How should I invest with low capital? - Seedly
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Asked on 01 Nov 2019

How should I invest with low capital?

I’m currently a student without any income. If I were to invest with my savings, I’m thinking on investing in REITs for dividends and a small capital gain since generally REITs are doing pretty well now and they are more affordable compared to other stocks. Am I making the right choice?


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Paridhi Jhunjhunwala
Paridhi Jhunjhunwala, Associate at Kristal.AI
Level 7. Grand Master
Updated on 06 Nov 2019


Being a recent graduate, I relate to your situation very well. However, it seems like you are only considering REITS as an investment choice but there are more options available for a smaller investment base as well. Diversification in different asset classes will allow you to be market proof and provide balanced returns throughout the market cycles.

I also understand that having an investment adviser is an unrealistic option, given the financial constraints. So, I would suggest looking up robo-advisors, which will be of help in providing optimal solutions without charging exorbitant fees.

I work for Kristal.AI, and it's my passion to evaluate various upcoming investment opportunities.

I hope you find this helpful!


👍 8
Junus Eu
Junus Eu
Level 9. God of Wisdom
Answered on 05 Dec 2019

How to Start Investing

1. Accumulate capital. Everyone needs to start with some investment capital. Also of your pool of available capital, decide how much you want to invest.

That said, you really don't need a big amount to start.

2. If you can, start as early as possible. Compound interest allows your account balance to snowball over time.

3. Open your CDP account (which you have already). For the benefit of those who haven't, sign up via the instructions here:

4. Open your brokerage account, and link your CDP account to it.

5. Understand your investment options.

There is a whole world of investment products out there from stocks, bonds, ETFs, mutual funds to the more exotic or less mainstream ones like art pieces, scultures, gold, and cryptocurrency.

Read up lots to understand your risk appetite, and form your own investment strategy.

6. Execution is everything

I always like to say that one can spend a decade reading and not deploy a single cent because of fear of procrastination. I always say to start early, and start investing in small amounts so that you can better understand yourself as an investor.


👍 1
Choon Yuan Chan
Choon Yuan Chan
Level 9. God of Wisdom
Answered on 05 Dec 2019

Its up to your own thinking. If you are comfortable with the stability of REITS with little gains why not. You can also opt for STI ETF which gives lesser returns but is slightly more volatile. It is a diversified ETF holding the 30 large companies of singapore who spans across many industires


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Takingstock @
Takingstock @
Level 6. Master
Updated on 06 Nov 2019

My two cents which hopefully can guide you to figure out the right answers yourself...

1) first you should only invest money that you would not need to touch or withdraw for some time, ie you keep emergency funds in liquid assets like cash / bank accounts. This will reduce or eliminate the chances of you selling the investments, sometimes at a loss, in order for you to meet that unexpected expense.

2) you will need to figure out your risk profile, investing horizon and investment style. Meaning you will need to find out - risk profile: if you panic / want to sell and play safe if your investment suddenly say drop 10% in value / price; horizon: when you would want to eventually pull out your investments (maybe to pay university fees / buy hdb / retire); style - dividend investing / go for overall appreciation, trading for capital gains etc. The answers to these questions can help you figure out the investment classes that are more in line with your appetite and goals.

3) when it comes to investing, "doing pretty well" and "affordable" are not the right ways of viewing it. A stock could be "doing pretty well", move up 80%, and drops 40% after you buy into it... This would be buying on technicals / trading....

I myself am more geared towards fundamentals, and value, so pardon if I am biased (against technical trading), so the words I would go for are: does the investment looks like a good bargain - ie I expect higher chance of the investment being a gain / good returns to me - is the company growing its revenue / profits / operating cashflow / dividends? Only if profits / cashflow grow, then dividends and/or share price should grow. My point is looking at the price trends alone isnt a good way of investing unless you are technical or trader who trades in minutes / hours / days.

"Affordable" isn't the right way of looking at an investment. Over the years, I have found given I have X dollars, which I could either buy 100-500 shares of a blue chip, or 20,000-30,000 shares of a penny stock... Almost always buying less shares of a blue chip generated better returns than the penny stock. The reason is usually there is more liquidity / investors on the blue chips, the blue chips are more transparent and accountable for explaining why they achieved or missed the quarterly / annual results. Rather than stating whether they are "affordable", the better question is which has a better yield based on the expected dividends, which would likely maintain or improve business results.

Words of advice, when it comes to investing,

  • dont borrow to invest / play on margin

  • go long term horizon (i mean 20 years or more)

  • go for low cost (on transaction fees)

  • do your homework

On the reits part, I would say take it as an asset class separate from stocks. They give more dividends, but are more or less predictable, and therefore stable, if you dont like to see wild swings regularly. If stability and regular dividends are your kind of thing, why not? But don't expect large capital gains from reits. They are boring in that sense.

When it comes to reits, there's a bunch of things to look out for, which some blogs like seedly would already share, but I can share some of my own thoughts

A) dont go for reits with very high dividend yield (more than 9%). Usually the better ones (get traded very often) and would land in the range of 4-7% dividend yield. Very high dividend yield means people noted something wrong, and are selling down the reit. Very low does sometimes mean the reit is a bit over valued (but the dividend yield on stockfacts is sometimes outdated and does not reflect new acquisitions)... So need to do homework. Example: CMT's Funan mall reopened recently, and going by the q4 dividend of 3.06 cents, full year dividend is probably 3.06 x 4 = 12.24 cents, over share price of 2.55 now, this is about 4.8% dividend yield based on recent info, but stock facts is still listing cmt at 3.6% dividend yield as of 6 nov 2019.

B) Go for moderate leverage (i prefer debt equity below 55%), but you may see gearing ratio (i would prefer low 30+%). The reason is at controlled leverage, these reits have capacity to buy new properties to collect more rental and can borrow without raising excessive rights issue that will undermine share price.

C) Go for high GTI scores... Usually more than 70. Good transparent managers will announce their decisions, and have egms for big investments, instead of coming out w lousy deals (go on trading halt, deal already done, then announced) to the detriment of existing shareholders. The share price drops on the lousy deals which investors know of after the fact.

D) key kpi is dividend per share has to go on an uptrend over the years. That's the real measure of a good reit manager.

Probably stop here for now then overflood you w too much pro-reits details. You can find some of my advice in other seedly advice or on stocks cafe.

P.s. : regular dividend farming is also one type of investing. If you are interested, go google dividend aristocrats to research. Compounding dividends over time can be rather formidable (but boring), and imho, doesn't lose out to growth stocks because companies that can grow their dividends is a sure and observable growth in itself. It just happens that reits give regular and decent dividends and fit into this strategy very well.


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Hi Anon

Glad to hear that you are already beginning/ have thoughts about investing!

As I am unclear of the amount that you have, I would say set aside 6 months of your expenses as emergency funds. Once this is done, place it in a high interest savings account such as Standard Charted Jumpstart account. Then invest the rest.

There are many options and ways to invest. One would be in REITs or ETFs, these are some of the ways that allows you to have a diversified investment. Another way would be to use AI investors such as smartly or stashaway.

You can also consider financial instruments, that allows you to have a disciplined savings. Speak to your financial advisor and I’m sure he/she will be able to assist.



👍 0
Level 5. Genius
Answered on 03 Nov 2019

Your plan is a good plan but REITs is not the only choice.

Most importantly is that you must not find the return as low and meaningless.

For example, if you only buy 1000 shares of CapitaLand mall trust, the dividend per quarter would only be about 25-30$. You would eventually find it little and meaningless.

If you are willing to put in more effort to read up. Look into a growth stock. After your student life of maybe a few more years, it might grow by 10-20% if you did a good pick.


👍 0
Lyndon Wong
Lyndon Wong, Dad at Dad Pte. Ltd.
Level 3. Wonderkid
Answered on 01 Nov 2019

Generally, I would assume low capital to be any amount under $10,000 with a possibly small but steady build-up of additional capital on a periodic basis. Would you consider taking up vacation jobs, or spend less / save more with your allowances?

Even with low capital, one should not be deterred to invest, as "Time in the Market" outweighs "timing the market". What could you do in this case?

  1. Regular Savings Plan (RSP). An RSP account with one of the brokerages/banks in Singapore will allow you to buy in selected counters from $100 upwards. This is especially good for parents who wish to save/invest for their child as they will not be daunted by the regular higher commission fees.

  2. Capital accumulation before buying. Instead of incurring higher commission fees by buying low quantities, one way is to accumulate your capital and buy counters once every quarter, semi-annually etc. Keep your commission fees low, under 2-3%.


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Question Poster

01 Nov 2019

I do work during holidays and control my spending. I already have 2 endowment/savings plan. I guess assuming with the capital i have now, i was thinking of maybe buying into a couple of counters which are more affordable to my budget. I won’t buy every quarter as the commission cost would be too high.
Lyndon Wong
Lyndon Wong

01 Nov 2019

That is great effort, do continue to keep it up. Investing is more of following up with a plan, thus if you have considered the various aspects before coming to the decision, do stick with it.