Why having an investment portfolio is a must even for the most risk averse?

We shall remember 2020 as the year when everything went to hell due to the COVID-19 pandemic. Our supply chains were heavily impacted, commercial air travel mostly came to a halt as countries closed their borders. It forced us into isolations and businesses had to adjust and adapt to a new world where working from home became a thing.

And there are businesses that couldn’t adapt fast enough and are forced to lay off workers because of financial issue. At the worse, they have to declare bankrupt. With that, people found themselves out of job and couldn’t find a new one, forcing them to rely on their savings. However, there are a lot of people who had to live from pay check to pay check due to various circumstances that were out of their control.

I’m grateful that I didn’t fall into that category. I have a career with an employer that pays me well and provided me with meaningful work despite the pandemic. In fact, it is because of the pandemic that I got to work on something that impact the lives of millions.

Privately, the pandemic also got me thinking about my future.

You see, throughout my working life, I have managed to save up a decent amount of money. People who are financially savvy enough would have started investing their money to grow their wealth. However, I feared losing my hard earned money. Risk aversion was a powerful check on my action. So, I kept my money in my saving accounts for a decade without doing anything much to it.

Towards the end of 2020, I decided to start investing. And, It had also taken a lot of convincing by my friends for me to go down this path.

Savings in a higher interest rate account

The pandemic has created an ultra-low interest rate environment. With this, there’s no way I can fight inflation with the current savings accounts. I’m basically losing money with each passing year because of inflation and may not be able to live off my savings in the event I do lose my job in the future.

The first step to combat low interest rate was to setup a deposit account that offer a higher interest rate. Once that is done, I moved most of my money there. A key guiding principle for me was: This money shall not be used for general spending.

Singapore banks like DBS, OCBC and UOB offers their customers the option of setting up a deposit account that provides a higher interest rate with some terms and conditions such as spending a certain amount monthly and/or crediting your salary into the account.

After evaluating my options, I went with setting up a DBS multiplier account since it was less of an hassle for me. I could easily meet all the conditions set out by the bank. Once that account is up, I started moving some of my existing savings into it and signed up for a new credit card with the bank in order to take advantage of that higher interest.

One good thing about the multiplier account was seeing the interest you earned credited every month. The more money you have in the account, and if you meet even more conditions set out by the bank, you see more interests rolling your way.

Low risk investment products

Based on the conditions I’m meeting with the multiplier account, the highest interest rate I’m getting was just 0.40% per annum even though it was better than 0.05% offered by the bank in the standard savings account. That is not quite enough. To get even higher interest, one of the condition was that I had to invest through the bank. The good thing was the bank offers a product call Regular Saving Plan.

Through Regular Saving Plan (RSP), you can start investing in ETF or Unit Trust with just $100 per month. This plan relies on a technique called Dollar-cost averaging, which is basically for the same amount of money, you buy a certain amount of assets depending on the price on the day of purchase. If the price is low, you get more units and vice versa. This will allow you to build up your investment portfolio gradually while still allowing you to have a little bit more freedom with your finances.

As someone who is still very risk averse, I went ahead with setting up a RSP account and put in just $100 in my first month. Since it was a small amount, the fear of losing it wasn’t that overwhelming. And I chose the ABF SG Bond ETF, a low risk product that tracks the price of bonds and it pays dividend on an annual basis.

The thing about taking your first step is, the subsequent steps becomes easier. Once I got over the initial fear, I ultimately increased my amount to $200. I could do that after I took into account my monthly expenses and income and find that l have extra liquidity.

But that’s not all I did.

I bought a few treasury bills, which are short-term securities backed by the Singapore government. Unlike bonds, these do not pay out any coupons and are sold for a discount. At maturity, the issuer pays you the face value.

For example, you buy a bill with a face value of $100 and matures in 6 months for $99.50. On maturity, you will get $100 back, a 0.50% return.

Although the returns for treasury bills are not as good as buying equities, this is still a good way not to let your cash sit idly and not worry too much about losing your capital.

Other than bills, I also bought the Singapore Saving Bonds. This is a special type of 10-year bonds that is very suitable for those who are risk averse. Since this is backed by the Singapore government, this is one of the safest investment one can make. Unlike the traditional bonds, these saving bonds can be redeemed anytime, which can give you the flexibility of recovering your investment capital for emergencies. And if you hold it to maturity, you will also get an interest payout once every six month.


With all these investments, it help me mitigate the risk of my money losing value over time and also help me learn about the different products. As time go by, it could build up your confidence in investing in products that are of higher-risk but give good returns that could possibly help you grow your wealth. And that was what I did six months in my investment journey. I went with a robo-adviser like Endowus. I started investing more of my savings into products that offer even higher returns. With patience, I could grow my wealth to a point where I can stop worrying about not being able to retire comfortably.

In the event that you are still feeling unsure, I want you to think about the next scenario for a moment.

With inflation, your purchasing power is actually falling every year. For the same $100, you could find yourself losing anywhere between a few cents to $1 in terms of worth every year. By the tenth year, that $100 could easily become $90 in worth despite the face value being the same. Inversely, goods and services that originally cost $100 could have risen to $110. As time goes on, your savings are basically shrinking in worth that will prevent you from being able to retire properly.

So, if you do not want to invest your money because you fear losing money due to the volatility, are you not putting your future at risk by doing absolutely nothing with your hard earn money? Should you not be risk averse as well when it comes to your ability to retire?

And investment is no different from buying life and health insurances for yourself and/or your love ones. It is all about mitigating the risk of dealing with medical emergencies and having no money to pay for them. In the event of your untimely death, insurance can provide some funds for your love ones so that they can get on with life.

Wednesday Science News Roundup #23

Below are 10 science news that I found interesting and are related to topics I care about.

Screen-addicted teens are unhappy – Researchers found that teens who spent a lot of time in front of screen devices — playing computer games, using more social media, texting and video chatting — were less happy than those who invested time in non-screen activities like sports, reading newspapers and magazines, and face-to-face social interaction. The happiest teens used digital media for less than an hour per day. But after a daily hour of screen time, unhappiness rises steadily along with increasing screen time. Science Daily

New Eocene fossil data suggest climate models may underestimate future polar warming – A new international analysis of marine fossils shows that warming of the polar oceans during the Eocene, a greenhouse period that provides a glimpse of Earth’s potential future climate, was greater than previously thought. Science Daily

First evidence of winds outside black holes throughout their mealtimes – New research shows the first evidence of strong winds around black holes throughout bright outburst events when a black hole rapidly consumes mass. The study sheds new light on how mass transfers to black holes and how black holes can affect the environment around them. Science Daily

Dietary fiber protects against obesity and metabolic syndrome, study finds – Consumption of dietary fiber can prevent obesity, metabolic syndrome and adverse changes in the intestine by promoting growth of ‘good’ bacteria in the colon, according to a new study. Science Daily

MIT Engineers Have Designed a Chip That Behaves Just Like Brain Cell Connections – For those working in the field of advanced artificial intelligence, getting a computer to simulate brain activity is a gargantuan task, but it may be easier to manage if the hardware is designed more like brain hardware to start with. Science Alert

This New Brain Study Shows Why Some People Are More Creative Than Others – Creativity is often defined as the ability to come up with new and useful ideas. Like intelligence, it can be considered a trait that everyone – not just creative “geniuses” like Picasso and Steve Jobs – possesses in some capacity. Science Alert

Every Single Piece Of Plastic Packaging In The EU To Be Reusable Or Recyclable By 2030 – The European Union has launched an ambitious campaign against single-use plastic, in an urgent plan to rid the continent of the flood of damaging plastics that are now choking the rivers, oceans, and countryside. IFLScience

Retirement Makes Short-Term Memory Decline 38 Percent Faster In Old Age – Dementia and Alzheimer’s are growing problems in many Western nations as people are living longer. While a treatment for these cognitive conditions still evades detection, there are certain behaviors and lifestyle choices that are known to exasperate the issue. It now seems that retirement might be one of them. IFLScience

The world’s largest set of brain scans are helping reveal the workings of the mind and how diseases ravage the brain – ENIGMA, the world’s largest brain mapping project, was “born out of frustration,” says neuroscientist Paul Thompson of the University of Southern California in Los Angeles. In 2009, he and geneticist Nicholas Martin of the Queensland Institute of Medical Research in Brisbane, Australia, were chafing at the limits of brain imaging studies. The cost of MRI scans limited most efforts to a few dozen subjects—too few to draw robust connections about how brain structure is linked to genetic variations and disease. The answer, they realized over a meal at a Los Angeles shopping mall, was to pool images and genetic data from multiple studies across the world. Science Mag

Stars with too much lithium may have stolen it – Something is giving small, pristine stars extra lithium. A dozen newly discovered stars contain more of the element than astronomers can explain. Science News