How To Start Investing With $1,000 In Singapore For Beginners
Are you a new investor or a potential new investor contemplating whether to take the first few steps into the stock market? There could be many reasons that are holding you back, such as the need to have a substantial amount in terms of thousands of dollars to begin investing, or the lack of time to track the performance of your investments despite the long urge to invest.
The truth is, you do not need a lot to start investing. You don’t need thousands of dollars; it can be just $1,000. If you have a full-time job and do not really have much time to immerse yourself in the fun of investing, here are some options and tips that you can try with just $1,000.
Investing For Beginners - $1,000 Edition
Before you start to invest, you’ll need to know your investment’s level of risk, and how to manage these risks to avoid making a move that you’ll regret. Depending on your risk appetite, a bigger risk appetite yields more significant gains and losses, while a lower risk appetite leads to smaller and likely more stable and consistent returns. $1,000 is pretty decent for a start, as it can be put to good use in a variety of investment choices ranging from bond investments to cryptocurrencies.
Why you should start investing
- Building smarter investment habits
Investments are a form of financial commitment, so it’ll eat into your disposable income at the beginning for a while until you gain returns from your investments. With reduced disposable income, you’ll most likely think twice about overspending on certain expenses. So, to make the most out of your investments, it’ll be wiser to pick the best online brokerage with lower fees and minimal miscellaneous charges. You may wish to compare various online brokerages via MoneySmart’s Online Brokerage platform before you decide to pick one, so that you won’t end up regretting and paying any unnecessary fees and charges.
- Saving for a particular fund
Whether it’s for a wedding, your child’s education, retirement or other reasons, investments can help increase your savings for a big-ticket expense in a shorter amount of time as compared to just relying on your monthly income with no extra returns.
- Growing your wealth
Once you begin investing, it’s the beginning of opening doors to opportunities to earn better returns as you learn to take more risks with tact and meticulous planning. Over time, you’ll get the hang of things and be able to meet your financial goals and increase your wealth, be it savings or disposable income.
How do I start?
You can start by deciding on your investing method. Did you know that there are actually 5 popular methods in Singapore? Each method is catered to different type/types of investment products:
- Passive investing - Suitable for ETFs and robo advisors
- Dividend investing - Ideal for bonds, blue chip stocks, and REITs
- Hands-off investing - Great for unit trusts and insurance products
- Active stock picking - Apt for stocks
- Speculation - Useful for cryptocurrency and forex
From low-risk digital investment apps to more hands-on and high-risk trading, you should make sure you pick a suitable method that suits your risk appetite and amount of capital for investments. If you’re keen to find out more about these methods in detail, you can read our article on how to invest in Singapore to better understand the appropriate approach to investing before throwing in your hard earned money into it.
Assets like Singapore Savings Bonds (SSBs), Regular Savings Plans (RSPs) and ETFs are great for beginner investors as there’s a lower risk involved as compared to high-risk assets like stocks or cryptocurrencies. However, they tend to give lower returns than high-risk assets.
Invest in an index fund or ETF
ETFs, which is short for exchange-traded funds, track the performance of an index, sector, commodity or some type of assets, so by investing in ETFs, you’re technically investing in the collective performance of a bunch of securities. For example, the Straits Times Index (STI) ETF tracks the performance of the top 30 companies in Singapore.
Regular Savings Plans (RSPs) for novice investors
You’ll be able to invest in stocks, ETFs, or unit trusts through RSPs that are offered by renowned banks or online brokerages in Singapore such as POSB Invest-Saver, OCBC Blue Chip Investment Plan and POEMS RSP, some of which requires even lesser than $1,000 to start investing in selected stocks and ETFs.
Best Online Brokerages In Singapore
As a relatively young player in Singapore's stock trading scene, Moomoo provides a cost-effective, fully digitised investment platform for trading stocks, ETFs, options, futures, ADRs, and REITs, on various exchanges in Singapore, US, Hong Kong, and China markets.
Besides competitive commission fees, attractive welcome bundle of free stocks and advanced trading analytics and research tools available on their apps, there's no currency exchange fees, no deposit and withdrawal fees, and no inactivity fees or account maintenance fees.
Backed by Chinese tech giant Xiaomi and US-based brokerage Interactive Brokers, Tiger Brokers offers competitive commission fees as well, but they offer a wider range of trading products as compared to Moomoo.
These include stocks, bonds, ETFs, mutual funds, futures, options, warrants, CBBCs, REITs and more. Their exclusive Fund Mall offers investor-friendly features that allow you to buy and sell mutual funds, and receive returns and dividends and you can even choose from either a Regular Savings Plan (RSP) or a one-time investment.
If you’re interested in trading Singapore stocks, Saxo may be a good platform for you to start as they don’t charge any custody fees for Singapore stocks. Moreover, Saxo is known for their relatively lower fees such as 0.08% commission per trade or as low as $0, with no minimum funding required.
You can expect to invest in stocks, ETFs, bonds, commodities, options, futures, funds, FX and CFDs via Saxo’s trading platforms, with a minimum of S$2 for SG stocks, and a minimum US$2 for US stocks.
Phillip MetaTrader 5 (MT5) offers a very decent range of investment products including Forex, Gold, CFD (Shares, Indices, Oil, and more) at zero commission. You can even trade US and Singapore stocks with no minimum commission fee.
Moreover, you'll be able to tap on their technical analysis tools from their Trading Central like the Risk Calculator and Chart Pattern Recognition to help you evaluate your every potential investment move, all of which are available at no additional cost.
Best Robo Advisors In Singapore
As Singapore’s first neobroker, Syfe is one of the most popular robo advisors around that lets you invest in US stocks and ETFs at a low cost. Besides its affordable fees with no minimum investment amount, it has a range of investment portfolios — Core, REIT+, Equity100, Global ARI, and Cash+.
Depending on your risk appetite, level of experience, and availability of capital for investing, you’ll want to pick a portfolio that you can manage. If you’re still new at investing, the Syfe REIT+ may be a better choice as there’s no minimum investment required. On the other hand, if you’re quite a seasoned investor and prefer to invest globally, the Syfe Equity100 will be more apt as it is a highly diversified stocks portfolio.
The key highlight of investing via Endowus is that you’ll be able to invest with both your CPF Ordinary Account and SRS savings in portfolios including LionGlobal Infinity U.S. 500 Stock Index Fund, FSSA Dividend Advantage Fund, Schroder Global Emerging Markets Opportunities Fund, PIMCO GIS Global Bond Fund, Dimensional Global Core Fixed Income Fund and many more. What’s more, you automatically be given a UOB Kay Hian trust account that will contain all your assets, and to process your Endowus transactions.
Unlike some robo advisors that do not require any minimum investment, Endowus has a minimum initial investment amount of SGD 1,000, so you’ll need to at least be able to afford to maintain that amount in your account. You’ll have the option to use both cash and/or your CPF Ordinary Account funds to make up this $1,000 in your account.
While Syfe is known as Singapore’s first neobroker, MoneyOwl is known as Singapore’s first bionic financial advisor but it also offers a human advisor, so technically, it’s not entirely a robo advisor. Besides investment products and services, MoneyOwl provides insurance advisory and will writing as well.
For investments, MoneyOwl lets you invest with your CPF Ordinary account and SRS account savings, which is pretty similar to Endowus. The CPF portfolio that MoneyOwl offers can let you earn an interest of 2.5% p.a. or higher, while MoneyOwl’s Dimensional and WiseIncome portfolios, gives you a payout rate of up to 4.5% and 8% respectively (estimated projected figures, not 100% guaranteed). Another good thing about MoneyOwl is that the minimum investment amount is just $100, which is much lower than Endowus.
This robo advisor specializes in investments in ETFs. So, if you’re thinking about investing in solely ETFs, this could be great for you. Providing you access to trade ETFs from all over the world, Stashaway’s variety of ETFs include generic ones that track entire markets, gold, bonds, etc., such as iShares International Treasury Bond ETF, Vanguard Real Estate ETF, SPDR Gold Shares, just to name a few.
Your funds will be kept in a DBS trust account, while your investments are held in a Saxo custodian account, with unlimited and free transfers and withdrawals. Similar to Syfe, no minimum investment is required, but there’s a minimum of 0.2% p.a. management fee charged to your account.
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Singapore Savings Bond (SSB)
If you really want to play it really safe, investing in a SSB is an ideal one to start with as this bond is almost risk-free, given that it is issued and backed by the Singapore Government. A SSB usually yields returns of between 2% and 3% (tied to Singapore Government Securities) when you hold it till maturity, plus it gives you the flexibility of cashing out any month without losing the accrued interest.
However, with a 10-year maturity, which includes step up interest rates, your payments will gradually be higher and higher, depending on how much longer you plan to hold on to your investment. Note that SSBs cannot be sold on a secondary market, unlike corporate bonds.
Supplementary Retirement Scheme (SRS)
This scheme is a voluntary scheme for Singapore citizens and PRs to help save up for retirement. You'll be able to top up to $15,300 each year, and your contributions to the SRS are eligible for tax relief. So, your investment returns are virtually tax-free, unless you're talking about Singapore dividends. However, 50% of your withdrawals from SRS are taxable once you reach the retirement age of 63.
There's an opportunity cost if you leave your uninvested funds in your SRS account as it only earns 0.05% per year. So you'd rather invest that money in stocks, bonds, ETFs and unit trusts. before withdrawing it at retirement.
CPF Special Account (CPF SA)
Another low-risk form of investment is placing some of your CPF savings in the Special Singapore Government Securities (SSGS) through your CPF Special Account. As SSGS are non-tradable bonds issued specifically to the CPF Board, and are guaranteed by the government, it makes it relatively safe and easy to get involved.
You can start by making top-ups to your CPF Special Account (CPF SA) by transferring some of your funds in your Ordinary Account (OA) to your SA. You are eligible to do this only if you've got sufficient cash in your personal bank account to pay off your flat (including your down payment).
Another option is the Retirement Sum Topping-Up scheme which lets you earn an interest rate of up to 5% when you top up your CPF SA (up to a maximum of $8,000) with a tax relief benefit. You'll also be enrolled into the CPF Life Scheme where you will receive a monthly payout. The downside to this scheme is that you can only get access to these funds once you hit the age of 55.
Cryptocurrencies and forex trading involve assets which are much more volatile than those of government bonds and ETFs. Moreover, such high-risk assets are mostly not backed by any physical cash or company assets, unlike stocks. If you do not have much capital to invest for a start, high-risk assets should only make up a small percentage of your entire investment portfolio and you’re better off investing in multiple asset classes (like a mix of ETFs, bonds, REITs, forex, etc.) to minimise potential damages to your finances.
Ever since Bitcoin was launched in 2009, there have been numerous cryptocurrencies popping up every now and then. By now, you’ve probably heard of the bigger names like Ethereum, Binance, Ripple, Tether, Dogecoin and so on.
Circulating supply and market cap
However, a cryptocurrency’s price, market cap and supply often swings up and down due to its high volatility. This is mostly due to the circulating supply and supply cap of that particular cryptocurrency, the overall cryptocurrency market cap. As every cryptocurrency has a cap on how much cryptocurrency can be produced, the smaller the gap between the supply and its cap, the scarcer it is. When this happens, the price of the cryptocurrency will shoot up.
Buying a little bit of a cryptocurrency
Despite the high volatility of cryptocurrencies, you do not need a lot to start investing in it. You can actually afford to buy bits of that particular cryptocurrency you want with as little as $50 or $100 by getting it via a crypto exchange platform like Binance Singapore, Gemini, Kraken and others.
Getting a cryptocurrency account
Before you set up a crypto exchange account in Singapore, you’ll need to go through a middleman like Xfers to carry out the cash-to-crypto transaction via bank transfer, and then fund your crypto purchases using bank transfers.
However, as a beginner investor, we'd encourage you to read up more on the basics of cryptocurrency first before jumping on the bandwagon of crypto trading because it involves a very high level of financial risk. You may want to refer to this simple guide that we've put together for you:Cryptocurrency in Singapore: 7 Things to Know Before You Start Buying.
Forex trading is considered as another high-risk form of investment as it requires quite a lot of leverage, which means borrowing money from your broker to carry out the trading. So it is like “spending future money” because you’re using money that you don’t have to trade, relying on just luck to gain some returns from the trade to repay the broker with your earnings.
Speculating the next move
The drastic and speedy fluctuations of the forex markets required you to be present most of the time to watch the market react fast enough in order to trade at the right time. As it entails more of a “speculation” strategy”, it may not be suitable for you if you’re into the “buy and hold” investment strategy.
Having a plan
As a forex trader, you’ve got to always be on your toes as things happen really fast, so you’ve got to be certain of the size of the trades that you want to make and always plan ahead. Given the high frequency of trading in forex, you need to recognise the signs of entering and exiting the market, when to sell a currency whenever you’re earning enough or losing enough.
Trading currencies on a suitable platform
There’s a wide variety of forex trading platforms, but for beginner traders, you might want to start with those which are more popular in Singapore such as Oanda, Interactive Brokers, POEMS, FXPRIMUS, HotForex and FX365 Mobile. Similar to stock trading, you’ll have to set up an account on a forex app, platform or other service provided by a broker before you can start trading on the platform using the provider’s interface.
Currencies are often traded pairs such as USD/EUR or USD/SGD. There are many combinations available, and it usually involves the base currency which is the first currency symbol in the pair, and the second is the quote currency.
Frequently Asked Questions
What can I invest with $1,000?
- There are actually many options that you can afford to invest in with $1,000. These include Regular Savings Plans, bond investments, REITS, ETFs, robo advisors’ products, cryptocurrency and forex.
Should I pick low-risk assets to invest in?
- If your risk appetite is small and the capital that you can afford is $1,000 or lesser, Singapore Savings Bonds (SSBs), Regular Savings Plans (RSPs) and ETFs will be safer choices for you as there’s a lower risk and funds involved as compared to high-risk assets like stocks or cryptocurrencies.
Am I eligible to invest in SRS?
- The Supplementary Retirement Scheme is only open to Singapore citizens and PRs. Under this scheme, you’ll be able to top up to $15,300 each year, and your contributions to the SRS are eligible for tax relief. So, your investment returns are virtually tax-free, unless it is Singapore dividends.
If I want to start investing but have less than $1,000, what can I invest in?
- Regular Savings Plans (RSPs), portfolios of global equities, REITs, bonds, and even cryptocurrencies require less than $1,000 to invest in.
Are robo advisors good for investment needs?
- This depends on your preferred investment style. Robo advisors make things hassle-free and in a way more “hands-off” in terms of investing style as everything is automated. All you need to do is put your funds in to buy and sell stocks, ETFs, bonds, etc., and the algorithm will do its job instead of the old skool way of human financial advisors watching the stock market.
Can I invest in cryptocurrency with less than $1,000?
- Yes. You’ll be able to buy bits of that particular cryptocurrency you want with as little as $50 or $100 by getting it via a crypto exchange platform like Binance Singapore, Gemini, Kraken and others.