10 Best Investment Options in Singapore: Grow your Wealth

18 April 2024

Building your financial future often means transforming your hard-earned savings into assets that can grow and create more value. For many new or aspiring investors, taking the first steps into the realm of investments can be daunting. Common hurdles include the misconception that a large initial sum is necessary to start investing or a lack of time to monitor investment performance, despite a strong desire to invest. 

Investing is critical. Done right, it can significantly grow your wealth, protect against inflation, and provide a steady source of passive income—key components for financial stability in today's uncertain economic climate. 

However, with the vast array of investment schemes and products available, knowing where to start can be overwhelming. But observing market trends and understanding popular investment choices can set you on the right path. 

Here, we introduce the eight most popular types of investments in Singapore and how you can use them to your advantage, aiming to simplify your investment journey and help you achieve optimal gains for a more secure financial future.

Why Investment Matters

Investing is more than just a financial commitment; it's a strategic approach to managing your finances that encourages smarter spending by necessitating a tighter budget in the short term. 

Far from being just another way to save, investing acts as a powerful accelerator, pushing you towards achieving significant life goals such as a dream wedding or a secure retirement more effectively than traditional savings alone. By starting your investment journey, you open the door to the possibility of higher returns. Strategic planning and a disciplined approach can not only increase your savings but also boost your disposable income, setting the stage for a more prosperous future.

Your motivation to invest can stem from various desires:

  • Financial Independence: Investing can provide the freedom to make life choices without financial constraints. 
  • Capital Growth: Your financial capital needs to work as hard as you do, growing over time through smart investing. 
  • Beating Inflation: Investing is essential to maintain your purchasing power as inflation rates outpace savings accounts. 
  • Retirement Planning: Investing is crucial for a comfortable retirement, ensuring you have enough to live the life you want later on. 

Investing isn't just about money growth; it's about securing your future, protecting against inflation, and ensuring comfort in retirement. Understanding your reasons for investing helps guide your financial strategy towards achieving your life goals.

Understanding Different Investment Approaches and Risks

Embarking on your investment journey begins with selecting a strategy that aligns with your goals, risk tolerance, and involvement level. These are the five main investing strategies that are typically chosen by many:

  • Passive Investing: Ideal for those seeking growth over time without daily management, focusing on ETFs and robo-advisors.
  • Dividend Investing: Targets generating regular income through investments in bonds, blue-chip stocks, and REITs known for consistent dividends.
  • Hands-Off Investing: Offers a managed approach with unit trusts and insurance products for those preferring minimal personal investment decision-making.
  • Active Stock Picking: For the investor willing to dive deep into market trends and individual stock performance, seeking higher returns through personal selection.
  • Speculation: The high-risk, high-reward path involving volatile markets like cryptocurrency and forex, suitable for those with significant risk tolerance and market knowledge.

Your choice should reflect your comfort with risk, the amount of capital you're willing to invest, and how closely you wish to manage your investments.

10 Best Types of Investments

Singapore offers a myriad of investment strategies tailored to diverse financial goals and risk appetites. Here's an overview of the top investment strategies to consider:

1. CPF Investment Scheme (CPFIS)

The CPF Investment Scheme leverages your Central Provident Fund (CPF) savings, allowing investments in a broad spectrum of financial products. It's divided into two categories:

  • CPFIS-OA (Ordinary Account): After setting aside the first S$20,000, you're permitted to invest in a variety of instruments including unit trusts, ETFs, bonds, and shares. This scheme is designed to boost your retirement savings by allowing your CPF savings to work harder.
  • CPFIS-SA (Special Account): Focused on securing your retirement, this scheme allows investment in safer instruments such as Singapore Government Bonds and selected unit trusts, provided you've reserved the first S$40,000 in your account.

Investments through CPFIS can outpace the default interest rates offered by CPF accounts, presenting an opportunity for enhanced growth of your retirement funds.

2. Supplementary Retirement Scheme (SRS)

A voluntary scheme to supplement CPF savings, the SRS offers tax benefits to encourage saving for retirement. The scheme allows you to invest in a wide range of financial products, potentially growing your retirement nest egg beyond what's possible with CPF savings alone, despite its modest interest rate.

  • Tax Benefits: Contributions to the SRS account qualify for tax deductions, thereby reducing your taxable income. Additionally, upon reaching the statutory retirement age currently set at 63, withdrawals made from the SRS account are only partially taxable, provided they are spread out over ten years.
  • Investment Options: SRS funds can be invested in a variety of instruments including stocks, bonds, Singapore Government Securities (SGS), Singapore Savings Bonds (SSB), fixed deposits, foreign currency fixed deposits, unit trusts, and single premium insurance products. This wide range of options gives SRS account holders the flexibility to tailor their investment strategies according to their risk tolerance and financial goals.
  • Contribution Caps: The maximum annual contribution is $15,300 for Singaporeans and Permanent Residents (PRs), and $35,700 for foreigners. This cap allows for significant tax savings while providing an opportunity to accumulate substantial retirement funds.

The SRS serves as a strategic tool for those looking to maximize their retirement savings and minimize their tax liabilities. By leveraging the investment possibilities within the SRS framework, individuals can significantly enhance their financial readiness for retirement.

3. Singapore Savings Bonds (SSBs) and Treasury Bills (T-bills)

Singapore Savings Bonds (SSBs) and Treasury Bills (T-bills) are government-issued securities that offer Singapore residents safe and flexible investment options. Both are backed by the Singapore Government, making them virtually risk-free investments ideal for preserving capital while earning a return. They cater to investors with a conservative risk profile or those looking for a safe haven for their savings:

Singapore Savings Bonds (SSBs)

  • Features: SSBs are designed for individual investors looking for a long-term, secure, and flexible investment. They can be held for up to 10 years, with the option to exit the investment at any time without penalty after the first month.
  • Returns: The 10-year average return since 2023 has been hovering between 2.82% to 3.47%, with the latest April SSB allotment promising a 3.06% return.
  • Investment Minimum: You can start investing in SSBs with as little as S$500, making it accessible to most savers.

Treasury Bills (T-bills)

  • Features: T-bills are short-term securities that mature in one year or less. They are sold at a discount to their face value, and upon maturity, the government pays the holder the full face value. The difference between the purchase price and the face value represents the interest earned.
  • Returns: T-bills offer competitive returns, especially in a high-interest rate environment. Their returns are typically higher than those of savings accounts and fixed deposits of similar tenures. The latest 20th March 2024 returns > 6-months tenor = 3.74% & 1-year tenor = 3.58%. 
  • Investment Minimum: The minimum investment for T-bills is S$1,000, with subsequent increments in multiples of S$1,000.

Both SSBs and T-bills are highly liquid, government-backed securities that provide a safe investment avenue for risk-averse investors. While SSBs offer a longer-term investment with progressively higher returns the longer they are held, T-bills provide a shorter-term option with returns that can outperform traditional bank savings, especially in a rising interest rate environment. These instruments are an excellent way for individuals to diversify their savings portfolio while maintaining high security and flexibility.

4. Wealth Management Platform

For those preferring a hands-off approach, wealth management platforms provide automated investment management services. By using algorithms to assess your risk profile and financial goals, they allocate your investments across a diversified portfolio, often at a lower cost than traditional investment managers. Let’s look into the advantages:

  • Automated Portfolio Management: These platforms continuously oversee your investment portfolio, making necessary adjustments to ensure alignment with your financial ambitions and adapting to market shifts.
  • Cost-Effectiveness: Thanks to their automated nature, wealth management platforms often incur lower fees than traditional investment advisors, presenting a more economical option for managing investments.
  • Ease of Access: With generally low starting investments, these platforms are accessible to a wide array of investors, removing the barrier of high minimum investments typically required by conventional advisors.
  • Streamlined Investing: Ideal for beginners or those preferring a passive investment strategy, wealth management platforms simplify the investment process, allowing easy entry into wealth accumulation.

StashAway stands at the forefront of wealth management in Singapore, offering an uncomplicated yet dynamic platform tailored to navigate through economic cycles. General investing offers a streamlined approach to diversifying your portfolio across a broad range of assets, aiming for growth over time without the need to pick individual stocks. It's ideal for investors looking for a balanced, long-term investment strategy. 

  • General Investing by StashAway: Focuses on maintaining a consistent risk level while aiming for long-term returns. It dynamically adjusts the portfolio to manage risk and strives to outperform benchmarks without closely mirroring market fluctuations. 
  • General Investing Powered by BlackRock®: Offers a partnership with BlackRock® to provide globally diversified multi-asset portfolios. This strategy aims for broad market exposure, moving in tandem with market highs and lows, and is built on BlackRock’s extensive analytics and asset allocation insights. 
  • Responsible Investing: Prioritizes investments in companies and sectors that adhere to environmental, social, and governance (ESG) criteria. This approach combines the goal of achieving competitive returns with a commitment to positive societal impact, aligning financial growth with ethical considerations.

Each strategy serves different investor preferences and goals, from seeking stable, risk-adjusted returns to following market trends or investing responsibly.

5. Cash Management Accounts

Cash management accounts are innovative financial tools that essentially invest your savings in low-risk assets like money market funds and short-term bonds. They're not traditional bank accounts but are offered by non-bank financial institutions such as brokerages and investment platforms. Some of the key features include

  • Higher Interest Returns: They aim to provide better interest rates compared to regular savings accounts by taking on a slight level of investment risk.
  • High Liquidity: These accounts offer high liquidity, allowing for easy withdrawal of funds without lock-up periods, making them ideal for short-term savings.
  • No Investment Cap: Unlike some savings or investment products, there's no cap on the amount you can invest in cash management accounts, offering flexibility for larger sums.

Many platforms in Singapore offer cash management accounts, with some allowing investments of Supplementary Retirement Scheme (SRS) funds. This feature is particularly attractive for earning returns on funds that also provide tax relief. StashAway Simple™ Cash stands out in Singapore's cash management account scene, offering three distinctive solutions tailored to different investor needs: Simple Guaranteed, Simple, and Simple Plus. Each option is designed to optimize your cash growth with varying degrees of flexibility, risk, and potential returns.

  • Simple Guaranteed: Locks in a guaranteed rate up to  3.75% p.a. but requires committing your funds for a specific period (1,3,6,12 months)
  • Simple: Offers flexibility and a projected rate of 3.7% p.a., ideal for those who prioritize liquidity. 
  • Simple Plus: Aims for the highest returns with slight volatility, suitable for investors seeking to maximize earnings on their cash reserves, with a 4.5% yield to maturity.

6. Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) in Singapore offer an accessible and efficient way to invest in a diversified portfolio of real estate assets. These trusts pool money from many investors to purchase, manage, and finance real estate properties across various sectors such as commercial, retail, industrial, and residential spaces. 

The appeal of Singapore REITs is partly due to their relatively high average dividend yields, which typically range between 4% to 8%, depending on the sector and market conditions. This yield is considerably higher than many other investment options, making REITs a compelling choice for those seeking regular income. Some of the key features of REITs:

  • Diversification: Singapore REITs allow investors to spread their investment across various property sectors and even geographic regions, reducing risk and exposure to volatility in any single market.
  • Income Generation: REITs are required to distribute at least 90% of their taxable income to shareholders annually in the form of dividends, making them an attractive option for income-seeking investors.
  • Liquidity: Listed on the Singapore Exchange (SGX), REITs can be bought and sold like stocks, offering investors liquidity and flexibility in managing their investment portfolios.
  • Tax Advantages: Singapore REITs benefit from specific tax treatments that enhance their appeal. For instance, dividends distributed by REITs to individual investors are exempt from tax.

Examples of Singapore REITs to Consider:

  • CapitaLand Integrated Commercial Trust: As Singapore's most expensive retail REIT, it boasts a market capitalization of S$24.2 billion. The trust's portfolio includes notable shopping centers like Bugis+, Bugis Junction, Tampines Mall, IMM Building, and Junction 8; integrated developments such as Funan, Raffles City, and Plaza Singapura; along with premier Grade A office spaces including Capital Tower, CapitaGreen, and Six Battery Road. Full year 2023 dividend payouts was 5.38%.
  • CapitaLand Ascendas REIT: Previously recognized as Ascendas REIT, CapitaLand Ascendas REIT holds the distinction of being Singapore's inaugural and most substantial listed REIT specializing in business space and industrial properties. It stands as one of the premier blue-chip S-REITs for investment. Full year 2023 dividend payouts was 5.63%.
  • Mapletree Logistic Trust: It boasts a diverse portfolio encompassing 183 properties across various industries, including Food & Beverage, logistics facilities, and consumer goods. This portfolio extends across multiple countries, including Singapore, Hong Kong, China, Japan, and South Korea, showcasing its geographical diversity. Demonstrating strong financial stability, Mapletree Logistics Trust has recently expanded its holdings by acquiring 20 additional properties in countries like Australia, Hong Kong, Malaysia, and China with a total acquisition value of $1.8billion. Full year 2023 dividend payouts was 6.15%.
  • Frasers Logistic & Commercial Trust: Frasers Logistics & Commercial Trust's holdings include 99 logistics and commercial assets, with an estimated value of around S$6.0 billion, spread over five key developed markets. Full year 2023 dividend payouts was 6.7%.

Investors considering REITs should conduct thorough research or consult with financial advisors to understand the specific risks and rewards. While REITs offer several advantages, including regular income and potential for capital growth, factors such as market fluctuations, interest rate changes, and property-specific risks can affect their performance. By carefully selecting REITs that align with their investment goals and risk tolerance, investors can effectively incorporate these instruments into their broader investment strategy.

7. Exchange-Traded Funds (ETFs)

ETFs present an appealing pathway for investors to diversify their portfolios across a wide range of sectors, asset classes, or even entire economies without the need to select individual stocks. This approach is particularly beneficial given the extensive number of companies listed on major indices across the world, making individual stock selection a daunting and time-intensive task. Investors particularly look at ETFs for the below reasons:

  • Diversification: ETFs offer exposure to a broad spectrum of stocks within an index, reducing the risk associated with investing in single stocks.
  • Cost-Effectiveness: Compared to unit trusts, ETFs generally come with lower management fees due to their passive management style, making them a more economical choice.
  • Flexibility: Being traded on the SGX like regular stocks, ETFs provide the flexibility to buy or sell shares at any time during trading hours.

With a myriad of ETFs available in Singapore, navigating and selecting the best ones for investment can be challenging. Fear not, as we've compiled a list of top ETFs to assist you in exploring your investment options.

  • SPDR STI ETF (SGX: ES3): Tracks the Straits Times Index, representing the 30 largest companies on the SGX. It's a popular choice for those looking to invest in Singapore's economy.
  • SPDR Gold Shares ETF (SGX: O87): A way to invest in gold without the physical hassle, tracking the price of gold.
  • iShares USD Asia High Yield Bond Index ETF (SGX: O9P): Focuses on high-yield bonds from Asia, offering potentially higher interest rates and income.
  • Nikko AM STI ETF (SGX: G3B): Another ETF that mirrors the performance of the Straits Times Index, with a slight difference in tracking error.
  • NikkoAM-StraitsTrading Asia ex Japan REIT ETF (SGX:CFA): Tracks high-performing Asian REITs, excluding those in Japan, primarily featuring Singapore REITs.
  • Nikko AM SGD Investment Grade Corporate Bond ETF (SGX:MBH): Comprises investment-grade bonds from quasi-sovereign and corporate issuers.
  • ICBC CSOP FTSE Chinese Government Bond Index ETF US$D (SGX:CYB): Provides exposure to investment-grade Chinese government bonds.
  • ABF Singapore Bond Index Fund (SGX: A35): A collective investment in bonds issued by the Singapore government and government-linked entities.
  • Lion Phillip S-REIT ETF (SGX: CLR): Focuses on high-yield Singapore REITs, allowing investors to diversify across the top-performing S-REITs without selecting individual REITs.

ETFs in Singapore, such as those listed above, serve as a practical tool for investors seeking to spread their investments across various assets. By offering diversification, lower costs, and flexibility, ETFs can be a cornerstone for building a robust investment portfolio, catering to both novice investors and seasoned market participants.

8. Stocks

Direct investment in stocks is for those seeking ownership in specific companies. This option can offer substantial returns through dividends and capital appreciation but requires a good understanding of market dynamics due to its higher risk profile. Within the stock market, investors can focus on:

  • Blue Chip Stocks: Shares of large, reputable, and financially sound companies known for their ability to withstand economic downturns.
  • Value Stocks: Shares that trade below their intrinsic values, often in companies overlooked by the market but with potential for growth.
  • Dividend Stocks: Companies with a history of paying out a portion of their earnings to shareholders, providing a steady income stream.

9. Cryptocurrencies

Cryptocurrencies represent a modern, digital form of currency secured by cryptography, making them nearly impossible to counterfeit or double-spend. A defining feature of cryptocurrencies is their decentralized nature, typically using blockchain technology to achieve transparency and immutability in transactions. The most well-known cryptocurrency, Bitcoin, has paved the way for thousands of alternatives, each with unique features, uses, and underlying technologies.

Here are some common ways to invest in cryptocurrencies:

  • Cryptocurrency Exchanges: The most direct way to invest in cryptocurrencies is through exchanges. These platforms allow you to buy, sell, and trade cryptocurrencies. Popular exchanges include Coinbase, Binance, and Kraken. They offer a wide range of cryptocurrencies and provide tools for trading and tracking your investments.
  • Cryptocurrency Wallets: To hold cryptocurrencies, you need a digital wallet. Some wallets offer the option to buy cryptocurrencies directly within the app. Wallets can be hardware-based, providing physical devices to store your crypto offline, or software-based, offering online apps for accessibility.
  • Decentralized Finance (DeFi) Platforms: DeFi platforms offer a way to invest in cryptocurrencies while engaging with financial services like lending, borrowing, and earning interest on your crypto holdings. These platforms operate on blockchain technology, enabling transactions without traditional financial intermediaries.
  • Cryptocurrency Index Funds and ETFs: For those looking for a more traditional investment approach, some financial institutions offer cryptocurrency index funds and ETFs. These funds allow investors to gain exposure to the performance of a basket of cryptocurrencies without having to manage individual assets.
  • Crypto Mining: Crypto mining involves using computer hardware to validate transactions on the blockchain and earn rewards in the form of new cryptocurrency. This method requires technical knowledge and significant initial investment in hardware and energy costs.
  • Initial Coin Offerings (ICOs) and Token Sales: Investing in ICOs or token sales allows you to purchase a cryptocurrency at an early stage, potentially at a lower price. This method involves higher risk as it depends on the success of the project behind the cryptocurrency.
  • Peer-to-Peer (P2P) Exchanges: P2P exchanges facilitate direct transactions between individuals without the need for a centralized exchange. This method can offer more privacy and flexibility in payment methods but may come with increased risk due to the lack of a regulated intermediary.
  • Investing in Blockchain and Crypto Companies: Instead of investing directly in cryptocurrencies, you can invest in companies involved in the blockchain and crypto industry, such as those that provide exchange platforms, wallet services, or blockchain technology solutions. This can be done through buying stocks or venture capital investments.

When considering investments in cryptocurrencies, it's crucial to acknowledge several key factors. The market is known for its volatility, where prices can experience dramatic rises and falls within short periods, offering the potential for high returns alongside significant risks. Given its relatively recent emergence, the cryptocurrency market may also be more prone to market manipulation and exhibit less predictability compared to more established financial markets. Additionally, the regulatory environment surrounding cryptocurrencies is continually evolving, which can significantly influence their value and the legality of transactions.

10. Crowdfunding

Crowdfunding is an alternative financing option where individuals or startups raise funds for projects or ventures from a large number of people, typically via the internet. This method pools together small contributions from a broad audience to support initiatives ranging from tech innovations to artistic endeavors.

Types of Crowdfunding:

  • Reward-Based Crowdfunding: Backers receive a tangible item or service in return for their contributions.
  • Equity Crowdfunding: Investors receive a stake in the company, sharing in its potential success.
  • Debt Crowdfunding: Also known as peer-to-peer lending, where contributors are repaid over time with interest.

Investors can either directly fund promising projects in exchange for future rewards or equity, or lend money to individuals and businesses with the expectation of receiving their money back with interest.

While certain crowdfunding projects, particularly those in equity crowdfunding, promise significant returns, the stakes are high with a substantial risk of loss should the project not succeed. To mitigate these risks, diversification becomes key; by investing across a range of projects, investors can spread their risk. However, this strategy demands careful selection to pinpoint potential winners. Moreover, the regulatory landscape plays a crucial role, with specific rules and regulations governing crowdfunding investments varying by region. This is especially true for equity crowdfunding and peer-to-peer lending, where legal frameworks can significantly impact the feasibility and structure of investments.

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