From rising inflation to GST hikes, it can feel like the bad news just never ends for our bank accounts these days. Investing offers a smart way to stretch your paycheck, enabling your savings to outpace inflation and helping you build a safety net for your living expenses.
But when you have close to zero knowledge about investing, starting the journey can be intimidating. In “The New Gen Worker” Report 2023 by Young NTUC’s Youth Taskforce, almost one in three youths said that investment products were the top thing they wanted to know more about to gain better financial literacy in Singapore.
The good news is that you don’t need a ton of knowledge on the stock market before jumping into investing. Outside of the traditional stocks and bonds, there’s a surprising range of alternatives that are fuss-free, low-risk, and don’t require huge sums to cash in.
Of course, there’s a trade-off: don’t expect to earn spectacular returns from these forms of investment. But if you’re just getting started or don’t have much time to read up, these five beginner-friendly alternatives are a good bet.
Robo-advisors
Think of robo-advisors as the automated version of your traditional financial advisor. Robo-advisors can manage your personal investment portfolios according to your risk appetite, using algorithms to rebalance each portfolio as market conditions change.
In Singapore, robo-advisors have gained serious traction in the market. By 2027, the assets managed by robo-advisors is predicted to total US$31 billion, with the number of Singapore users on board reaching over 833,000. AutoWealth and StashAway are two of Singapore’s pioneering robo-advisors, and other reputable players include MoneyOwl, Syfe, and Endowus.
Convenience is the biggest charm here – all you need to do is sign up to an online platform, input your financial goals and risk tolerance, start investing with as little as S$1, and pay an annual management fee of around 0.25%-0.8% of what you invested. Based on the platform’s algorithms, you’ll be recommended a portfolio of assets – such as exchange-traded funds (ETFs), bonds, commodities, and more – tailored to your goals.
Since your portfolio will be automatically diversified and rebalanced, you don’t need hands-on knowledge of the stock market to grow your money. The downside is that you have limited freedom to pick the specific investments or companies your money is going to.
Pro tip: Each platform uses its own unique algorithms and offers access to different asset classes, so experiment with investing small sums in a few platforms before committing to one.
Regular savings plans
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Planning to put a portion of your paycheck towards investing each month? A regular savings plan (RSP) can be a smart move.
As the name suggests, RSPs require you to invest a fixed amount into a particular financial product regularly (typically every month). The bank or brokerage offering the plan will then invest your funds into your choice of investments, such as ETFs, unit trusts, and stocks.
RSPs are modelled on an investment method called dollar-cost averaging. Unlike the popular notion of ‘timing the market’ to buy low and sell high, this method is all about reducing your risk by investing a consistent sum at intervals – regardless of market performance. Because asset prices tend to rise over the long term, chances are good that you end up buying shares at a lower average price over time.
You can set up an RSP conveniently with many of Singapore’s major banks. DBS Invest-Saver, for instance, allows you to start investing from as little as S$100 a month, while OCBC’s Blue-Chip Investment Plan offers access to blue-chip shares in Singapore’s leading companies.
Pro tip: Look to brokerages for a wider range of investment options. For example, FSMOne’s Regular Savings Plan enables you to invest in over 130 ETFs listed on the Singapore Exchange, Hong Kong Exchange, as well as US stock exchanges.
High-interest savings accounts
You probably already have a basic savings account, which typically gives you a base interest rate of a measly 0.05% p.a. or so. As you enter the workforce and start earning a steady paycheck, a high-interest savings account is just the upgrade you need to grow your savings.
To achieve interest rates as high as 7% and above, you’ll need to fulfil multiple conditions. Crediting your salary into the account, paying a certain number of bills, and maintaining a minimum credit card spend are some of the most common conditions.
The great thing about this investment option is that it’s pretty much risk-free – you earn a fixed and guaranteed interest rate as long as you jump through certain hoops. Most financial institutions in Singapore are also members of the Deposit Insurance (DI) scheme, which provides coverage of up to S$75,000 per account in the (unlikely) event that your bank fails.
Pro tip: For youths starting out without a ton of savings, here are some of the friendliest options on the market:
OCBC 360 Account: Earn up to 4.65% interest when you credit your salary of at least S$1,800, increase your average daily balance by at least S$500 monthly, and charge at least S$500 to selected credit cards per month.
Standard Chartered Bonus$aver Account: Get up to 5.3% interest by crediting a salary of at least S$3,000, maintaining a monthly card spend of over S$500, and buying eligible insurance or investment products.
Fixed deposits
When you make a fixed deposit, you deposit a lump sum of money in a bank account and leave it there for a certain period of time (typically between three to 12 months). In exchange, the bank will offer a fixed amount of interest on your deposit.
While higher interest rates are up for grabs when you make bigger deposits, it’s possible to get started with as little as S$500. Similar to high-interest savings accounts, you get the benefit of guaranteed interest at attractive rates – especially if you take advantage of promotional rates during periods like Chinese New Year.
On the other hand, it does leave your savings locked away for an extended length of time. If you need to withdraw your money early, you may have to pay a penalty fee.
Here’s our shortlist of Singapore’s best fixed deposits for youths and young working adults (as of August 2023):
DBS Fixed Deposits: Earn up to 3.2% interest per annum when you deposit at least S$1,000 for 12 months.
UOB Fixed Deposits: Make a placement of at least S$5,000 for 18 months and earn an interest rate of 3.05%.
Bank of China Time Deposits: Deposit at least S$5,000 for 6 months via mobile banking to secure a promotional interest rate of 3.35% p.a.
Pro tip: Rates are always changing as banks offer seasonal promotions, so it’s worth checking back regularly!
Micro-investing
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What if we told you that you could add a dollar to your investment fund every time you bought a cup of kopi?
Micro-investing platforms make investment a part of your lifestyle. Each time you complete selected daily activities such as purchases, you channel a bite-sized amount into your investments. Depending on the platform, the money is invested into exchange-traded funds (ETFs) or fractional shares of stock.
Since no minimum deposit is needed, it’s an ultra-convenient way to build a diversified portfolio without the hundreds in savings that traditional investing calls for. It also gets you into the habit of investing, helping you add up your spare change into a substantial nest egg over time.
In Singapore, SNACK by NTUC Income offers the very first Micro Investment-Linked Plan. You can choose from a range of lifestyle activities – including Food & Drinks, Transport, Groceries, and Retail – and set the bite-sized amount you want to invest whenever you complete the activity. For instance, if one of your chosen activities is Transport, you can contribute S$1 to your fund each time you tap your EZ-Link card.
Pro tip: Snag a welcome bonus of a S$25 eCapitaVoucher on SNACK Investment when you sign up with our recently launched NTUC Starter Membership. Redeem this eCapitaVoucher on your choice of lifestyle activities at participating CapitaLand retailers to start investing.
Kickstart your investment journey with the NTUC Starter Membership
Ready to take your first step into the market? Get that extra push you need with the NTUC Starter Membership.
Priced at S$36 annually, this innovative membership experience is designed to support your adulting needs. Membership unlocks a range of tailored perks to help you work, save, and play: career support, funding for training courses, special rates on various attractions, and more.
Get a boost on your investment portfolio with a welcome bonus of a S$25 eCapitaVoucher on SNACK Investment. You can also get a headstart on insurance protection with up to S$3,000 free coverage on SNACK Insurance.
Learn more about the NTUC Starter Membership and sign up here.
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