Best Investment Options in Singapore: 2024 Guide for Small and Big Capital Investors

As Singapore maintains its position as a leading global financial hub, there is no doubt that both long-time residents and newcomers are eager to build their wealth.

Recognizing that the plethora of investment options can be daunting, we’ve curated a list of the 7 best investments in Singapore for 2024. Each option is carefully tailored to suit investors with varying capital levels, ensuring everyone can find a suitable avenue to grow their wealth.

By following this guide, you can confidently navigate the investment landscape and witness your finances thrive.

Best Investment in Singapore: Overview

Starting Small: Best Investments in Singapore with Low Entry Barriers

There are avenues to build wealth for those seeking the best investment in Singapore, especially newcomers or those with limited capital. Let’s delve into some of the top choices for 2024:

1. CPF Investment Scheme (CPF-IS)

Overview:

The CPF Investment Scheme empowers you to invest your Central Provident Fund (CPF) savings as your best investment plan in Singapore across various instruments, such as unit trusts, fixed deposits, and shares.

Advantages for beginners:

• Accessible entry: Minimal investment thresholds make it feasible even with modest savings.
• Government-backed security: Certain CPF-approved products ensure guaranteed minimum returns, mitigating risk.
• Tax perks: Enjoy tax exemptions on investment gains within your CPF account.

Risks:

• Limited investment scope: Options are narrower compared to other platforms.
• Lock-in period: Funds in your Ordinary Account (OA) typically remain inaccessible until retirement age (currently 65).

Examples:

• CPF-linked unit trusts
• Singapore Savings Bonds (SSBs) within your CPF account

How to start:

Verify your CPF eligibility and investment limits online. Select your preferred investment product via your CPF member portal or authorised banks.

2. Supplementary Retirement Scheme (SRS)

Overview:

The SRS offers a voluntary retirement savings avenue, enabling you to earmark a portion of your income for tax deductions and potentially higher returns than CPF.

Advantages for beginners:

• Tax relief: Gain tax benefits for your SRS contributions, reducing taxable income.
• Investment versatility: Access a broader array of products, including stocks and ETFs.
• Early withdrawal option: Withdraw SRS funds upon reaching 62 years old, albeit with certain restrictions.

Risks:

• Lock-in duration: Funds are typically locked until retirement age (currently 62), with penalties for premature withdrawal.
• Investment responsibility: Unlike certain CPF products, you bear the investment risk.

How to begin:

Initiate an SRS account with a participating bank and commence contributions.

To choose the optimal SRS account, consider considerations like minimum initial deposit, fees, and investment options provided by different banks.

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

Overview:

Singapore Savings Bonds (SSBs): These government-backed bonds issued by the Singapore government offer guaranteed returns, providing a safe and reliable method to grow savings with minimal risk.

Treasury Bills (T-Bills): short-term debt instruments issued by the Singapore government with maturities ranging from one month to one year. They offer competitive interest rates, albeit with lower liquidity compared to SSBs.

Advantages for beginners:

• Accessible entry: SSBs allow investments starting from S$100, making them ideal for those starting with small amounts.
• Security: Both SSBs and T-Bills offer a high level of safety due to government backing.
• Regular returns: SSBs provide semi-annual interest payments, while T-Bills offer a lump sum payout upon maturity.

Risks:

• Limited potential returns: Interest rates on SSBs and T-Bills may be lower than other investment options.
• Interest rate risk: Returns may not outpace inflation, impacting purchasing power.

Examples:

• Singapore Savings Bonds (available through Ministry of Finance issuance)
• Treasury Bills (issued by the Monetary Authority of Singapore).

How to start:

• SSBs: Invest directly through the SSB website or authorised banks.
• T-Bills: Participate in T-Bill auctions conducted by the MAS.

4. Real Estate Investment Trusts (REITs)

Overview:

REITs own and operate income-generating real estate properties, offering exposure to the Singapore property market without the high upfront costs of property purchase. This is also one of the best investment options in Singapore for foreigners if you have the Glowithr Programme (GIP).

Advantages for beginners:

• Low entry: REITs can be invested through unit trusts with lower minimums than direct property purchases.
• Diversification: REITs offer exposure to various properties, reducing risk compared to single-property investments.
• Regular income: REITs typically distribute rental income to investors as dividends.

Risks:

• Market fluctuations: REIT performance is tied to property market performance, subjecting investments to value fluctuations.
• Interest rate sensitivity: Rising interest rates can affect REIT values.
• Management risk: REIT performance depends on management competence.

Examples:

• REITs listed on the SGX, like CapitaLand Integrated Commercial Trust
• Ascendas Real Estate Investment Trust

How to start:

Invest in REITs through unit trusts offered by brokerage firms or purchase listed REIT shares on the SGX.

If you want to choose the best REIT, do some research and consider factors like property type, geographic focus, dividend yield, and historical performance.

5. Exchange-traded funds (ETFs)

Overview:

ETFs are diversified baskets of securities traded on stock exchanges. They offer lower fees and risk diversification than individual stocks. For a balanced risk-reward profile, opt for broad market ETFs tracking major indices.

Advantages for beginners:

• Diversification: ETFs spread risk across multiple assets, mitigating exposure to individual stock fluctuations.
• Cost-effectiveness: ETFs typically have lower fees compared to actively managed funds.
• Transparency: Publicly available ETF holdings facilitate easy research and understanding.

Risks:

• Market volatility: ETF values may fluctuate with underlying market movements.
• Tracking variance: ETF performance differs slightly from benchmark indices.

Examples:

• SPDR S&P 500 ETF (tracking the S&P 500 Index)
• Vanguard FTSE Emerging Markets ETF (tracking emerging market stocks)

How to start:

Invest in ETFs through brokerage platforms like DBS Vickers or Interactive Brokers.

To choose the best ETFs, you need to assess factors such as underlying index, expense ratio, and liquidity. For research, use online resources like Morning Star.

6. Robo-advisors

Overview:

Robo-advisors are automated investment platforms utilising algorithms to tailor investment portfolios based on risk tolerance and financial goals.

Advantages for beginners:

• Convenience: Simplified and automated investment management.
• Low entry threshold: Some platforms require minimal initial investment.
• Diversification: Portfolios are diversified based on individual risk profiles.

Risks:

• Limited control: Reduced autonomy over specific investment choices.
• Performance variability: Robo-advisors may not consistently outperform the market.
• Fees: Management fees based on account size apply.

Examples:

• StashAway
• Schroders Invest
• Bento by DBS

How to start:

Select a robo-advisor, complete a risk assessment, and fund your account.

Choosing the best robo-advisor: Consider minimum investment, fees, strategies, and user experience. Research and compare platforms before deciding.

7. Stocks

Overview:

Stocks denote company ownership, offering the potential for capital appreciation and dividend income. They could be another best investment option in Singapore for foreigners.

Advantages for beginners:

• High growth potential: Stocks can yield significant long-term returns.
• Ownership stake: Shareholding aligns with company growth.
• Dividend income: Some companies pay dividends to shareholders.

Risks:

• Volatility: Stock prices can fluctuate widely, leading to potential losses.
• Company-specific risk: Performance correlates with individual company success.
• Research intensity: Successful stock picking demands thorough research.

Examples:

Stocks listed on SGX include Singapore Airlines and DBS Group.

How to start:

Conduct diligent research and open a brokerage account with platforms such as POSB or Interactive Brokers.

Choosing the best stocks: Assess company financials, growth prospects, and competition. Diversification aids risk management in stock investing.

Best Investments in Singapore for Long-Term Growth

While the previous section focused on the best investments in Singapore for novice investors, Singapore offers a broader array of investment avenues for those seeking sustained long-term growth.

Here’s a glimpse into strategies suitable for extended investment horizons:

1. Investment-Linked Policies (ILPs)

Overview:

ILPs are insurance products that blend protection benefits with investment potential. They typically integrate life insurance coverage with unit-linked investment accounts. ILP is one of the best investment plans in Singapore, and you can subscribe to it.

Advantages for Long-Term Growth:

• Potential for substantial returns: ILPs, tethered to diverse investment funds, offer the prospect of significant growth over time.
• Life insurance coverage: Ensures financial protection for beneficiaries during the policyholder’s demise.
• Flexibility: Certain ILPs offer premium payment flexibility and fund-switching options.

Risks:

• Fee burden: ILPs entail various fees, encompassing sales charges, surrender fees, and management charges.
• Complexity: Grasping ILP intricacies and fee structures can pose challenges for novices.
• Reduced liquidity: Early access to invested capital may be restricted during initial policy years.

Examples:

ILPs are provided by major insurers like Prudential, AIA, and Manulife. Here are some good ones to explore:-

• FWD Invest First Plus – Best ILP with the lowest fee
• Manulife InvestReady III – Best ILP in Singapore
• Tokio Marine goClassic – Best ILP with flexibility
• HSBC Life Wealth Invest – Best Single Premium ILP

Selecting the best ILP: Scrutinise the best investment plans in Singapore – ILP plans across insurers, factoring in fees, investment choices, coverage benefits, and surrender penalties. Seek professional financial advice to ensure alignment with your objectives and risk tolerance.

2. Private Equity

Overview:

Private equity involves investments in non-publicly traded companies, typically in their growth phase. These investments offer the potential for robust long-term returns.

Advantages for Long-Term Growth:

• High return potential: Successful private equity investments can yield substantial returns.
• Diversification: Exposure to an alternative asset class that is not readily accessible to retail investors’ diversified portfolios.
• Active management: Seasoned private equity firms actively manage portfolio companies to unlock growth potential.

Risks:

• High minimum investment: Private equity mandates substantial capital, often beyond the reach of beginners.
• Illiquidity: Investments with limited early withdrawal options are locked in for extended periods.
• High risk: Private equity carries significant risk without ensuring company success.

Example of Private Equity firms in Singapore:

• 500 Southeast Asia
• Accelerating Asia

How to start:

Private equity typically eludes most retail investors, but high-net-worth individuals may access specific funds through accredited investor schemes. Consult a financial advisor for guidance when choosing the best investment options in Singapore for foreigners.

3. Real Estate (Direct Ownership)

Overview:

Direct real estate ownership, such as residential or commercial properties, promises long-term capital appreciation and rental income potential.

Advantages for Long-Term Growth:

• Capital appreciation potential: Real estate values may appreciate over time, yielding long-term capital gains.
• Rental income: Properties can generate steady rental income streams, offering passive earnings.
• Inflation hedge: Real estate can serve as a hedge against inflation, with property values often rising in tandem with inflation.

Risks:

• High initial investment: Property acquisition demands substantial capital outlay.
• Illiquidity: Real estate needs quicker convertibility to cash, with property sales often time-consuming.
• Management obligations: Property ownership entails tenant management and upkeep costs.

How to start:

Research property markets thoroughly, secure financing, and consider real estate agent consultation. Be mindful of substantial capital requirements and inherent risks associated with property ownership.

Advanced Options: Private Markets and Alternative Investments

For seasoned investors with a high-risk appetite and substantial capital, choosing the best investment plan in Singapore can extend beyond conventional stocks and bonds.

This section delves into three notable strategies potentially yielding exceptional returns.

Real Estate (Direct Ownership)

Direct real estate ownership offers enduring benefits like capital appreciation and rental income, but seasoned investors can adopt nuanced approaches for enhanced outcomes.

• Value-Add Investments: Identify undervalued properties ripe for enhancement through renovations or strategic management, necessitating expertise in renovation costs and market dynamics. Example: Transforming ageing office spaces into dynamic co-working hubs or refurbishing historical properties into boutique accommodations.
• Commercial Ventures: Diversify beyond residential holdings into commercial real estate segments like office spaces or industrial complexes, offering superior rental yields albeit with complexities such as lease structures and tenant mixes. Example: Investments in logistics warehouses to cater to burgeoning e-commerce demands or acquiring medical facilities with stable long-term leases.
• Specialisation: Concentrate on niche sectors like student housing or healthcare facilities, demanding in-depth industry insights for successful ventures. Examples: developing student accommodations in education hubs or acquiring senior living centres in ageing populations.

Private Debt

Private debt avenues enable seasoned investors to attain higher returns compared to conventional bonds by directly lending to unlisted firms, leveraging tailored strategies:

• Debt Structuring: Negotiate favourable loan terms incorporating preferential interest rates or equity conversion options to maximise returns amidst company growth.
• Industry Focus: Channel investments into sectors where expertise lies, enabling robust credit assessment and risk mitigation. Example: Bridge financing for cyclical industries during downturns or mezzanine funding for burgeoning tech startups.
• Diversification: Allocate investments across diverse debt instruments like senior loans or distressed debt, each offering distinct risk-return profiles. Example: Senior loans for stability, mezzanine financing for higher yields, or distressed debt for potential significant returns amid heightened risk.

Niche Fixed Income Options

Beyond traditional bonds, seasoned investors can explore specialised fixed-income avenues for enhanced yields:

• High-Yield Bonds: Buy bonds from lower-rated companies (“junk bonds”). These bonds offer elevated yields but with higher default risks, necessitating careful credit analysis and diversification. Examples: Bonds from leveraged buyout firms or high-growth startups.
• Emerging Market Debt: Tap into burgeoning economies via government or corporate bonds, though they are exposed to currency fluctuations and political uncertainties—examples: sovereign bonds from Southeast Asian nations or corporate bonds from African infrastructure firms.
• Structured Products: Invest in intricate financial instruments combining bond features with options. These instruments offer the potential for amplified returns but require astute comprehension of product dynamics and associated risks—examples: principal-protected notes or callable structured products.

Key Considerations:

• Due Diligence: Thoroughly research any investment opportunity, including asset fundamentals, borrower creditworthiness, and market dynamics.
• Liquidity: Recognize that many options may lack liquidity, potentially restricting capital access for extended periods. Align investment timelines with liquidity constraints.
• Professional Guidance: Seek counsel from adept financial advisors who are well-versed in alternative investments, aiding in navigating complex structures, risk assessments, and portfolio diversification tailored to your objectives.

Conclusion

If you are looking for the best investments in Singapore, you will find plenty of choices, whether you are new to investing or have been doing it for a while.

You can begin with easy-to-start options like ETFs or Robo-advisors, and as you learn more and feel more confident, you can consider more adventurous options like real estate or private equity.

Just remember, investing is a long journey, so take your time, do your homework, spread out your investments, and don’t hesitate to ask for help from experts.

Frequently Asked Questions (FAQs)