How to Successfully Start Investing with Just $100 per Month in Singapore

As a beginner in investing, the idea of putting money into an investment you are considering may be intimidating. Usually this comes from lack of confidence in your own ability to invest wisely due to lack of sufficient knowledge, or it may come from hearing stories of people who have lost lots of money by making poor decisions when investing. This intimidation and fear can lead to paralysis, hindering you from taking the first step. This can delay investing or even stop the person entirely from journeying into investment. Many such people have no issues spending as much as $100 on shopping or going out to eat with friends or family. What they may not be aware of is the fact that that amount of money can actually be the start of their journey into investing. Let’s discuss how you can start investing with just $100 per month.

How much does it take to start investing?

The idea that one must first save up tons of cash and then acquire extensive knowledge on investing prior to taking a step into investing is impractical. Most people find that this is not at all ideal. Those who do well tend to step in cautiously and learn as they go. Investing should be considered a life skill that one learns by doing, the same way people get on-the-job training, learn how to cook or swim. The goal for beginners should be to start small, and then learn as they go. They should not be thinking in terms of investing and earning large amounts of money.

It would be unwise to jump into the deep end before you learn how to swim, and that applies to investing too. One needs to start slow and small, and then pick up momentum along the way as he or she builds the confidence necessary to make bigger investments. It is therefore important that a potential investor begin by investing small amounts of money on a regular basis. This will help him or her to create a plan and to know where they put their money. With an increase in knowledge and confidence, he or she can then slowly increase how much they invest.

Is $100 enough to begin with?

The answer is yes! Even though this will not make one a millionaire in a few years, it is still a great place to start. Dollar-cost averaging, which is investing fixed amounts of money in small amounts regularly, will enable the investor to purchase more share units when there are low market prices, and when the market is high they can purchase fewer units. Some of the options available for beginners include the following:

1. RSS (Regular Shares Savings) – These are also known to many as monthly investment plants. They are one of the ways that someone can begin investing in the Singapore exchange. One is able to start with $100 every month and starting is not complicated at all. He or she will need to speak to a bank or brokerage firm and open a Regular Shares Savings (RSS) plan. Some of those that offer this include the following:
   • Phillip Share Builders plan
   • POSB Invest-Saver
   • OCBC Blue Chip Investment Plan

This option works through a broker who invests an amount that is fixed on behalf of the investor every month based on the investor’s particular instructions. As an example, one can opt to invest their $100 into the ETF (Exchange Traded Fund) or STI (Straits Times Index). The investment decisions are in the full control of the investor, which makes RSS plans very attractive to most people. From month to month, one can decide to increase their investments, spread their investment to different companies, or even stop investing altogether. He or she will just need to make sure that the brokerage firm receives their instructions on the same. The online platform for the brokerage firm is usually the place to give instructions.

2. Robo-Advisers – These are platforms that use algorithms to provide advice to investors so that they are able to allocate and manage the assets they have in their personal portfolios. These type of advisors have been used in more sophisticated markets for a while now, but in Singapore they are relatively new. The main ones include AutoWealth, Smartly, and StashAway. They each use different methods to determine which investment would be optimal for the allocation of the money at that time. StashAway and Smartly do not have any minimum investment requirement, but AutoWealth requires $3,000. A yearly fee of 0.2% – 1% is charged on these platforms as a management fee. It is based on how much one has in total in their portfolio.

3. Unit trusts – These are managed by a person and also go by the name of mutual funds. They work by pooling funds from many investors and then investing the funds. A fund manager is assigned the role of investing the funds. Even though people imagine that investing in a unit trust is a hands-off investment, it is important that they first do their research prior to investing so as to ensure that they opt for the best available fund.

Since there are many different unit trusts in Singapore, platforms such as DollarDex and FSMOne are helpful because investors are able to review the different unit trusts and figure out which one they are interested in. On these platforms, the investor is able to make small regular investments from month to month.

How to select the best option

It is important for the investor to pick the best option for him or her. In doing this, there is one major factor that must be considered: What level of involvement do you want in the investment decisions?

This helps one understand which investments are best for him or her. Stocks and ETFs will require that one take interest and be very keen in the process. These are investments for people who enjoy learning how to build their investments and also enjoy the process. He or she will need to learn more about the Singapore Exchange and also about the individual companies that they are interested in investing in. RSS (Regular Shares Savings) plans are ideal for people like these. One is able to keep their investment costs low because he or she does the investing directly.

A Robo-Advisor is ideal for someone who wants to invest in the stock market but does not have the time to invest in learning and following the stock movement daily. Here, one can expect to pay between 0.2% and 1% per annum in a management fee. Most people who are not able to be hands-on with their portfolio are happy to pay the fee. The robo-advisor balances the portfolio as needed on the person’s behalf.

Those who do not want to leave their investment in the hands of a robot and do not have the time to be more hands-on will be happy with unit trusts where there is a professional fund manager in charge of the investment. It is important to first carry out research on the unit trusts because they are often set up to invest in assets in particular asset classes such as stocks and bonds, and also particular regions. Look for a suitable unit trust.

Whatever you decide, know that it is possible to start investing with only $100 every month. Get started!