How To Invest In Singapore: A Beginner’s Guide (2022)

A Beginner’s Guide To Investing In Singapore

Relying on your savings to achieve financial security is a thing of the past. If you are serious about safeguarding your future, you need to invest.

Investing may seem like a daunting task, especially for first-timers. However, it’s actually straightforward if you know where to start.

Investing is not just about putting your hard-earned money into something that will give you great financial returns at a later date. It is also about finding smart business opportunities, no matter how small, and making the most of them.

Want to know how to invest in Singapore? We’ve compiled this beginner’s guide for you.

Here At OMY Singapore, You Will Discover:

Things You Need to Know Before Making Investment Decisions

Things You Need to Know Before Making Investment Decisions

Starting your investment journey is never easy. You need to evaluate a lot of things first, from the type of investments you want to make, to the time frame of your investments. However, take note that investing won’t make you rich overnight. It takes time.

To help you plan your investment journey better, consider these things below.

Your Financial State

What kind of financial state are you in right now? Are you drowning in debt? Are you saving up for a car down payment? Are you just starting your career? Ask yourself these questions and write down your answers. This way, you will be able to create a realistic map of where your finances stand right now.

Once you have an idea of where you stand financially, you can identify your next step. Before you invest, make sure you have an emergency fund to protect yourself from unforeseen expenses. This way, you don’t have to tap into your investments when an emergency occurs.

Next, you must also factor in your debt. How much do you owe? Paying off your high-interest debts should be your top priority. Once you’ve paid off your debts, you’ll be able to focus on investing.

Lastly, do you have extra cash to use for investments? The last thing you want is to dig into your emergency fund or take out another debt to make investment payments. If so, you may have to come up with another income source to cover your investments.

Determine Your Investment Goals

It’s not enough to have a financial plan without goals. Your investment goals will act as a guide as you look for investments and identify business opportunities.

Short-term Goals

These goals are usually less than a year. It may include buying new furniture, paying for a vacation, or paying off your credit card debts.

The advantage of setting short-term investment goals is that you can immediately feel your rewards.

The downside, however, is that short-term investments are usually high-risk with high rewards, or low risk with low rewards. Therefore, always be realistic about where you put your money. If you consider high-risk investments, you may end up losing your money, or earning your goal.

Medium-term Goals

These investments allow you to make some cash in the long run. Most of these goals are 1-3 years away. Examples include paying for your child’s tuition, generating money to start a business, buying your first car, or purchasing a property as an investment.

Long-term Goals

These investments give you the chance to achieve financial freedom. Most of these goals are 10 years long, or more. Examples include saving up for retirement, buying your own home, or buying out an existing business.

Long-term goals are usually passive investments that don’t require much maintenance. The logic is that if you pick the right investments, it will grow over time even if you leave it alone.

Assess Your Risk Tolerance

When you invest, there’s a chance for things to not go as planned. You could lose half your investment because of a bad choice. You could even lose all your money. Conversely, you can gain so much money from investments if you do it right. How does this make you feel?

Risk tolerance refers to how much risk you’re willing to take to achieve your goals. Are you a cautious investor, or are you willing to take risks?
If you get nervous just thinking about your investment, you need to lower your risk tolerance. If you don’t mind taking a risk, you can go for higher-risk investments.

Consider Various Investments To Diversify Your Portfolio

Chances are, you’ve heard of the saying “Don’t put all your eggs in one basket.” The same is true when it comes to investments. By not following this tip, you will make yourself vulnerable to losses.

There are a lot of options to choose from when it comes to investments. Why diversify?

For one, diversification can help you mitigate the risk you take with your investments. Secondly, you can get better returns. If you invest in a single investment, you are limited in the amount of profit you can make from it. Investing in multiple avenues can help you maximise your earnings.

Avoid Investments That Are “Too Good To Be True”

Scams are everywhere. It’s hard to tell which business ventures are true and which are not. Most scam artists try to entice you with “too good to be true” investment opportunities that promise you a huge return. As appealing as these opportunities are, they can be very risky.

If you are looking to invest, you need to be wary of these investments.

It’s important to do your research first. Find out if the investment is regulated by the government, who the promoters and distributors are, and how much they are offering in the investment.

If the promoters are pressuring you to make an investment decision immediately, be wary. You can never be sure of your decision if you make it in haste, especially if you do not know the investment.

As always, do your due diligence. An investment is only as good as the company behind it. Before investing, do your research to get to know what the company has to offer.

Open A CDP Account

The Central Depository (CDP) Account is needed to safely keep your securities such as bonds, stocks, and other securities that are listed on the Singapore Government Securities and SGX.

First, you must be at least 18 years old to register for an account. Undischarged bankrupt individuals are not permitted to open an account.

If you meet the eligibility requirements, you need to have a bank account with the following:

  • Standard Chartered
  • Citibank
  • UOB
  • OCBC
  • POSB/DBS
  • Maybank

Once done, open an account here, and provide the supporting documents required:

  • NRIC/ Passport
  • One of these documents or e-statements dated within the last 3 months:
    • Bank statement from any Monetary Authority of Singapore (MAS) licensed banks
    • Central Provident Fund (CPF) statement
    • Latest Notice of Assessment for Income tax
  • Singapore Bank Account
  • Photographed/ Scanned copy of your signature

Other supporting documents are found here.

Best Investment Options In Singapore

How To Invest In Singapore

Here are the best investments for beginners in Singapore. Take a look at this table to examine each investment side by side.

Investment type Best for Pros Cons
Singapore Savings Bond Investors with low-risk appetites
  • Minimal risk
  • Flexible exits (high liquidity)
  • You can use your Supplementary Retirement Scheme
  • Tax-free
  • Affordable fees
  • Higher returns compared to savings accounts
  • Low-interest rate
  • High returns can only be enjoyed when the fund matures
  • Interest rates are not consistent
Exchange-Traded Funds Investors with medium-risk appetites
  • Trade execute just like stocks
  • Low expense ratio
  • Investment diversification
  • Comes with trading costs
  • The investment mix may be limited
  • Not great for short-term goals
Investment Plan Investors with medium risk appetite
  • Sustainable
  • No monitoring needed
  • Low entry costs
  • Diversified assets
  • Comes with trading costs
  • The investment mix may be limited
  • Not great for short-term goals
Stocks Investing Investors with high-risk appetites
  • High returns over time
  • Income from dividends
  • Highly liquid
  • Great hedge for inflation
  • Prices can rise and fall dramatically
  • No guaranteed return
  • Takes time to research

1.Singapore Savings Bond

Pros Cons
  • Minimal risk
  • Flexible exits (high liquidity)
  • You can use your Supplementary Retirement Scheme
  • Tax-free
  • Affordable fees
  • Higher returns compared to savings accounts
  • Low interest rate
  • High returns can only be enjoyed when fund matures
  • Interest rates are not consistent

Singapore Savings Bond is one of the most common choices of investment beginners in Singapore because it offers higher returns compared to fixed deposits. It’s also an amazing option for investors who do not have a big risk appetite.

Singapore Savings Bonds are types of Singapore Government Securities. Because it is fully backed by the government, a lot of Singaporeans, foreigners, and PRs prefer this type of investment.

Each month, the Monetary Authority of Singapore publishes a new bond with specific interests. To help you understand SSBs better, here’s a look at the Singapore Savings Bond for June, called SBJUN22 GX22060F. This investment offers a 2.53% average return in 10 years.

Year from issue date Interest % Average return per year %*
1 1.43 1.43
2 2.41 1.92
3 2.68 2.16
4 2.71   2.30
5 2.71   2.37
6 2.71   2.43
7 2.71   2.46
8 2.71   2.49
9 2.71   2.51
10 2.71   2.53

How to get started:

Purchasing Singapore Savings Bonds is easy. First, you must open a CDP Securities Account, and own a bank account.

When you finally have your accounts settled, you can apply for an SSB through internet banking or ATMs. Wait for the Monetary Authority of Singapore to announce the amount available for issuance, and its corresponding interest rates.

After you’ve been allotted, you can start earning interest after 6 months. Your yields can be received through your Supplementary Retirement Scheme fund or CDP account. If you redeem your bonds before their maturity period, redemption requests can be done in S$500 increments. You just have to pay a S$2 transaction fee.

2. Exchange Traded Funds 

Pros Cons
  • Trade execute just like stocks 
  • Low expense ratio 
  • Investment diversification 
  • Comes with trading costs 
  • Investment mix may be limited 
  • Not great for short term goals 

Also called ETF, this is an investment that tracks the performance of an underlying index. Beginners that go for this investment can access a wide range of companies within the ETF instead of simply picking individual companies. You just have to pay a standard price for investing in multiple investments at once.

How to get started:

There are 3 ways you can buy ETFs in Singapore. First, you must open a CDP account and a brokerage account. After this, you can purchase ETFs you are interested in.

Second, you can start a Regular Savings Plan or RSP. This will allow you to invest a predetermined amount of money each month.

Finally, you can purchase ETFs through a Robo Advisor such as Autowealth and StashAway. Both offer investment portfolios that are specifically designed to meet your investment goal, risk appetite, and preference. Your portfolio will rebalance automatically, and you also have the option to add more ETFs each money.

3. Investment Plan 

Pros Cons
  • Sustainable 
  • No monitoring needed 
  • Low entry costs 
  • Diversified assets 
  • Not great for short-term gains 
  • Money invested when the market fluctuates 

For investment plans, you are required to pay a fixed sum regularly. This will be used to invest in REITs, blue chip stocks, and/or ETFs.

This type of investment protects you from stock volatility since you are investing in a consistent schedule regardless of the market’s current performance. Considering this, you can ride the ups and downs of different investments, as well as take advantage of the market’s trajectory.

This is an awesome option for investment beginners who do not have the time or patience to consistently monitor the stock market and invest depending on the fluctuations.

Here are various investment savings plans in Singapore.

Investment Savings Plan Assets
FSMOne Regular Savings Plan 88 ETFs (worldwide)
POEMS Share Builders Plan Over 50 ETFs and stocks
DBS Invest-Saver 4 ETFs
Saxo Regular Savings Plan 4 managed ETF portfolios
OCBC Blue Chip Investment Plan 15 ETFs and stocks

4. Stocks Investing

Pros Cons
  • High returns over time 
  • Income from dividends 
  • Highly liquid 
  • Great hedge for inflation 
  • Prices can rise and fall dramatically 
  • No guaranteed return 
  • Takes time to research 

Also known as shares or equities, stocks are an investment that gives you part ownership of listed companies.

How to get started:

Just like other investments, stocks cannot be bought anywhere and taken home. Before you can buy stocks, you need to open an investment brokerage account. The brokerage will serve as the middleman between you and the stock exchange.

With brokerage accounts, you must pay trading fees with each trade you make. This can impact your profit so always compare. Phillip Securities (POEMS) and SAXO Markets are a great starting point for beginners because they offer low fees, as well as no minimum commission.

Because you’ll be investing through your chosen broker’s platform, you must also take into consideration how easy or hard it is to navigate. As much as possible, choose a broker with a simple and user-friendly design so you won’t get intimidated to learn.

If you don’t want to manage your account, you can leverage custodian accounts, where the brokerage will hold stocks on your behalf. For those who want to own Singapore stocks, a CDP account is required.

After opening an account, you can finally begin trading. First, transfer money to your account. Most brokerages have a minimum funding requirement. Then, decide which stocks you want to put your money into.

Here are the most popular buys for beginners looking for a stable and safe investment.

Blue chip stocks 

You can buy stocks from companies like DBS, Keppel, and Singtel, which are considered giants in today’s economy. Investing in blue stocks is safe since these companies are extremely stable. However, it’s recommended to hang on to these stocks for a longer period since their growth is not fast.

ETFs

As discussed above, ETFs are an awesome bet because they are safer than blue chip stocks. These are typically a mix of assorted stocks (or bonds and other assets) that perform well. For example, if one company in your ETF goes bankrupt, you’re not going to feel a huge dent in your investment dividends.

REITs 

Through Real Investment Trusts (REITS), you can be a part-owner of commercial, industrial, and health-related companies in Singapore and abroad. Some of the most successful REITs in Singapore include:

  • Suntec REIT
  • Mapletree Logistics Trust
  • Mapletree Industrial Trust
  • Parkwaylife REIT
  • Ascendas REIT
  • CapitaLand Integrated Commercial Trust
  • Frasers Centrepoint Trust
  • Keppel REIT

After the funds in your account have been cleared, you can finally start buying shares using your broker’s dedicated platform.

A Word From OMY 

Your financial future depends on your investment decisions. What you do today will affect the future.

If you are just starting in your investment journey, take comfort in the fact that you are not alone. Everyone starts small. It takes time. Practice patience and you will slowly but surely be able to make an impact.

Now that you know how to invest in Singapore, you can start making wise investments that will help you achieve financial stability.

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