sell. The whole outcome depends on one business, though, and he treated the high return score as a hope, not a promise.
The endowment plan landed near safety and far from liquidity. Some of the payout is guaranteed and some is not, and surrendering in the early years usually gets you back less than you paid in premiums. He did not know what protection applies if the insurer fails, so question mark 2 reads "check the benefit illustration, and whether SDIC's Policy Owners' Protection Scheme covers it".
Private property sat low on the triangle, nearer safety than liquidity, with return scored medium. It brings in rent and its price may go up. Buying and selling are very costly, though, finding a buyer can take months, and a loan makes both gains and losses larger. Question mark 3 says "check seller's stamp duty on IRAS".
None of his eight options reached all three corners, as the triangle predicts.
Your triangle is complete when all eight options are on it, each has a one-line reason beside it, and every placement you could not settle has a question mark with a named source. Jun Hao finished with three question marks, which is about right for a first attempt. Once you have the scale and the three research questions ready, the drawing is the quick part.
Draw the triangle, place all eight options on it, and write one line explaining why each one sits where it does.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).