6 Ways You Can Invest Your First $1,000 In Singapore

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Investing beyond the daily necessities of life has usually been thought of as a rich man’s game. This may have been true in the past decades, as there were few investment vehicles that accepted a small capital outlay. But not anymore. Today, technological advancements have altered our perceptions of investments and our ability to participate in them.

Unlike in the past, investors now have more asset classes and investment products to choose from. These include the traditional forms of investments like stocks, property, and bonds, as well as newer forms of investments like cryptocurrency, peer-to-peer lending, and Environment, Social and Governance (ESG) funds. We could now begin investing in them with a small capital of between $100 and $1,000.

This is beneficial for us as investing in the right product allows us to beat the inflation monster that erodes the purchasing value of money over time. Moreover, when we start investing early, we have more runway to compound our returns. Which is why, we should start investing even if we have a small savings of $1,000.

We have curated a list of 6 ways in which new investors could start investing for as little as $1,000 in Singapore.

#1 Invest In Yourself

Warren Buffet once said, “The best investment you can make is an investment in yourself”. And, according to him, his best investment was a $100 Dale Carnegie public speaking course, despite what many would have thought.

It takes us at least 15 years of formal education to complete our tertiary education and be hired in a professional capacity. Yet, we either neglect the importance of learning or find shortcuts (ie: stock tips) when it comes to our investments.

Thankfully, in this digital age, we have access to a plethora of information at our fingertips. Open online learning marketplaces such as Udemy, Coursera, and Skillshare offer convenient-access and affordable courses on a host of topics, including trading and investing.

Furthermore, there are many accredited and non-accredited investment courses structured for our local context. This could be useful for those seeking a more traditional hand-holding session. For the IBF-accredited investment courses from 1 January 2023, Singapore citizens under 40 could tap on the IBF’s Financial Training Scheme (FTS) to get up to 30% in course fees subsides (capped at $500 per person), while those over 40 could receive up to 70% (capped at $500 per person).

#2 Robo Investments

Since 2008, the adoption of robo-advisory platforms amongst retail investors globally has been gaining traction. They are seen as an alternative to the traditional means of using a financial adviser for investment advice.

Robo advisors provide access to their platform, allowing users to select funds based on their risk profile and investment goals. These robo funds invest in either ETFs or unit trusts, or a combination of both, using their unique investment methodology and algorithms. It costs little to no sales charges and requires minimal annual fees to invest in a diversified, passively managed investment strategy.

Amongst the many robo advisors that are available, these are some of the robo advisors that allow you to invest with them for $1,000 or less.

Endowus

Endowus offers a curated list of what it deems to be the best-in-class funds at the lowest cost. They offer investors various investment solutions, including options to invest using CPF and SRS funds.

Their Cash Smart fund allows you to invest your cash savings in cash, money market, and short-duration funds offering yields of between 3.4% and 4.9%. You can start investing with Endowus for as little as $1,000, and subsequent investments can be in made small increments of $100.

MoneyOwl

MoneyOwl not only offers investment solutions but also provides comprehensive insurance and will-writing solutions. It is one of two robo advisors that allow you to invest using your CPF and SRS funds.

You can start saving with MoneyOwl for as little as $10 with their WiseSaver fund that offers a projected 3.92% annual yield. If you are seeking higher returns, you can choose their other investment funds, like the Dimensional and WiseIncome funds, according to your risk profile and investment goals. These funds require you to invest as little as $50 per month or up to a $1,000 one-off investment to get started.

StashAway

StashAway which won the 2021 Singapore FinTech Festival for Singapore Financial Institution is another robo platform that investors could consider. It offers various portfolio solutions that are made up of a mix of best-in-class ETFs, including four thematic funds. You can also invest with StashAway using your SRS funds.

Investors can start investing with StashAway Simple or StashAway Simple Plus, both of which are cash management solutions that have a projected yield of 2.8% p.a. and up to 5%p.a., respectively. There is no minimum investment, so you can start with as little as $1. However, if you want a passive income return that matches that of StashAway’s Income portfolio, then a minimum investment of $10,000 is required.

Syfe

Syfe offers managed solutions, including thematic funds, a Singapore REITs portfolio, and also allows you to build a custom portfolio based on Syfe’s curated list of ETFs. More recently, Syfe became the first neobroker in Singapore by allowing its users to also buy US stocks and ETFs through their new Syfe Trade feature.

Syfe does not require any minimum investment amount for its users to get started, though like other robo-advisory platforms, its annual management fee gets reduced as the investment increases. You can get started with the Cash+ portfolio, which has a projected return of 3% for as little as $1.

#3 Regular Savings Plan (RSP)

Another low-cost option to begin your investment is through Regular Shares Savings (RSS) plans. Instead of committing to an initial large sum of investment, you can invest through the RSS plans with just a small amount of capital in your choice of investment, be it stocks, ETFs, or even unit trusts.

There are many platforms, such as POSB (or DBS) Invest-Saver, OCBC Blue Chip Investment Plan, Philip Share Builders Plan that allow investors to start investing as low as $100 in selected stocks and ETFs.

One such platform that you could consider is FSMOne. There are over 1,615-unit trusts from 53 fund managers and 10 FSM-managed portfolios for investors to select from. This wide selection also includes 71 ETFs listed on the Singapore, Hong Kong, and US stock exchanges. It is suitable for investors seeking exposure to a diversified ETF portfolio, and you can start off by just investing $50 per month.

#4 Bond Investment

If you want to get regular payouts, then you could consider an investment in bonds or fixed-income securities. They are debt instruments that provide a fixed rate of return. The bond asset class could be seen as a form of diversification during periods of high volatility in the equity market. The general rule of thumb is that an investor should hold a smaller bond allocation when they are young or equivalent to their age. That is, a 25-year-old can invest up to 25% in bonds and 75% in stocks, whereas a 60-year-old can invest 60% in bonds and 40% in stocks.

Bonds can be classified as either investment grade or high-yield grade. Investment grade bonds tend to have a lower risk of default and consequently a lower rate of return compared to high-yield bonds, which gives a higher return to compensate for the higher risk of default.

Read Also: 5 Reasons You Need To Diversify Your Bond Investments

With a $1,000 initial capital, investors may consider the following ways:

Retail Corporate Bonds

Corporate bonds are typically only available to accredited investors with a minimum investment of $250,000 for one lot. However, with retail corporate bonds, investors can trade in smaller nominal values of $1,000 through the Singapore Stock Exchange.

Among a small pool of retail bonds, the Astrea series of bonds and SIA’s bonds have more liquidity on the exchange.

Singapore Savings Bonds (SSBs)

Singapore Savings Bonds (SSBs) were introduced in 2015 as a low-risk fixed income investment that Singaporeans could invest in. The SSBs are capital guaranteed by the Singapore government and step-up the interest rates every year over the 10-year maturity period. However, investors could redeem their SSB bond holdings at any time without incurring a penalty.

The average 10-year yield of SSBs has typically been above 3%. The minimum investment is $500, with a maximum limit of $200,000 per individual. The application is open from the first business day of the month to the fourth last business day of the month.

CPF (Special Account)

If you are new and unsure about investing, then topping up your CPF funds could be a risk-free choice of investment. In this current low interest rate environment, the CPF interest rates of between 2.5% and 4% have prompted many CPF members to top-up (a record amount of $4 billion) in either their own or their loved ones’ retirement savings in 2021.

CPF members who top up via the Retirement Sum Topping-Up Scheme (RSTU) could earn 4% on their Special Account (SA). In fact, you can earn an additional 1% interest on your first $60,000 of combined balances, which is capped at $20,000 for Ordinary Account.

If you have not achieved your Full Retirement Sum (FRS), you could consider topping up your SA as a form of investment towards your retirement. You may also get tax relief of up to $8,000 for self-contribution per calendar year.

#5 Environmental, Social and Governance (ESG) Investing

ESG which stands for Environmental, Social and Governance has been gaining awareness amongst the investment community as a key non-financial metric when assessing companies. It is believed that when we as investors guide our money based on our core principles about sustainability and social responsibility, it will influence corporations to adopt a similar strategy with their investments as well.

Investors can invest in companies with high ESG ratings using the ESG-thematic funds from robo advisors such as Endowus, StashAway, and Syfe to name a few. You can also view the ESG ratings of each SGX-listed stock or invest in the soon-to-be launched (28 April 2022) low carbon ETF.

The iEdge-OCBC Singapore Low Carbon Select 50 Capped Index will consist of the top 50 Singapore companies with lower carbon intensity. Investors can buy the ETF in small lot sizes of 1 unit for as little as $1 per unit (IPO price).

#6 Cryptocurrency Investment

Cryptocurrencies have been all the rage since 2017. It might be easy to be tempted by the wins of investors who got 5x or 10x returns on their crypto investments. In truth, cryptocurrencies are more volatile compared to traditional asset classes and could lead to a complete loss of investment. Which is why mainstream financial advisors usually exclude cryptocurrencies as an asset class for a typical retail investor.

That said, cryptocurrencies are at a nascent stage of development and we have not seen their mass adoption in day-to-day use as intended. Hence, while cryptocurrencies like Bitcoin and Ethereum are risky, they continue to hold great potential as a long-term investment.

Do Your Own Due Diligence Before Investing

These are some of the options that new investors have to get started investing with a small amount of capital. This allows us to grow our wealth incrementally as we earn and save more.

That said, while we have no excuse for delaying our investing journey, we must always do our own due diligence on any investment that we wish to undertake. All investments carry some form of risk and could lead to losses on our initial capital.

This article was first published on 17 April 2022 and has been updated with the latest information.

The post 6 Ways You Can Invest Your First $1,000 In Singapore appeared first on DollarsAndSense.sg.

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