Need Help Getting Safe returns from Wealth
Can you look at this and advise me which is a good one to invest into. MY needs are:
- I need to have a secure 5% return for a period of 5 to 10 years.
- I cannot afford much loss of capital.
- I do not need to make any redemptions for another 5 years.
In line with your risk profile and stated investment preferences, the below options are for your consideration:
1) APPROVED LIST: consist of non-SGD pure Fixed Income instruments, focusing on 5 years tenure, 5% yield to maturity and investment grade credit rating
2) 642CM: This would be the closest SGD pure Fixed Income instrument, with yield to maturity 3%, with minimum amount less than SGD 250k. However, the tenure exceeds the 5 years tenure and lower credit rating, relative to list in #1
The above two options would be a great addition to your portfolio, as the main core of recurring income; the existing bond fund portfolio can wrap itself around this core for a move up in risk class.
Alternatively, you can also consider the below SGD denominated bond funds for a continued focus on recurring income:
1) Templeton Global Total Return Fund (SGD): aims to maximise total investment return consisting of a combination of interest income, capital appreciation, and currency gains by investing principally in a portfolio of fixed and/or floating rate debt securities and debt obligations issued by government and governmentrelated issuers or corporate entities worldwide as well as certain financial instruments for investment purposes. YTD up about 3% and non-guaranteed monthly dividends of about 4% paid
2) Franklin High Yield Fund (SGD): aims to earn a high level of current income and seeks capital appreciation when consistent with its principal objective of high current income, by principally investing either directly or through the use of financial derivative instruments in Fixed Income debt Securities of US or Non-US issuers with investment grade or lower grade ratings. YTD up about 3.5% and non-guaranteed monthly dividends of about 6% paid
If you like to diversify among fund houses, you may also consider:
1) Fidelity Asian High Yield (SGD): seeks a high level of current income and capital appreciation by investing primarily in high-yielding, sub investment grade securities of issuers that have their principal business activities in the Asian region. YTD up about 6.5% and non-guaranteed monthly dividends of about 6.5% paid
2) Fidelity US High Yield (SGD): seeks a high level of current income and capital appreciation by investing primarily in high-yielding, lower quality securities of issuers that have their principal business activities in the United States. YTD up about 4% and non-guaranteed monthly dividends of about 5% paid
tl;dr
Variable Annuity
Is this a CFA question?
Honestly, I would go with a portfolio of high yield bonds, and just hold them to maturity. You can find yields over 5% with minimal risk of default.
Some blue chip dividend stocks, if bought intelligently, will also get you there. Preferred shares are even safer, provided the company is generating steady cash flow.
UFO is right about the variable annuities: Met, AXA, and a few others offer GMIBs at or above 5%. But, if my memory serves, the GMIB just increases the base amount of the annuity (i.e. the amount your stream of payments would be based on). So, you are not getting a lump sum, although I think some companies do allow that option at the cost of steep fees. UFO is probably more knowledgeable on this than myself.
The main concern here is the expected depreciation of the rupee (which is the currency being earned) so would diversifying into SGD be ok? What do you guys think of the long term prospects of the SGD vs the USD over the course of the next 5 years or so? Or the rupee:USD?
Also any reviews of the Templeton mutual fund?
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