Blue chip shares

Read about blue chip shares here
Investor Buddy
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Blue chips are large, well managed companies that have a long history of giving good dividends to their shareholders. They are usually the companies that are selected to form the stock market index. Examples of blue chip shares in Singapore are Singapore Airlines, the three local banks, Singapore Press Holdings, SMRT, Singtel, Starhub, the large property companies and shipyards.

In the past, the asset mangers expect a yield of 7% to 10% on these blue chip shares. If a small investor were to buy into the shares at the market price, the expected yield is at this level, comprising of dividend (around 3%) and capital appreciation. There is volatility, i.e. the share price can go up or down by a large margin, but over the long term, this is averaged out to give a yield of expected long term yield.

Some blue chip shares can go bust, but the risk is much lower than the speculative or smaller shares in the stock market. You can diversify the risk by investing in an exchange traded fund (such as the STI ETF). In other countries, you can invest in an indexed fund (i.e. a unit trust that is invested in the stocks comprising the stock market index) but this is not available in Singapore.

Read the FAQ about investing in blue chip shares in www.tankinlian.com (Ask Mr. Tan)

Tan Kin Lian

Invest in Preference Shares

A consumer asked for my views about a 5 year single premium product that pays a guaranteed yield of 2% p.a. or 10% for 5 years. The investment showed an immediate 10% loss during the first year, a smaller loss during the next two years and will only produce the gain of 10% on maturity at the end of 5 years. I advised the consumer against this type of investment, as it locks up the money for 5 years and only gives a modest return.

I did some research on preference shares and REITS and have posted several articles in this blog. I have also written a FAQ on "investing in preference shares", which is posted in my website, www.tankinlian.com (click on Ask Mr. Tan). The preference shares issued by the local banks give a yield of 4.2% to 5.9% and should be relative safe.

Tan Kin Lian

TKL Website [6]

Feedback on TKL website: www.tankinlian.com

a.. How do you come to know about the website?

Via google search for term insurance

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I was comparing term insurance prices across different companies

c. Do you like the design and layout of the website?

Simple is good, its the content that matters. The various investment/insurance articles are useful starting points for me.

d. What do you like best about the website (if you like it at all).

The simple and easy to understand articles. 

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