SINGAPORE (Apr 17): Contrary to popular belief, you don’t need to amass a great number of funds before you begin investing in the stock market.
While most serious investors talk about putting in at least $10,000 to get decent returns, a little (sum) can go a long way, too.
Now, if you’ve been meaning to invest and haven’t had the time – or money – to do so, you may want to consider entering with the extra cash you have just received.
Of course, before entering into any investment, it is important to do the following:
- Determine what you want out of your investments. Are you looking at something short term, or long term?
- Diversify your assets as much as you can (unless your gut is 10/10 accurate, or you’ve got a hot tip).
- Decide how much money you can afford to put into the market.
And in this day and age, instead of relying on investment banks and mutual funds, where there is a minimum sum to enter, there are several options for smaller investors to put their money in.
We take a closer look at these options.
1. Buy shares directly
If you’re looking to start with the Singapore market, stocks here come in standard lots of 100 units. This regulation was proposed by the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) in 2015.
Prior to this, standard lots came in 1,000 units.
This means that if you’re looking to buy shares from Singtel for example, you will need to fork out at least $281, as its share prices trade at around $2.81.
Lot sizes for overseas stock markets differ. For example, you can buy one share per trade on the stock exchanges in the United States and in the London Stock Exchange. In Hong Kong, lot sizes are determined by the issuer, whereas a minimum lot size on the Tokyo Stock Exchange is 100 units.
With individual shares, you will need to do your own research as to whether the investment is worth it or not. To start, look into the company’s financial statements for information, to determine if the stock is able to provide sustainable dividends, and has a steady growth outlook.
2. Explore ETFs
ETFs are a great way to ensure diversity in your portfolio. An ETF, or exchange-traded fund, is a basket of stocks that splits your investments into all the companies that are included in that basket. ETFs can come in many forms, including individual stocks, commodities, and bonds; they can also come in a mixed basket of assets, too.
Like stocks, you can trade ETFs on the stock market at any time of the day.
Read more about ETFs here.
3. Investing in Singapore Savings Bonds
Conservative investors may consider putting their money into the government-issued Singapore Savings Bonds (or SSB). These bonds, which mature in 10 years, offer better returns than fixed deposits, and require a minimum sum of just $500. There are no penalty fees should you wish to withdraw your funds before the 10 years are up, and interest rates for these bonds vary each month.
4. Recruiting a robo-adviser
A robo-adviser is a digital investment platform that helps you plan and manage your financial portfolio based on an automated algorithm system.
There are several platforms that are readily available in Singapore. Signing up for an account is simple. The process varies between each provider. With Stashaway for instance, you will be asked to fill in your information, determine your goals and target amount. All these will help the platform determine your investment risk appetite, and allocate assets to your portfolio accordingly.
See also: Robo-advisers 101: What they are, and how to find one that suits your needs
5. Investing with a fixed amount with your bank
Conservative investors can even start with a minimum investment of $100 per month through Regular Shares Savings plans (or RSS). These work like regular bank savings accounts, except you allocate a fixed sum of money for banks to invest in. Different banks offer a range of investment products, as well as fees. Keep your eyes peeled for our comprehensive guide and comparison to Regular Shares Savings accounts in Singapore.
6. Continue saving
Even if you’re not looking to start right now, make the best use of your money by putting it in a savings account with an attractive annual interest rate. Click here to meet the best bank savings accounts in Singapore.
For more stories on investing 101, click here. For more news and investment insights, see our print edition here.
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