How to Get Started With Investments in Singapore

trading screen


We all want to see our wealth grow over time. There are undeniable perks to accumulating wealth, from buying your dream home to paving the way for a stress-free retirement. One of the biggest reasons why people do not invest (apart from the risks) is that they have no idea where to start. 

Investments can be daunting. With so many types of investments, so many platforms, and so much information, it can be hard to get started. The first steps are always the hardest to take but we are here to help you. Read on to have all your questions on investments in Singapore answered. 

How Much Do I Need to Get Started?

When people say you can start with as little as S$500, they’re not wrong. 

The first thing you need to do is build up an emergency fund. It is incredibly risky to put your entire life savings into investing because one never knows when they may need to deal with a medical emergency, or have money saved up for unexpected times. 

Furthermore, when all your money is tied up in investments, you might have to withdraw funds and incur penalty fees to deal with your personal crises which may lead to losses.  

Therefore, ensure you have enough money saved up to deal with tumultuous events, and whatever’s left will be just the right amount to get started with. 

What Do I Invest In?

One of the first places beginner investors start at are ETFs (Exchange-Traded Funds) or blue-chip stocks. ETFs are funds that pool money from various investors and trade that sum. This allows a beginner investor to diversify their portfolio while not having to do all the actual trading themselves. Blue-chip stocks, on the other hand, are shares in a single company of high market capitalization, and because of this are generally considered less risky because you’re investing in a stable and established firm. 

You can invest in many other things, options, bonds, REITs, commodities, etc. but one key thing to note is that you should refrain from investing in things you do not entirely understand. The market is huge and no investor knows it all, but at the very least you should do your research and be confident in what you’re investing in. 

Where do I begin?

One of the most popular trading platforms in Singapore nowadays are online brokerages. For trading in stocks Online brokerages are cheap, simple, reliable. They are incredibly accessible, with most brokerages boasting mobile and web applications that you can take with you wherever you go. 

If you’re looking for the truly cheapest commission rates so you can get the best bang for your buck, take a look at uSMART. uSMART currently boasts the lowest commissions, coming in at only 0.02%.

If you want a more guided approach to investing, investing with your trusted bank is always an option. 

What is an ideal rate of return?

Inflation in Singapore is about 3% to 4% every year. This means that while your S$1,000 can buy a phone this year, it may not be able to do that next year as the price of the phone will increase by 4% but your S$1,000 will remain the same. Ofcourse, we are only approximately speaking. So in this situation you should be looking at a return rate of 5% and upwards will ensure that your money is steadily gaining in value over the years. 

As a general rule of thumb, always aim for a rate of return higher than inflation rates.

What are the risks of investing?

No matter how safe you think you are or how confident you may be, we human beings cannot predict the future. Markets are volatile and you never know what might happen. The current situation is an astute example. The S&P 500 is in a bear market after decades due to the pessimistic business outlook as a result of the coronavirus. None of this really could have been predicted in early 2019. 

Nevertheless, you can always take measures to curb your losses. Having an emergency fund and diversifying your portfolio are some of the many ways you can cushion the impact of unforeseen circumstances on your investments. 

If you still have more questions pertaining to investing in Singapore, head over to our website where our analysts have a comprehensive set of resources and recommendations for your perusal. 

This entry was posted in Blogging. Bookmark the permalink.