Investing in difficult times

Dear Mr. Tan,
Is it safe to put money in the bank anymore? If not, where can I invest my money? I am scared even to leave the money in the bank as the banks are no longer safe, and they may ask me to invest in the minibonds and other risky products, without my knowledge.

REPLY
My wife asked me the same question. I advised her to buy the STI Exchange Traded Fund. It is a fund comprise of the top 30 shares in Singapore. My reasons are:

1. These are the 30 largest companies listed in Singapore
2. The dividends paid average about 5%, based on the current price. It is paid in two installments every 6 months.
3. If this is for a long term investment, it does not matter if the share prices comes down further. It will eventually recover (maybe in a few years' time and make a good capital gain)
4. If the recession continues for one or two years and the profits of the companies drop by 50%, these shares will still give a dividend of 2.5% (which is better than bank deposit or government bonds).
5. Invest for the long term. Be bold.

Another alternative is to invest in a few RIETs. Many of them have a dividend payout of 10% now. Even if the rentals fall by 50%, the dividend payout is 5%. Make sure that these REITS do not have high leverage.