How are you enjoying your Chinese New Year so far? Pretty sure there’s good food, good company, and great memories. And of course – plenty of ang baos, too!
Now with that extra cash, it’s time to think about what to do with all that ang bao money you've collected. And don’t worry if the amount wasn’t huge. At the end of the day, it’s extra money you didn’t have before, with no expectations attached. That means you’re completely free to use it however you like.
But instead of blowing it all on bubble tea, Pokemon cards or one too many impulse Shopee buys, why not get your ang bao money to work for you?
Choosing the right place to park it really comes down to two things:
When you’ll need the money
How much risk you’re comfortable taking
Short Term (0 to 12 months)
If you don’t need the money immediately but would like to use it within a year– say for a holiday or a big purchase – liquidity should be your top priority. In other words, you want a place that can grow your money, while still being easy to access when you need it.
Money Market Funds
Money market funds are low-risk investments that put your money into short-term instruments such as government securities and bank deposits. They’re designed to preserve your capital, which means there’s a low chance that you will lose your money.
In terms of returns, money market funds typically offer slightly higher returns than regular savings accounts because they earn interest at higher rates, and that interest is passed on to you. As a result, your money grows a bit faster than it would in a standard savings account.
Most also don’t have a lock-in period, so you can withdraw your money when needed. That said, while money market funds are liquid, withdrawals aren’t always instant. Some funds may take 2 to 3 business days for the money to reach your bank account, so it’s worth factoring this in when planning a withdrawal.
Robo-Advisors
If you want your money to grow but aren’t sure how to start, a robo-advisor can help. You just have to inform them of your risk level, timeframe and goals, and the platform will automatically create a portfolio based on your needs. So, you don’t have to mull over annual reports or figure out which companies might perform well.
If you are looking to invest for the short term, it’s best to pick a low-risk, conservative portfolio. These portfolios are designed to keep your money safe while your money grows modestly.
Also, withdrawals are usually quick, so your money remains accessible when you need it.
Medium Term (1 to 5 years)
If you don’t need your ang bao money immediately but plan to use it within the next few years–maybe for your wedding or as down payment for a home – you can afford to take a little more risk in exchange for potentially higher returns.
Bond Funds
Bond funds are mutual funds and exchange-traded funds (ETF) that invest in government and corporate bonds. When you invest in a bond fund, you’re basically lending money to governments and companies.
Returns usually come from the interest paid on these loans, and when the bond matures, the original amount that was lent is returned to the fund.
While bond funds aren’t risk-free, they tend to be more stable than equity funds and can offer higher returns over a few years. This makes them a popular choice for investors who want steady growth without taking on too much risk compared to equities.
Balanced funds
Balanced funds invest in a mix of bonds and equities, aiming to give you a balance between growth and stability. By spreading your money across different asset types, they help reduce large swings in value while still allowing your money to grow over time.
Withdrawals are usually flexible as well, but you should always check on the fund’s specific timeline.
These funds are ideal if you are looking for moderate growth with moderate risk, without taking on the full volatility of the stock market. Think of them as a middle ground – not too aggressive, but not too conservative as well.
Long Term (Over 5 years)
If you don’t need your ang bao money anytime soon, consider putting it towards long-term goals like wealth building and retirement. With time on your side, you can use this to your advantage by giving your money time to grow and recover from short-term market swings.
Equity Funds
Equity funds invests mainly in stocks, which means you will own small portions of companies. Because these companies aim to grow over time, equity funds are designed for long-term capital growth. Thus, their value can be quite volatile in the short term, with prices moving up and down along the way.
While equity funds can give you a steady income, returns aren’t guaranteed and can vary from year to year. Historically, equity funds have delivered higher returns over investment periods of 10 years or more, as the longer time frame allows you to ride out market fluctuations and benefit from compounding growth.
Because of this short-term volatility, equity funds are best suited for money you can leave invested for many years without needing to touch it. But investors have to learn how to stomach these temporary dips and avoid making rash decisions when they happen, such as panic selling.
Retirement fund
Another long-term option is contributing to a retirement fund, which is designed specifically for long-term savings. These funds are typically structured to prioritise capital preservation while allowing your money to grow steadily over time.
In some countries, this includes government-backed retirement schemes such as Singapore’s Central Provident Fund (CPF) or Malaysia’s Employees Provident Fund (EPF).
You can often make voluntary contributions to top up your retirement account. Because this money is usually locked in until retirement age, it’s best suited for ang bao money you’re confident you won’t need for many years. In return, you can leave it untouched and allow compounding to work over the long term.
Retirement funds are just one way to make your ang bao money work for you. Whether you choose short-term safety, steady growth, or long-term investing, how you use this extra cash can play a meaningful role in your finances. Even small amounts can grow over time if you put them to work wisely. The key is picking an option that fits your time horizon and comfort with risk.
