Drawbacks of Some Financial Instruments

Drawbacks of Some Financial Instruments

In the past, you would have seen your parents or grandparents saving their hard-earned cash by storing it in those biscuit tins. In current…

Dr. Clemen Chiang
Dr. Clemen Chiang
Photo Courtesy of Google Images

In the past, you would have seen your parents or grandparents saving their hard-earned cash by storing it in those biscuit tins. In current times, the mindset of people have evolved to adopt the mindset of “Investing is the new way of saving”.

This has brought about huge changes in the financial industry. The increasing demand for investing has given rise to a plethora of different financial instruments that budding investors can choose to purchase.

On top of stocks, bonds, REITs and saving policies, there is a new type of investments — cryptocurrencies. With so many financial instruments to choose from, which should a budding investor choose?

In my opinion, it all boils down to how much risks you are willing to take.

Based on my research, US bonds have a return rate of 4%, S&P 500 has a return rate of 10% and Singapore REITs have a dividend rate of 6%. Meanwhile, the newest of the lot — cryptocurrencies are going off the roof with crazy figures!

Disclaimer: These information is done from my own personal research and I take the average from past years’ data. These rates might not apply to the future so do your own research before investing!The higher the returns, the higher the risks.
Photo Courtesy of Google Images

US Bonds

With a rate of 4%, US bonds will almost never default because it is backed by their government unless a catastrophic event occurs. This appeals strongly to low risk appetite investors because of its stability and you get to receive coupon payments up until the bond expires.


For stocks indices such as the S&P 500, it will almost almost never default as well because it takes the 500 largest companies based on the US stock exchange. From my research, the average returns is 10% but this is based on a long term average, there will be years that it could dip 20% or increase 20%.

Investors in stocks are likely to hold their portfolio for a longer period of time, i.e. more than 10 years. Stocks generally has a higher return but requires the investor to hold for a longer period because the it fluctuates according to the US economy. Stocks also require more skill in trading because there are multiple companies all around the world across different indices.


The dividend yields are spread widely amongst the various companies in Singapore and I got an average of 6% dividends after compiling all the data. The capital growth potential for REITs are not often sought after and investors are mainly seeking for the dividends.

REITs appeal to people with medium risk appetite because it is similar to a mixture of bonds and stocks, you get dividend yield from the REITs itself and you also gain capital gains of the REIT if it grows. But investors mainly look into REITs to gain a stable source of income stream from the dividends.


Cryptocurrencies are the craze right now and the growth in this market is out of the ordinary in the last two years. Many economists have termed them to be not currencies but more as assets to store value. Similar to stocks, there are hundreds of cryptocurrencies and it require experience and knowledge before making a sound investment. With the Initial Coin Offering (ICO) craze going a while back, I would deem cryptocurrencies to be extremely high risk because of how volatile it can get.

Cryptocurrencies growth can be 10% in a day as compared to a stock’s growth of 10% in a year. This crazy returns is what these high risk investors are looking for and you should only invest what you can lose into cryptocurrency because of its volatility.

With having to require so much skills and knowledge to start investing, writing this article may seem easy but these knowledge has been amassed over time. I came across this application called Spiking that helps you to observe market trends by big investors on the stock markets, for example, Elon Musk buying back Tesla shares. It is really a great help for me because the application gives me push notifications and I get to know about these stock trades without scouring through all the financial news.

What’s more interesting is that Spiking is raising money to fund their cryptocurrency platform on their application. With that platform, users are able to follow big investors of the crypto world termed as ‘Whales’ and mirror their trades in real time. This cuts down the amount of time spent to learn on getting started on cryptocurrencies such as reading on guides on how to purchase Bitcoin. Spiking will truly aid users towards financial freedom because of the convenience that it provides.

by Denlie Noah Hoo, NTU Business Student

Drawing from its successful and rich experience in the stock market since 2016, Spiking is expanding to cryptocurrency trading! With its unique and powerful trading tool and its AI robot Robobull, Spiking enables traders to easily find whales and mirror the trades automatically. At Spiking, we strive to help traders make better decisions and take the steps toward fulfilling their dreams of achieving financial freedom. Check out Spiking App, Top Grossing Finance App at App Store & Google Play.

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