How to Invest in Singapore

How to invest in Singapore with $100

Investing is one of the many important components in personal finance and educating oneself on it could bring you one step closer towards your financial goals. You may have come across some financial blogs online or simply had a chat with your friend. Whichever the case, do bear in mind that no matter how easy it is to start investing or how promising a certain investment is, investors should always do your own due diligence. This article is meant as a simple guide to learn more about investing in Singapore and how we can do so with just S$100.

How to invest in Singapore

Many have the misconception that a large sum of capital is required in order to kickstart an investment portfolio. Not only is this an intimidating thought for new investors, it is also untrue. You do not need a lot of money to invest, and can start with as little as $100.

Many budding investors start small. The key is to educate yourself on the various investment options out there, do your own due diligence, and see what type of investment best suits your personal risk appetite and investment time horizon.

What can investors do with just $100?

First of all, it is important to clarify that it is not just $100. To put things into perspective, $100 can be a large percentage of a young working adult’s disposable income, particularly in the current uncertain economic climate triggered by the coronavirus. In addition, if you look at the return on investment, a $5 gain or $5 loss may not seem like a lot in terms of lump sum value, and can probably get you a meal at McDonald’s, but if the gain or loss stemmed from a $100 investment, then this constitutes to 5% of the investment amount.

As evident, every dollar amount invested matters. Over time, if you were to put in $100 a month, you would have invested $1,200 in a year and the end results can be rewarding in the long run. Ultimately, every dollar is a commitment set aside towards investing for your future.

This is where the concept of opportunity cost can be helpful. Opportunity cost is the forgone benefit of an option. In this case, it refers to how you would have spent the $100 if you chose to not invest in it. It could have gone into treating your family to a nice dinner, rewarding yourself with a gift, contributing to a charity, and more. Evaluating opportunity costs by weighing the pros and cons is important.

What is the benefit of investing $100 a month?

Investing on a monthly basis as opposed to trying to time the market by attempting to buy low and sell high is a form of dollar-cost averaging strategy. This strategy is adopted by investors who divide up their total amount of investment dollars across periodic purchases of a target asset to potentially reduce the impact of volatility on the overall purchase. For example, one may choose to put in a certain amount of money into an investment vehicle on a monthly, bi-monthly, or quarterly basis.

As you can imagine, dollar cost averaging can possibly be a starting point for inexperienced investors or busy investors with no time to scrutinise and track their portfolio performance on a daily basis.

Here are some investment options available in Singapore that allow you to start investing with $100.

(Do note that all investments inherently have risks)

  • Debt Investing

Debt investing allows individuals or businesses to obtain loans directly from others, cutting out the traditional financial institution as the middleman. 

One such example is Funding Societies, a debt investing platform that bridges the gap between SMEs in need of business financing and investors looking to invest into another asset class. The platform offers 6 types of investment products across varying risk levels. 

There are 2 products under the Guaranteed products line, both ensuring that investors’ returns are effectively guaranteed. This means that if the SME makes a late repayment or default in those deals, Funding Societies will arrange for the repayment to the investors on time. The other four types are Property-backed Secured investments, Invoice Financing investments, Revolving Credit investments and Business Term investments.

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  • Shares

Shares are units of equity ownership interest in a company or financial asset that give an equal distribution in profits, if any are declared, usually in the form of dividends. Simply put, buying shares is a bit like buying a small bit of a company. Depending on the company’s performance and market sentiments, the price of the share that you own will fluctuate in the stock market.

  • Exchange Traded Fund (ETF)

An exchange traded fund (ETF) is a collection of securities that tracks an underlying index or industry sectors. An ETF tracks an index, a commodity, bonds, or a basket of securities. It is a fund that holds various underlying assets. 

  • Regular Shares Savings (RSS) plans

RSS plans are a form of systematic investment plan (SIP). This type of plan allows investors to make regular and equal payments into a mutual fund, trading account, or retirement account. Investors can save regularly with a smaller amount of money in this case, as compared to putting in a lump sum of money at one time.

  • Unit trust

Unit trusts are unincorporated mutual fund structures that allow funds to hold assets and give out profits to individual unit owners instead of reinvesting them back into the fund. Simply put, unit trusts are funds that usually hold specific assets in specific quantities where profits and income are passed to its investors.

  • Robo-advisors

As the name suggests, robo-advisors are digital platforms with automated algorithms that guide financial planning for its investors. There is often little to no human supervision. The robo-advisory platform usually does a check on the investor’s financial goals, financial situation, and risk appetite before advising on a suitable portfolio type.

How can investors make the most of their investment?

Just as diversifying your portfolio on debt investing platforms can mitigate concentration and default risks to optimise portfolio returns, splitting your capital in a wide variety of non-overlapping investment instruments can help diversify your overall investment portfolio.

Besides diversification, reinvesting investment gains back into the investment instead of spending it may also be useful. This is due to the compounding effect where money can grow bigger over time. Compounding is the process in which an asset’s earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. The investment ends up generating earnings from both its initial principal and the accumulated earnings from preceding periods. To see this for yourself, use a compound interest calculator to calculate how much your monthly investment or savings can grow.

What else can new investors invest in?

Self-enrichment is something that can be neglected when researching on the topic of investments. Channeling in some money for your own financial literacy is also important as it equips you with better knowledge to form your own investment philosophy and judgement.

Of course, not all education is expensive. If costly financial courses are not suitable, you can also source for free investment articles online or share a finance magazine subscription with friends and family.


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