Learning Objectives
By the end of this guide, you'll understand Singapore's investment landscape, know how to start investing with as little as $100, and have a clear roadmap for building your first investment portfolio.
Why Young Singaporeans Must Start Investing
With Singapore's high cost of living and inflation averaging 2-3% annually, keeping money in traditional savings accounts (earning 0.05-0.1%) means you're actually losing purchasing power every year. Investing is not optional for long-term wealth building—it's essential.
Consider this: A 25-year-old who invests $500 monthly at 7% annual returns will have approximately $1.37 million by age 65. The same person who waits until age 35 to start will only have about $610,000. The cost of waiting is enormous.
"Time is the most powerful force in investing. In Singapore's expensive environment, young professionals who start investing early have a significant advantage in building wealth despite high living costs." - Dr. Sarah Chen, HenteBromo Head of Education
Understanding Risk and Return
The Risk-Return Spectrum in Singapore
Different investments offer different risk-return profiles. Here's how major Singapore investment options stack up:
Low Risk, Low Return (0-3% annually):
- Singapore Savings Bonds (SSB): ~2.5%
- High-yield savings accounts: ~1-2%
- Fixed deposits: ~1.5-2.5%
- CPF Special/Medisave accounts: 4% (guaranteed)
Medium Risk, Medium Return (4-8% annually):
- Singapore government bonds: ~2.5-3.5%
- Corporate bonds (investment grade): ~3-5%
- Dividend-paying stocks: ~4-6%
- REITs: ~5-8%
Higher Risk, Higher Return (6-12%+ annually):
- STI index (Singapore stocks): ~6-8% long-term
- Global equity ETFs: ~7-10% long-term
- Individual growth stocks: Highly variable
- Technology/sector ETFs: ~8-15% (with higher volatility)
Singapore's Investment Landscape: Key Options
1. Exchange-Traded Funds (ETFs)
ETFs are ideal for beginners because they provide instant diversification at low cost. Here are the most popular ETFs on SGX:
SPDR STI ETF (ES3)
- What it tracks: Singapore's top 30 companies
- Expense ratio: 0.30% annually
- Minimum investment: 1 share (~$35-40)
- Why it's good for beginners: Low cost exposure to Singapore's entire stock market
iShares Core MSCI World UCITS ETF (IWDA)
- What it tracks: Global developed markets (1,500+ companies)
- Expense ratio: 0.20% annually
- Minimum investment: 1 share (~$100-110)
- Why it's good for beginners: Global diversification in one fund
2. Real Estate Investment Trusts (REITs)
REITs allow you to invest in real estate without buying property directly. Singapore has one of the most developed REIT markets in Asia.
Popular Singapore REITs:
- CapitaLand Ascendas REIT (A17U): Industrial and business space
- Mapletree Commercial Trust (N2IU): Commercial properties
- CapitaLand Mall Trust (C38U): Retail properties
- AIMS APAC REIT (O5RU): Industrial properties
Benefits of REITs:
- Regular dividend income (typically 5-8% annually)
- Professional property management
- Lower barrier to real estate investment
- Liquidity (can sell anytime during market hours)
3. Singapore Savings Bonds (SSB)
Perfect for ultra-conservative investors or as part of your emergency fund strategy.
Key features:
- Government guaranteed (no default risk)
- Minimum investment: $500
- Flexible redemption without penalty
- Step-up interest rates (higher rates for longer holding periods)
- Individual limit: $200,000
4. Individual Stocks
Buying individual company shares requires more research but can provide higher returns. Focus on blue-chip Singapore companies as a starting point:
Beginner-Friendly Singapore Stocks:
- DBS Group (D05): Singapore's largest bank
- Singapore Telecommunications (Z74): Telco with stable dividends
- OCBC Bank (O39): Strong regional bank
- Keppel Corporation (BN4): Diversified conglomerate
CPF Investment Scheme (CPFIS)
Many young Singaporeans overlook the ability to invest their CPF funds. Here's what you need to know:
What You Can Invest
- From OA: Stocks, corporate bonds, unit trusts, ETFs
- From SA: Lower-risk investments like government bonds and selected unit trusts
Key Considerations
- Opportunity cost: OA earns 2.5% guaranteed, SA earns 4% guaranteed
- Break-even requirement: Your investments must earn more than these guaranteed rates
- Risk tolerance: Only invest if you're comfortable with potential losses
- Time horizon: CPFIS works best for long-term investing (10+ years)
CPFIS Reality Check
Most financial experts recommend only investing CPF-OA funds since the SA's 4% guaranteed return is excellent. Only consider CPFIS if you have a long time horizon and can accept the risk of potentially earning less than the guaranteed CPF rates.
How to Start Investing: Step-by-Step Guide
Step 1: Ensure You're Ready to Invest
Before investing a single dollar, ensure you have:
- Emergency fund (3-6 months expenses)
- No high-interest debt (credit cards, personal loans)
- Stable income
- Clear investment goals and timeline
Step 2: Choose a Brokerage
Popular options for Singapore investors:
Traditional Brokerages
- DBS Vickers: Comprehensive platform, higher fees
- OCBC Securities: Good research, moderate fees
- UOB Kay Hian: Established platform, competitive rates
Digital Brokerages (Lower Fees)
- Tiger Brokers: Commission-free US stocks, low SGX fees
- Interactive Brokers: Global access, low fees
- Saxo Capital Markets: Good platform, competitive rates
Robo-Advisors (Hands-off Approach)
- StashAway: Automated portfolio management
- Syfe: Low-cost diversified portfolios
- Endowus: Focus on CPF and SRS investments
Step 3: Start with Dollar-Cost Averaging
Instead of trying to time the market, invest a fixed amount regularly. This strategy reduces the impact of market volatility.
Example DCA strategy for beginners:
- Invest $300-500 monthly
- Split between STI ETF (40%) and Global ETF (60%)
- Consider adding REITs (10-20%) after 6 months
- Review and adjust quarterly
Building Your First Portfolio
Sample Beginner Portfolios
Conservative Portfolio (Age 22-30)
- 30% STI ETF (ES3)
- 50% Global Developed Markets ETF (IWDA)
- 20% Singapore Savings Bonds or REITs
Moderate Portfolio (Age 25-35)
- 25% STI ETF (ES3)
- 45% Global Developed Markets ETF (IWDA)
- 15% Emerging Markets ETF
- 15% Singapore REITs
Growth Portfolio (Age 22-28)
- 20% STI ETF (ES3)
- 40% Global Developed Markets ETF (IWDA)
- 25% Technology ETF or Growth stocks
- 15% Emerging Markets ETF
Rebalancing Your Portfolio
Review your portfolio quarterly and rebalance annually or when any asset class deviates more than 5% from your target allocation.
Common Investing Mistakes to Avoid
1. Trying to Time the Market
Research consistently shows that time in the market beats timing the market. Start investing regularly regardless of market conditions.
2. Putting All Money in Singapore Only
Singapore represents less than 1% of global market capitalization. Diversify globally for better risk-adjusted returns.
3. Chasing Hot Stocks or Trends
By the time a stock is in the news, it's often too late. Stick to your investment plan and avoid FOMO investing.
4. Not Understanding Fees
High fees can significantly erode returns over time. Understand all costs including brokerage fees, platform fees, and fund expense ratios.
5. Emotional Investing
Markets will fluctuate. Having a plan and sticking to it helps you avoid buying high during euphoria and selling low during panic.
Tax Considerations for Singapore Investors
Singapore's Tax-Friendly Environment
Singapore doesn't tax capital gains for individual investors, making it very attractive for long-term investing:
- No capital gains tax: Profits from selling investments are not taxed
- Dividend income: Most Singapore dividend income is tax-exempt due to one-tier system
- Foreign dividends: May be subject to withholding tax in the source country
Using Your SRS for Tax Benefits
The Supplementary Retirement Scheme (SRS) provides tax relief for investments:
- Annual contribution limit: $15,300 for citizens/PRs, $35,700 for foreigners
- Tax relief: Contributions are tax-deductible
- Withdrawal: Only 50% of withdrawals are taxable after age 62
Investment Resources and Tools
Research Platforms
- SGX.com: Official Singapore Exchange information
- Yahoo Finance: Free stock quotes and basic analysis
- Morningstar: Fund analysis and ratings
- Bloomberg: Financial news and market data
Portfolio Tracking Apps
- Google Sheets/Excel: Create your own tracking system
- Portfolio tracking apps: Many brokerages provide portfolio tracking
- Third-party apps: Personal Capital, Sharesight
Long-term Wealth Building Strategy
The Power of Compound Growth
Einstein allegedly called compound interest "the eighth wonder of the world." Here's what consistent investing can achieve:
30-Year Investment Projection
Assumptions: $500 monthly investment, 7% annual return
- Total invested: $180,000
- Investment growth: $578,846
- Final value: $758,846
Your money grows by more than 4x through the power of compound returns!
Increasing Contributions Over Time
As your salary grows, increase your investment contributions:
- Years 1-2: $200-300 monthly
- Years 3-5: $500-800 monthly
- Years 6-10: $1,000+ monthly
- Goal: Save and invest 20-30% of gross income
Conclusion: Your Investment Journey Starts Now
Investing in Singapore offers excellent opportunities for young professionals to build long-term wealth. The key principles for success are:
- Start early: Time is your greatest asset
- Invest consistently: Dollar-cost averaging reduces risk
- Diversify globally: Don't put all eggs in Singapore's basket
- Keep costs low: Use ETFs and low-cost platforms
- Stay disciplined: Stick to your plan despite market volatility
- Continue learning: Financial markets evolve constantly
Your First Investment Action Plan
This week:
- Open a brokerage account
- Research STI ETF and global ETF options
- Calculate how much you can invest monthly
Next month:
- Make your first investment
- Set up automatic monthly transfers
- Start tracking your portfolio
Remember, you don't need to be rich to start investing—you need to start investing to become rich. Singapore's favorable tax environment and diverse investment options provide an excellent foundation for building wealth over time.
The journey of a thousand miles begins with a single step. Take that first step today, and your future self will thank you for starting your investment journey early.