A Beginners Guide to Investing in Singapore

Want to grow your money but don’t know which investment type suits you best? This beginner’s guide is for you. 

It’s time to stop relying on the measly 0.05% interest you’re currently earning in your savings account. To beat the core inflation rate of 1.3%, you’ll need to do better than that! And the best way you can do that is to invest. If you’re new to the game, you may be wondering: Isn’t investment risky? I don’t want to put all my hard-earned cash into a risky investment and end up losing money from it! The answer? No, you don’t have to put all your eggs into one basket. And not all investments are high risk! Some investments are barely any risk at all, though as expected, their returns are also correspondingly lower than high-risk investments like stock investments.

Here, we’ll give you an overview of the many investment choices you can make, from low-risk investments in government bonds to high-risk investments in the stock market. 

Disclaimer: As this is only an overview, our focus here is laying out all the options you can take, and we won’t go too in-depth with the details. If any of these money growers interests you, be sure to do further research before jumping in.

But before we go through your choices, here’s a little reminder. You should only start investing if you can cover all of these points: 

  1. You’re not in any debt
  2. You have money to spare (after accounting for 6 months of savings)
  3. You do your research beforehand
  4. You’re willing to take on the responsibility and any consequences

Remember, an investment can be risky. You should only invest the money that you are willing to lose, and not the money that you’re relying on for your day-to-day needs. And no matter how good a deal sounds, be sure to read up and clarify and confusing details before you invest. But if you’ve checked and double-checked, and you have the spare moolah to grow, then go for it!

CDP Account & Brokerage Account: The First Step To Investing

Before you can start investing in Singapore, be it in Singapore Savings Bond or stocks investing on SGX, you will first need to open a Central Depository Account (or CDP account). And before you can start investing in stocks, you’ll have to open a brokerage account. All of the bonds and stocks you buy will be deposited into your CDP account.

Opening a CDP account is now easier than ever before with the online application portal. You simply need a bank account with any of the following banks in Singapore: Citibank, DBS/POSB, HSBC, Maybank, OCBC, Standard Chartered Bank or UOB. Then head over here to sign up online. With MyInfo, you don’t even need to fill all of the required information. If your data is already with MyInfo, most of your personal data will already be filled in for you.

When you sign up, you will also need these supporting documents with you:

  1. A Singapore Bank Account
  2. Photographed/Scanned Copy of Signature
  3. Tax Identification Number (TIN)

If you have a tax residency status outside Singapore, you will need to provide:

  • Country of Tax Residency
  • Tax Identification Number (TIN) 
  • Completed Form-W9

Note that you need to be at least 18 years of age to apply. 

Brokerage firms

There are many brokerage firms you can open an account with such as 

  • CIMB Securities
  • DBS Vickers Securities
  • iFAST Singapore
  • KGI Securities
  • Lim & Tan Securities
  • Maybank Kim Eng
  • OCBC Securities

And more.

When choosing a firm, consider these two factors: market access and trading/commission fees. For the former, choose firms that offer wider market access if you’re looking to invest in foreign exchanges. 

Singapore Savings Bond (Low Risk, High Liquidity)

The Singapore Savings Bond (SSB) is a bond issued by the Singapore Government. It’s a fairly low-risk way of earning money, and as a bonus, you can take out your money at any time. The SSB interest rate starts low but increases every year to the maximum 10 years, so if you want to get the best returns, don’t take the money out until the bond expires. 

Exchange-Traded Funds (Medium Risk: Diversify Your Funds)

An Exchange Traded Fund (ETF) is an index fund that tracks a pool of many companies. It’s good for when you don’t want to put all your eggs into one basket. Rather than buying up a huge share of one company’s stock, you get a small stake in many different companies. It’s also less expensive than investing in many different companies individually. Of course, this still has an element of risk because any of those companies can still go bust, so we’ve pegged ETF at medium risk.  

Regular Savings Plan (Medium Risk)

If you like the sound of ETF but you lack the time to monitor stocks or you’re unsure how to read the market, a Regular Shares Savings Plan (RSS) is great for you. Through an RSS, you will invest a fixed monthly amount into an ETF, and the bank you choose to invest with will do all the legwork for you. Currently, RSS is offered by DBS Bank, OCBC Bank, and PhillipCapital. An RSS is good for inexperienced investors who want to invest long-term.

Stocks Investing (High Risk, High Returns)

This is what most people think of when they think about investments. Stocks investing means you pin your hopes on the success of a company. Obviously, this means that if the company goes down, your money will too. On the bright side, stocks investing can earn you a lot of money. If everything goes well, that is.

Before you invest, learn how to read financial statements (income statement, balance sheet, and cash flow statement) and financial ratios.

Not all investments are equal. Some will require more initial capital, while others require only a small amount. Some have virtually no risk but offer lower payouts, while others are high risk but can potentially give you sky-high rewards. Whichever the case, always be aware that investment always comes with a risk, and you will always need at least some amount of capital to invest. So, be sure to do your research and read the fine print before you embark on your investment journey.

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