Invest in STI ETF

Last year, my wife asked for my views on the shares to invest in. Previously, she kept her money in fixed deposits, but interest rate had dropped to below 1% for a few years already. The banks sold her a few structured products over the past years that gave a very poor return. e.g. 2% for 5 years, but fortunately her principal was intact.

I advised her to invest in the STI ETF. This is an exchange traded fund that is invested in the component stocks of the ST Index. It is a large, well diversified fund with low cost.

Her friends advised her to invest in some of the hot stocks that have higher liquidity and market interest. Fortunately, she took my advice.

For a while, the STI ETF lost money due to the market collapse earlier this year. I advised her not to worry, as it is a long term investment.

Recently, she told me that the STI ETF had made a large profit for her. The gain must be more than 30% over the past year. This was the best performing share among the few shares that she held.

Some people complained that there is not much liquidity in the STI ETF. For most ordinary investors who are investing for the long term, the liquidity is sufficient. The fund manager will create more units if there is demand.