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Are you a first-time investor in Singapore? Read on.

Are you looking to earn passive income with your savings and want to try your hand at investing? There are many avenues to consider, and as a first-time investor in Singapore, it’s best to do some research before fully committing to the investment plan.

Here’s a quick guide to investing in Singapore:

1. Shares

A popular form of investing in Singapore is the practice of buying and selling shares on the stock market. Shares are issued by companies to raise financing from interested investors, and when you invest in a share, you will own part of the company.

This form of investment has risks tied to it as price fluctuations will influence how much you earn or lose. A good sense of business acumen is needed when dealing with the stock market as there are changes to the share values every minute. There isn’t a minimum amount set to invest in shares as the prices would depend on the company’s share value, which will vary on a daily basis. 

The pay-out from owning shares is made in the form of dividends and capital gains if your share value increases. So, if you own 1,000 shares in a company that sets its dividend at $0.60 per share, you stand to earn $600 when the gains are paid out. That’s not a bad amount to earn if you are a first-time investor, but since the stock market is highly volatile, it’s best to explore with some caution.

2. Singapore Savings Bonds

The Singapore Savings Bonds (SSB) was introduced in 2015 by the government as a fixed income investment option for the citizens above 18 years of age. The bond’s full term is ten years, and it’s a secure way to safeguard your capital if you are looking for a long-term investment plan.

The SSB pays out a step-up interest annually till the 10th year of the bond; essentially you will earn a higher return from the investment if you let it mature to its full term. The minimum required investment amount is quite affordable as it starts at $500 and stops at a maximum saving value of $100,000, this is a reasonable capped amount to start your investment in Singapore.

The Singapore Savings Bonds credits their investors with interest every six months and their interest are exempted from tax, another advantage to be gained with this investment method. If you choose to withdraw your capital for any reason, you can do so in multiples of $500 with no penalties making it a highly liquid form of investment. 

Generally, the withdrawal process for bonds are rather long-winded, and there are penalties involved, but with the SSB your capital can be recovered with almost no delay or hassle.

3. Fixed Deposit

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Fixed Deposits are a tried and true method of passive earning, but it requires patience and the return might not be as high as other investment opportunities. A fixed deposit is a method of investment and savings where you place your capital investment amount into a fixed deposit at a bank for a fixed annual rate and for a fixed period of time. You will be able to earn interest from the funds as long as there’s no early withdrawal made.

This is a very low-risk and uneventful way of investing, a solid way to start if you are wary of other ways to invest as a first-time investor. The minimum required amount to open a fixed deposit account varies from bank to bank, and the annual interest rate is also variable depending on the company you choose to invest in.

4. Unit Trusts

Investing in unit trusts is basically accumulating an amount of capital with other investors and the person-in-charge of the funds will invest in a diverse range of investment with varying risk levels and returns. Unit trust investing is quite common as a way to earn extra money from investments in Singapore, and if you find the right combination of unit trusts to place your funds in, you stand a good chance to get your money to grow exponentially.

The minimum amount required to get started with investing in unit trusts varies from each different banks or investment companies. You should be aware that there are fees applicable when it comes to unit trusts (service fees, redemption fees and switching fees) so be prepared to spend more than just the capital amount that you want to invest.

As a first-time investor in Singapore, unit trusts are not a bad way to try to earn as there are medium risks involved, and it will provide you with a more diverse portfolio.

5. Investment-Linked Insurance Policies

Investment-linked insurance policies (ILPs) are quite popular these days as an investment method in Singapore due to its double-pronged approach towards guaranteed compensation and earning some extra capital while being protected. Insurance premiums that are paid on a monthly or quarterly basis (depending on the insurance company) is used to invest in a specific fund of your choice in the form of units. When you need your insurance protection to kick in, units are sold to pay for the coverage while the rest of the amount remains invested.

As a first-time investor, you would value the flexibility that comes with ILPs as you have the option to change your investment plan by sub-funds to suit your current financial situation or you can also make partial withdrawals if the need arises. You also have the option to adjust your insurance coverage by increasing or decreasing it, giving you control over how much you want to invest with the ILP.

This is a relatively low-risk and popular investment choice, and the insurance coverage that comes with it is an added bonus that puts the mind at ease.

Investments, in general, are never risk-free and you should always be cautious when investing your hard-earned cash. Singapore has some great investment choices, and you can do well in earning a passive income if you identify your investment needs and choose an investment vehicle that works well for you.


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