1. I just started working
2. I have 10-20k
3. Where do I park my money, without caring too much about it?
Of course, the actual answer is to shove it in some savings plan, or cpf 'shudders'. If you are not sure where to get a savings plan, just sit in a square outside raffles mrt and get swamped by insurance agents in seconds.
But if you don't want to take the difficult path of buying stocks yourself, here is my recommendations that I would give to my friends based on investments that
1. Have predictable earnings and dividends
2. Have low downside risk
3. Doesn't do anything.
Recommendation 1: Corporate bonds
I would recommend DBS 4.7% preference shares which gives a nice 3.06% cash yield
(a simple way to think of cash yield is that if you invest $107.6 now, the dividends and $100 you get back when DBS redeems it at par will give you 3.06%)
This mainly because of its
1)Long call date (4.57 years till you have to decide what else to do with the cash)
2)Too big to fail quality (if DBS can't even pay if preference shares, which it has to pay before its dividends then the whole Singapore is in trouble)
If you want to stretch for more yield Genting 5.125% would be great (5.5% cash yield), just that the company has an option to call it back in 1.5 years. The great thing is that casinos are simply money generators. The simple dumb model of casinos are....
1) You spend alot of cash to build the casino
2) you spend little cash maintain the casino
3) you wait for the cash to roll in, even if the cash doesn't roll in your maintenance is so low, that you have excess cash.
As you can see, it spends loads of cash to prepare for its opening in late 2009, after that the casino just literally spews out cash.
Recommendation 2: Vicom
This stock does nothing. Its a bit on the high side atm with a 3% dividend yield only, but if you want a sleep easy stock, this is it. No one covers it, so no one cares about its earnings, which has not been the most exciting. It business is just slapping 'certified' on cars and collecting a cheque which it then gives to you.
Its free cash flow per share vastly outstrips its dividends per share too, ensuring that your dividends are safe, unlike reits
Look at the growth of the cash pile! This company literally has no idea what to do with it!
Actually, the perfect buying price is when the index is at 2.6k. But if you can't wait 2.8k is fine too
But besides drawing lines, usually when the STI hits 2.8k its price to earnings ratio is at 12x, slightly cheaper than its 5 year average of around ~13x, of course ifs earnings keep falling (like it is now) you may want to stagger your buying (dollar cost average). Also 3% yield
Recommendation 4: Singtel when it hits 5% yield ($3.5)
Despite being the bluest chip of the blue, I actually hesitate recommending Singtel, because Singapore telcos have really been earning above average roe than its peers, and its 4th telco entry may lead to a structural decline. Sure you can say Singtel is diversified, but it still gets 50% of its operating income from Singapore
Of course Singtel is never going to back to the levels of 7% yield anytime soon (that was as the smartphone boom has never taken off yet). But if you take levels from 2013 onwards, then investing at 5% yield seems pretty comfortable.
Disclaimer: Yes I know that the returns I'm promoting are pretty pathetic, but if you have friends that literally know jack shit, these are my top few picks that are most likely to gain steady returns, without suffering much volatility. 3-4% a year isn't saying much, but hey the STI has returned an amazing -8% if you invested in it 5 years ago (April 11)