You have just started working and can now choose to dine at fancier places or travel to somewhere further afield.
Or perhaps you have been working for a good five to 10 years — and now have your house loan and bills to pay or young mouths to feed.
With the rising cost of living in Singapore, drawing a regular salary may not be enough.
How much of your earnings do you actually save? Even if you live frugally and manage to save one-third of your paycheck, relying solely on bank interest rates may not be the best way to manage your savings.
Investing is a good way to grow your money and achieve your goals and financial aspirations — be it buying your first home, preparing for a family or just to travel more.
That said, the world of stocks and shares may not be seen as easy to the uninitiated.
This handy guide will help you make your first foray into investing.
Why should you invest in shares?
When you buy shares in a company, you are essentially buying a piece of its business.
As a company grows and makes profits, its share price is likely to go up. Selling your shares at the right time will give you capital gain, or profit made from selling the shares at a higher price than when you bought them.
To mitigate investment risks, you can diversify your investment portfolio by putting your money into different companies, instead of a single company.
On the Singapore Exchange (SGX), there are close to 800 listed companies operating in various markets and with different growth cycles.
It doesn’t take much to get started. You just need to buy a minimum of 100 shares, which can be done easily online.
What’s more, with shares, you can see the prices of what you want to buy or sell, and choose the amount you want to convert to cash.
Decide on your investment goals
Having an idea of what your goals are enable you to narrow down the type of investments you should go for.
Is having a regular stream of income from investments or amassing a large amount of money quickly more important to you?
Being clear about your needs and preferences will help you determine the type of investments to choose.
Here are some things to consider when planning your goals.
What investment products can you buy?
The following are four common investment products you can start building your investment portfolio with:
Blue chip stocks: These are stocks of large and established companies that have consistently generated stable earnings and are likely to operate profitably in good and bad times.
Examples include DBS Bank, OCBC Bank and CapitaLand.
Exchange Traded Funds (ETFs): This refers to funds that are listed and traded on the Singapore Exchange. ETFs seek to track or replicate the performance of an underlying index, commodity or a basket of stocks and bonds.
A popular ETF is the Straits Times Index (STI) ETF, which tracks the performance of the Singapore stock market as represented by the top 30 largest, most actively traded blue chip companies listed on the Singapore Exchange.
Real Estate Investment Trusts (REITs): These real estate assets generate steady income and long-term capital growth for unit holders.
Examples include shopping malls, office space and hospitality properties.
Regular Shares Savings (RSS): These are investment plans where you commit a fixed amount of money on selected shares or ETFs monthly from as little as $100.
RSS is offered by DBS Bank, Maybank Kim Eng, OCBC Bank and Phillip Securities.
Do your homework
The Internet offers a wealth of information, but not everything you read online is reliable or accurate.
Improve your investment knowledge with these resources provided by the SGX:
SGX Investor Roadmap is a step-by-step tool that guides you through the basics and helps you to make informed choices.
SGX StockFacts allows you to see all the stock fundamentals on SGX-listed companies and select the stocks you want.
SGX Academy provides courses, including online and classroom sessions, for newbie and experienced investors alike.
You can also download the SGX mobile app to get live market updates, track selected stock prices and stay up to date with the latest news.
Meet the experts
Get offline for a bit and head down to the SGX’s My First Stock Carnival, where you can have your questions answered by financial professionals, and meet industry experts and retail brokers. There are also games that will help you pick up investing knowledge fast and with prizes to be won.
Pick up your investment goodie bag and a My First Stock Guidebook which will help you get started in investing.
You can get to win prizes such as STI ETF units, SGX Academy vouchers and enjoy promotions from brokers.
Where: VivoCity, outdoor plaza atrium
When: May 26 to 27, 11am to 8pm
Website: My First Stock Carnival
After the carnival, the My First Stock Carnival Investment Week will be held, during which you can attend investor education forums.
Professionals from SGX Academy, broking firms and financial bloggers will speak at panel discussion on May 28 and 30 and June 1 and 2.
Register for your free session online.