When you think of investing, you’d often assume that you need a lot of money to begin. After all, the wealthiest investors in the world have several million – even billions – of dollars to spare.
While you could use a loan from a money lender to gain investment capital, this move might unintentionally trap you in debt. Thankfully, you have many options to invest even if you don’t have a lot of money.
Here are five investments you can explore if your budget is limited.
Regular Savings Plans (RSPs)
For as little as $100 per month, you can already invest in stable assets like stocks and unit trusts. You can apply for RSPs from major banks like OCBC and POSB, and they will handle choosing the right mix of assets for you.
All you have to do is put in a set amount of money each month into your RSP. Over time, your investment will grow, and so will its potential to earn.
Exchange Traded Funds (ETFs)
You can think of ETFs as baskets containing different stocks and bonds. Buying an ETF means you have an already diversified set of investments on hand. Because ETFs are already diversified, the risk is lower.
The best part about ETFs is you can buy them like normal stocks, making them easy to access. There is no minimum investment, but it’s safe to say you can start at $100 or less.
Real Estate Investment Trusts (REITs)
There is a strong market for REITs in Singapore. In essence, REITs are companies who own leasable properties like shopping malls, office buildings, or data centres. Investing in REITs allows more of these projects to be constructed and helps maintain existing ones.
REITs are traded like stocks. With that, buying shares in REITs makes you a part-owner of the company’s properties. You need only a few hundred dollars, and you can earn, on average, 4 to 6 percent of your investment in dividends.
Popular REITs in Singapore include the CapitaLand Integrated Commercial Trust, the Mapletree Logistics Trust, and the Keppel DC REIT.
CPF Investment Scheme (CPFIS)
You can use part of your CPF funds to invest in approved stocks, bonds, ETFs, and unit trusts. You don’t need to shell out your own money for the CPFIS, but you need to have at least $20,000 in your Ordinary Account (OA).
The good thing is the CPF guarantees a minimum interest rate of 2.5% per year. On the other hand, you still risk losses if the investments underperform or if the market suddenly shifts. Consider this as well before deciding to set aside money on the CPFIS.
Government Bonds and Treasury Bills (T-Bills)
If you prefer lower-risk investments, try government bonds and treasury bills. These guarantee safe and steady returns over their tenures, which can last anywhere from 6 months for T-bills to 30 years for Singapore Government Securities (SGS Bonds).
While these investments are lower risk and have more guaranteed returns, the initial investments are a bit higher. You will need at least $500 to invest in Singapore Savings Bonds (SSBs) and $1,000 for T-bills and SGS bonds. Potential returns range from 2.5 percent to 4 percent.
Conclusion
You don’t need to have millions of dollars to start your investing journey. In fact, even a few hundred dollars is enough to introduce you to the world of investing. Choose from among RSPs, ETFs, REITs, the CPFIS, and bonds/bills to start building wealth. Don’t hesitate to consult a professional financial advisor if you need help.
