3 Ways to Risk-Free Wealth Building (+ Bonus)

3 Ways to Risk-Free Wealth Building (+ Bonus)

Growing your wealth doesn’t always have to involve taking risks. For Singaporeans who have low-risk tolerance, there are numerous ways you can put your money to work and build your wealth without experiencing a drop in account values when the economy is not doing well.

There are 5 ways to build your wealth without taking a single ounce of risk. None of these methods are get-rich-quick schemes and takes years of patience and discipline to realize a return. So if you have a very short-term horizon, these may not be the most suitable for you. But if you are willing to put in the time, then they are definitely worth it.

With that said, let’s get started.

Endowment Plans

Endowment plans are financial products that combine elements of insurance and savings to help individuals build wealth over a specific period without taking significant financial risks.

Related: How Endowment Works in Singapore

Here’s how endowment plans work and why they are considered a relatively low-risk way to build wealth:

  1. Guaranteed Returns: Endowment plans provide a guaranteed sum of money upon maturity, which is typically after a predetermined period, such as 10, 15, or 20 years. The key advantage of endowment plans is that they offer a guaranteed return on your investment. This means that you can expect to receive a specific amount of money at the end of the policy term, regardless of market fluctuations.
  2. Life Insurance Protection: Endowment plans also include life insurance coverage, which provides financial protection to your beneficiaries in the event of your untimely death during the policy term. This feature ensures that your loved ones receive a payout if something unfortunate were to happen to you.
  3. Regular Premium Payments: To participate in an endowment plan, you make regular premium payments (monthly, quarterly, or annually) over the duration of the policy. These premium payments are invested by the insurance company on your behalf, which helps to grow the value of the plan over time. The funds are managed by professionals who aim to generate a return on the investments.
  4. Bonuses and Non-Guaranteed Returns: In addition to the guaranteed maturity payout, many endowment plans may offer bonuses or non-guaranteed returns. These bonuses can be in the form of reversionary bonuses, terminal bonuses, or other variations. The actual amount of these bonuses depends on the performance of the insurer’s investments and other factors. While they are not guaranteed, they can provide additional returns if the insurance company performs well.
  5. Financial Discipline: Endowment plans encourage financial discipline as they require you to commit to regular premium payments. This enforced savings habit can be beneficial for individuals who struggle to save or invest consistently on their own.
  6. Diversification: The insurance company managing the endowment plan invests the premiums in a diversified portfolio, which may include various asset classes such as bonds, equities, and fixed-income securities. This diversification can help mitigate investment risks.
  7. Long-Term Financial Goals: Endowment plans are well-suited for individuals with long-term financial goals, such as funding their children’s education, saving for retirement, or building wealth over time.

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Fixed Deposits

Fixed deposits (often referred to as time deposits or term deposits) are a popular and straightforward savings or investment option that allows you to build wealth without taking significant risks.

Key Features and Advantages:

  • Capital Protection: One of the primary advantages of fixed deposits is capital protection. Your initial deposit is secure, and you will receive the entire principal amount back at the end of the tenor, regardless of market fluctuations.
  • Predictable Returns: Fixed deposits offer predictable and guaranteed returns. Since the interest rate is fixed, you know exactly how much interest you will earn over the investment period.
  • Low Risk: Fixed deposits are considered low-risk investments, making them an excellent choice for risk-averse investors. Your returns are not dependent on market volatility or economic conditions.
  • Liquidity Options: While fixed deposits are designed for a specific term, many banks offer the option of premature withdrawal or breaking the deposit. However, early withdrawal may result in a lower interest rate or a penalty.

Types of Fixed Deposits:

  • Regular Fixed Deposits: These are standard fixed deposits with a predetermined interest rate and tenor.
  • Promotional Fixed Deposits: Some banks offer special promotions with higher interest rates for specific terms, which can be a way to maximize returns.
  • Foreign Currency Fixed Deposits: If you have funds in a foreign currency, you can open a fixed deposit in that currency. This can be useful for individuals dealing with multiple currencies.
  • Step-Up Fixed Deposits: Step-up fixed deposits offer increasing interest rates over the tenor, providing the benefit of higher returns as time progresses.

Tax Implications:

  • In Singapore, interest earned on fixed deposits is not subject to income tax. This means, you can grow your money tax-free.

Learn More: IRAS | Interest


  • While fixed deposits are a low-risk investment, they also offer relatively modest returns compared to other investment options like stocks or real estate. If your goal is capital preservation and you prefer a predictable income stream, fixed deposits are suitable.
  • To maximize returns, it’s a good practice to shop around and compare the interest rates offered by various banks before opening a fixed deposit account.
  • Keep in mind that interest rates on fixed deposits may be influenced by factors such as the prevailing market interest rates and the bank’s policies.
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Singapore Savings Bonds

Singapore Savings Bonds (SSBs) are a unique savings and investment product offered by the Singapore government to help individuals save and grow their money with a focus on safety and flexibility.

Here’s a detailed explanation of how Singapore Savings Bonds work:

Issued by the Government:

SSBs are issued and fully backed by the Singapore government. This means they are considered virtually risk-free, as they come with the full faith and credit of the Singapore government.

Key Features and Benefits:

  • Safety: SSBs are one of the safest investment options available, as they are guaranteed by the government. They are an excellent choice for risk-averse investors who want to preserve their capital.
  • Flexibility: SSBs offer a high degree of flexibility. They are designed to be accessible to a wide range of investors. You can buy SSBs in small denominations, making them suitable for both retail and institutional investors.
  • Variable Interest Rate: The interest rate on SSBs is variable and is tied to the Singapore Government Securities (SGS) yields. This ensures that the returns on SSBs are competitive and responsive to market conditions.
  • Monthly Issuance: SSBs are typically issued on a monthly basis, allowing investors to purchase them regularly if they choose to do so.
  • Multiple Investment Options: You can choose to invest in SSBs for different purposes, such as saving for short-term goals or building a long-term investment portfolio.

Investment Tenors:

SSBs come with different investment tenors, typically ranging from 2 to 10 years. This allows you to select the tenor that best aligns with your financial goals and investment horizon.

Interest Payments:

SSBs offer interest payments every six months, providing you with a predictable income stream. The interest earned is credited directly to your bank account.

Early Redemption:

SSBs offer the flexibility to redeem your bonds before the maturity date with no penalties. This means you can access your funds in case of an emergency or to take advantage of better investment opportunities.

Applying for SSBs:

You can apply for SSBs through the Central Depository (CDP) or directly through your bank or financial institution. The application process is straightforward and can often be done online.

Useful Links

Interest Rates and Returns:

The interest rates on SSBs are competitive and may vary from month to month based on market conditions. These rates are typically announced by the government before each issuance. You can check the SSB website or other financial sources for the latest rates.

Use Cases:

SSBs are versatile and can be used for various financial goals, including building an emergency fund, saving for short-term expenses, or even as a stable component of a diversified investment portfolio.

Singapore Savings Bonds offer a unique combination of safety, flexibility, and competitive returns, making them an attractive option for individuals looking to grow their wealth without taking on significant financial risks. They are particularly well-suited for those who value capital preservation and accessibility to their funds while earning a reasonable return.

CPF Special Account (SA)

The Central Provident Fund (CPF) Special Account (SA) is a savings account within the CPF system in Singapore. It is designed to help Singaporeans save for their retirement, particularly for long-term financial security. The CPF SA offers a safe and reliable way to build wealth for retirement while enjoying certain tax benefits.

Purpose of CPF Special Account:

The CPF SA is primarily earmarked for retirement savings. It is intended to provide individuals with a source of income during their retirement years, ensuring they have sufficient funds to meet their retirement needs.

Contributions and Interest Rates:

  • CPF members contribute a portion of their income to the CPF SA. The exact contribution rates may vary depending on age and income levels.
  • The funds in the CPF SA earn a guaranteed interest rate, which is set by the government and reviewed periodically. This interest rate is typically higher than the one offered in the CPF Ordinary Account.

Learn More: CPFB | Earning CPF interest

Tax Benefits

Contributions to the CPF SA are eligible for certain tax benefits. Members can enjoy tax relief on their CPF contributions, which reduces their taxable income, helping them save on income taxes.

Useful Links

CPFB | What are the conditions for me to enjoy tax relief?

CPFB | How much tax relief can I enjoy when I make cash top-ups?

Withdrawals and Usage:

  • Funds in the CPF SA are typically meant to be used for retirement purposes. However, they can also be used for housing and investment under specific conditions. For instance, CPF SA funds can be used for the down payment and mortgage payments on HDB flats or private property.
  • It’s important to note that withdrawals from the CPF SA are subject to age and account balance requirements. Members can usually start making withdrawals from their CPF SA after reaching a certain age (e.g., age 55) and meeting specific criteria.

Investment Opportunities:

CPF SA funds can be invested in various approved CPF Investment Schemes, allowing account holders to potentially earn higher returns over time. These investment options include unit trusts, exchange-traded funds (ETFs), and other investment instruments.

Long-Term Financial Planning:

The CPF SA plays a crucial role in long-term financial planning for retirement. It helps individuals accumulate savings over their working years, ensuring they have financial security and a steady source of income during retirement.


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