An Introduction To The Singapore Market & How You Can Start Investing With $100 A Month

It’s a common misconception that you need a lot of money to start investing. This might have been true a few years ago when the minimum lot sizes for stocks and high brokerage fees made it impractical to invest just a few hundred dollars.

Today, there are a variety of options available for investors on a budget. Most robo-advisors like Syfe or Stashaway don’t require any minimum investment to get started. Regular savings plans on the market let you start investing from just $50 a month.

For most investors, Singapore stocks are a good way to get acquainted with the market. The Singapore Exchange (SGX) is home to many mature, reputable companies like DBS, Singtel, ST Engineering etc.

These companies are well-managed and typically pay decent dividends. From this perspective, the Singapore market is a mostly safe and dependable investment option, especially for investors who may want to start off with a dividend investing strategy.

This is a strategy The Frugal Fox is building towards as well. Right now, almost one-third of our portfolio is held in dividend paying Singapore stocks.

Once you learn the ropes and gain confidence, you can then expand to other markets for growth and geographical diversification.

If you're looking to start dollar-cost averaging into the Singapore market, here are three options you can consider on a beginner's salary.

#1: Singapore REITs

REITs are a popular investment for Singaporeans looking to earn passive income from real estate. The Frugal Fox is particularly partial to REITs because they provide relatively high dividend yields while offering the potential for long-term price appreciation.

There are currently over 40 REITs listed on the SGX. For beginner investors, choosing which REIT to invest in can be quite time-consuming and involve a bit of research. If you’d rather watch Netflix than read annual reports, one easy way is to just invest in all the top Singapore REITs.

You can do so via an ETF like the Lion-Phillip S-REIT ETF, or a robo advisor like Syfe REIT+ portfolio. With both options, you gain exposure to a diversified selection of REITs with just one investment.

If you’re planning to invest a small sum every month, The Frugal Fox thinks Syfe REIT+ is the most cost effective option.

While their top 3 holdings are almost the same, Syfe REIT+ slightly outperforms the Lion-Phillip S-REIT ETF in returns. If you're interested to find out more, check out the comparison we did in our blog post here.

What we also like about REIT+ is that you don’t pay an additional fund expense ratio unlike with a REIT ETF. The management fees start from 0.65% per annum, going down to 0.4% if you invest $100k or more.

P.S. If you're looking for a Syfe referral code, you can sign up using our referral code SRP732ACX to get a $10 bonus when you deposit $500 or more in Syfe REIT+

#2: Singapore Blue-Chips

Blue-chip stocks are your stocks like DBS, Singtel, CapitaLand and ST Engineering. They tend to be large, financially sound companies that are often stalwarts of their industries.

Many investors like investing in blue-chip companies because they are familiar and dependable. What’s more, most blue-chips in Singapore tend to offer decent long-term growth prospects and stable dividend yield.

Yet, you should not assume that all blue-chip stocks are automatically good. Commodity trader Noble Group was a blue-chip that ended up being suspended from the SGX after inflating the investment value of its associated companies in Australia.

You still need to do your own research and due diligence before investing in blue-chip stocks. If this sounds like a chore, you can invest in all the current blue-chip stocks on the SGX through the STI ETF.

How to invest in blue-chips from $100 a month

We explain more about the STI ETF in our blog post, and if you want to invest in it, our recommendation is the FSMOne Regular Savings Plan. The RSP as it is known, is an investment plan that lets you invest a small amount of money into a particular investment product every month.

You can get started with just $50 a month and invest in either the SPDR STI ETF or the Nikko AM Singapore STI ETF as part of your RSP.

FSMOne fees are also lower than other RSP offerings. If you invest $300 a month, you only need to pay $1.07 in fees each month (including GST). If you go with DBS Invest Saver, you’ll be paying $2.61 in monthly fees.

If you prefer to invest a small amount every month into individual blue chip stocks instead, OCBC’s Blue Chip Investment Plan (BCIP) is our recommendation. The BCIP lets you choose from 15 blue-chips such as CapitaLand Integrated Commercial Trust (CICT), DBS and Keppel. However, you need to start with a minimum of $100 a month.

#3: Singapore bonds

If you’re risk-averse but still want to get higher returns than the sub 1% offered by your bank account, you can consider bonds.

The safest options would be your Singapore Savings Bonds (SSB), but do note that the returns offered are no longer as attractive due to the current low interest rate environment. If you buy a SSB now and hold it to maturity for 10 years, your effective interest rate will only be 0.89% a year.

If you’re looking for slightly higher returns than the SSB (and also willing to take slightly higher risk), you can consider investing in the ABF Singapore Bond Index Fund.

This is a bond ETF that lets you invest in predominantly Singapore government bonds and government-linked entities like LTA, HDB, and Temasek Holdings. These are very safe and dependable entities, so there’s very little worry that they will default. Simply put, you’re almost guaranteed to get your principal plus interest payments if you hold the bond to maturity.

How to invest in the ABF Singapore Bond Index Fund

The ABF Singapore Bond Index Fund is one of the more popular ETFs in Singapore. You can invest in them through a RSP with FSMOne as well. The minimum to get started is $50, same as with the STI ETF.

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