Many people believe that wealth management is only for the rich. However, that cannot be further from the truth. In today’s day and age, people from all walks of life who care about their financial future can participate in managing their wealth and learn more about how they can build security for themselves. If you have some financial goals that you want to reach or you are simply looking to save money more efficiently, this is a guide for you.

In this article, we will examine what wealth management is and the types of accounts and investments you can participate in as a Singaporean resident. We will also look at the rules and regulations within the industry. Finally, we will walk you through some of the steps you can take to set up your own investment account to secure your financial future.

What is wealth management?

Wealth management is a comprehensive financial service that involves managing and growing your financial assets to achieve your financial goals. This service typically includes investment management, financial planning, tax planning, estate planning, and risk management.

Types of wealth management accounts and funds

In Singapore, there are several types of wealth management accounts and funds that you can invest in to grow your wealth. Some of the most popular types of accounts and funds include:

Savings accounts

Savings accounts are low-risk accounts that allow you to earn interest on your deposits. They are typically offered by banks and other financial institutions and can be used to store your emergency fund or short-term savings. They are one of the most standard types of accounts for you to build your financial future.

Depending on the firm you work with, you may be offered different interest rates that can grow your deposits. There may also be firms that offer greater interest rates the more money you deposit with them.

Fixed deposit accounts

A fixed deposit account, also known as a term deposit or time deposit, is a type of bank account where a customer deposits a certain amount of money with a bank or financial institution for a fixed period, usually ranging from a few months to several years.

In a fixed deposit account, the money deposited earns a fixed interest rate that is predetermined and agreed upon between the customer and the bank at the time of opening the account. The interest rate on fixed deposits is generally higher than that on savings accounts because the client is committing to keeping the money deposited for a specified period.

The account holder cannot withdraw the money from the fixed deposit account until the end of the fixed term, without incurring a penalty. However, some banks may offer premature withdrawal options, but this usually results in a lower interest rate on the deposit.

Unit trusts

A unit trust is a type of investment fund that pools money from multiple investors to invest in a diversified portfolio of assets such as stocks, bonds, and other securities. Each investor in the unit owns a ‘unit’ of the fund, which represents a portion of the fund’s overall assets.

Professional fund managers typically manage unit trusts, and these managers use their expertise to choose a mix of investments that aim to achieve the fund’s investment objectives. Typically, the fund’s goal is to generate returns for its investors.

Unit trusts can be a great investment option for traders who wish to access a diversified portfolio of assets but may not have the knowledge or resources to build and manage their own portfolio. It is also a great way to invest with a relatively small amount of capital, as this investment is pooled from multiple investors.

Exchange Traded Funds (ETFs)

ETFs are like unit trusts in that they are a type of investment fund that invests in a diversified portfolio of assets. However, ETFs are traded on stock exchanges, which means that they can be bought and sold like individual stocks. ETFs are typically low-cost investments and are suitable for investors who want to invest in a diversified portfolio but want the flexibility of buying and selling their investments on a stock exchange.

Is wealth management regulated in Singapore?

Yes, the Singaporean government regulates wealth management through their regulatory body, the Monetary Authority of Singapore (MAS). The MAS oversees the financial industry in Singapore, including wealth management activities and organisations.

In other words, wealth management firms in the country are required to obtain a license from the MAS before they can offer financial services to clients. Requirements vary depending on the type of services they offer, but generally, firms must meet certain criteria related to their financial stability, competency, and integrity.

The MAS also ensures that wealth management firms in Singapore operate in a fair and transparent manner, and that they take measures to protect their clients’ funds and personal information. Some of these regulations cover items such as disclosure of risks, fees, and charges, as well as the safeguarding of client funds and assets in segregated, protected accounts.

How can I get started planning for my financial future?

If you are keen to get started planning for your financial future, you should know that you do not necessarily have to be a high-net-worth individual to begin with. Regardless of your financial situation, you can get a start on building your wealth and reaching your investment objectives when you follow the below steps.

Determine your financial situation and goals

The first thing you must do is to understand your financial situation and determine your financial goals. To determine your financial situation, you can calculate your net worth, track your spending, and create a budget to understand what your main expenses, debts, and income are. Be honest with yourself and track accurately, so that you can have the most accurate information.

In terms of your financial goals, think about what you want to achieve in the short and long term. Examples may include saving for a down payment on a house, paying off debts, building an emergency fund, or saving for retirement. If you are a parent, you may also want to save money for your child’s education and living expenses.

Build an investment plan

Next, you should plan to build a diversified portfolio based on your situation and goals. This portfolio should adhere to your risk tolerance, and your investment plan should include actionable steps, a timeline, and milestones. You should also use this plan to track your progress.

Consult a wealth manager advisor

As part of your investment journey, you are not expected to know it all. However, you are expected to be educated on the most important aspects of wealth management, such as the kind of account you are going to create, the kind of goals you are working towards, and the funds you want to invest in. At times, this can be daunting.

You should consult a wealth manager advisor to seek professional financial advice. Other experts you can consult on your journey include an accountant who can accurately calculate your net worth. The financial advisor can also help you take your first steps in making your investments.

Keep learning and review your plan regularly

Once you have built an investment plan and started investing, you should never stop there. A good wealth manager will remind you wealth management is a continuous process, and you should always keep learning. Review your plan regularly to check if you are on track and adjust your plan and goals when you have outgrown them.

The bottom line

Wealth management is an effective way for you to build your financial future in a relatively low-risk way. When investing, you should understand that wealth management is a lifelong journey, and it takes effort to achieve your financial goals. By taking small steps, you will find it easier and easier to develop good financial habits and build the foundation for your stable financial future.