Your browser does not support JavaScript! Pls enable JavaScript and try again.

Guide to Investment in Singapore

Jan 3, 2023Priyanka Adhikary
Guide to investment

Over the years, Singapore has proved to be one of the most sought-after locations for global investors. The reason for this can be attributed to factors such as - open business policies, stable political environment, ease of investment, skilled workforce, intellectual property protection, developed infrastructure, and more. As the investment options in Singapore are abundant, both seasoned investors and beginners can take advantage of opportunities to boost their wealth journey. There are several financial products such as bonds, stocks, ETFs, REITs, unit trusts, etc., that can be explored. However, it is also advisable to do thorough research about the products before investing. You can also opt to take the advice of wealth management services that provide customized financial solutions tailored to your wealth goals. Also, before investing you may want to check whether these products align with your risk appetite and financial goals.

Reasons to Invest in Singapore

There are several reasons why investing in Singapore can be beneficial for investors. Some of the reasons are explained below:

Stable USD-SGD Exchange Rate Over The Years

The USD-SGD exchange rates have had a stable relation over the past 10 years. For instance, in the year 2018, the average closing rate was 1.35, in 2017 it was 1.38, in 2016 it was 1.38.

 

Source: macrotrends

Ease of Investment

Investing in Singapore is not too complicated. For example, if a foreign company, which has foreign investors with 100% shareholding, wants to establish itself in Singapore, it can do so by setting up a subsidiary company or a branch office. Usually, foreign investors are also not required to give up the management control or ownership of their company or entity to locals. However, restrictions and certain controls may be applied for sectors like financial services, professional services, real estate, media, and telecommunication services. There are also no foreign exchange controls, so individuals (residents and non-residents), entities and countries are free to remit Singapore Dollars in and out of the island-nation. However, remittances are not allowed if countries/entities/individuals are officially sanctioned by the Singapore Government.

Other Factors

Apart from the above, there are several other factors that make investing in Singapore a good option. Some of these factors are as follows:

  • Safe environment with a low-crime rate
  • Sound regulation
  • Politically and economically stable
  • Low corruption
  • Skilled workforce

Investment Options in Singapore

Singapore offers several investment options that investors can choose from. The following are some financial products that you may want to invest in:

Bonds

Bonds can offer a steady source of income and can help in preserving the capital amount. There are majorly two types of bonds which are - corporate bonds (CB) and government bonds (Singapore Savings Bond), that investors can choose from to invest their funds for a fixed period of time. Bonds may also provide interest on the invested amount and pay the capital amount after the contract period ends. They can even be sold at a potentially higher price to earn potential returns. However, bonds also come with limitations such as credit risk, event risk, fluctuating interest rates, among others that can affect the potential returns.

Stocks

Stocks are one of the most popular investment products. They can be traded in the stock market actively through day trading (buying and selling stocks on the same day) or long-term investing (buying a stock and holding it for a long period). A brokerage account can help investors buy and sell stocks of several sectors on the Singapore Stock Exchange. Before investing in stocks, investors should also be aware of the fact that stock prices are heavily dependent on market fluctuations. As a result, if the prices of the stocks hit rock-bottom due to market volatility, the returns may not be profitable.

ETFs

Ideal for passive investing, ETFs, also known as Exchange Traded Funds mimic indexes. Rather than investing in individual stocks, ETFs allow investors exposure to a basket of stocks. ETFs are also usually considered as low-cost financial products. However, like almost all financial products that come with limitations, ETFs also come with some risks such as low selling price against a higher cost price, intraday pricing, complicated settlement dates, reduced liquidity, and more.

REITs

Real Estate Investment Trusts or REITs give investors the option to purchase units of REITs without physically buying property. When you invest in REITs, you are putting your funds into a real estate portfolio that is managed professionally. These portfolios have properties that are rented out. The yield generated from the rental income is paid to the shareholders in the form of dividends. However, REITs can be risky as they are traded on the stock market and are subject to market fluctuations.

Unit Trusts

Unit trusts allow investors to invest in several investment products such as stocks, bonds, etc. In a unit trust, the contributions by the investors are pooled in. The pooled money is then invested into different financial assets. Unit trusts can be cost-effective as they invest in multiple assets at one go instead of buying them separately. They also provide more liquidity, as they allow investor to exit positions (withdraw investments) at the liquidation price, on any business day. However, unit trusts may also be subjected to risks such as management risks, inflation risks, currency risks, among others.

Singapore Government Treasury Bills

Treasury bills give investors the opportunity to invest in short-term investment products. There are short-term government securities that can be ideal for investors who have a low-risk appetite. Investments in treasury bills can be made for up to one year. While the above investment products can yield potential returns, it is advisable to understand the risks associated with them. Most investment products are dependent on the stock market, so their rates can fluctuate. Before investing, you may also want to assess your risk appetite or seek advice from a financial advisor.

Frequently Asked Questions

Why should people invest in Singapore?

Some of the reasons why people may want to invest in Singapore are listed below:

  • Free trade agreement
  • Intellectual Property protection
  • Diversified economy
  • Low corruption

What are some examples of high-risk investments?

Some investments which can be of high-risk are:

  • Foreign Emerging Markets
  • Currency Trading
  • High-yield Bonds
  • Stocks
  • REITs
  • Hedge Funds
  • Cryptocurrency
  • Leveraged ETFs

Though the above can be considered as high-risk investments, they can also potentially yield higher returns. Investors must identify their risk appetite and their wealth goals as well as understand the market before investing in these products. Investors can also engage professional help on this.

Discover a world of wealth opportunities in Singapore

Join Citigold

Disclaimer:

This video/webcast/article is provided at your specific request and for general information purposes only. It is not intended as a recommendation nor an offer or solicitation for the purchase, loan, swap or sale of securities, financial products, services or currencies. Neither all nor part of this video/webcast may be reproduced or copied in any manner without the written consent of Citibank N.A. or its affiliates or subsidiaries ("Citi"). This video/webcast/article has been prepared without taking account of the financial objectives, situation, or needs of any particular investor. Any person or entity considering an investment should consider the appropriateness of the investment having regard to their financial objectives, situation, or needs, and should seek independent advice on the suitability or otherwise of a particular investment.

Investments are not deposits, are not obligations of, or guaranteed or insured by Citi, or by any government, insurance agency or other public institutions, and are subject to investment risk, including the possible loss of all or part of the principal amount invested. Past performance is not indicative of future performance; prices can go up or down. Investment products are not available to US persons.

Investors should be aware that it is their responsibility to seek legal and/or tax advice regarding the legal and tax consequences of their investment transactions. If an investor changes place of residence (including tax residency), nationality, or place of work, it is his/her responsibility to understand how his/her investment transactions are affected by such change/s and to comply with all applicable laws and regulations as and when the same become applicable. Citi does not provide legal and/or tax advice. If you have any questions, please contact your Relationship Manager.

Please click on the following link for other important disclosures associated with this video/webcast/article, including but not limited to disclosures relating to certain risk factors and/or specific country disclosures that are applicable to you, depending on the country of your residence: asia.citi.com/wealthinsights/country-disclosures

Frequently Asked Questions