In the dynamic financial landscape, investors are presented with a plethora of investment options, each with its own unique characteristics, risks, and potential rewards. From traditional assets like stocks and real estate to innovative digital currencies like cryptocurrencies, the choices can be overwhelming.

In this article, we will explore 7 investment options, shedding light on their features and strategy considerations for investors in the Lion City.

1. CPF Investment Scheme (CPFIS) and Supplementary Retirement Scheme (SRS)

CPF Investment Scheme (CPFIS)

This commonly known scheme allows you to use your CPF monies to invest in various products, such as insurance, fixed deposits, unit trusts, bonds and shares. There are two options highlighted in the table below.

Login to CPF to check how much of your OA and SA savings you can invest. Suggest to consider only investing your CPF savings if you are confident of earning more than the CPF risk-free interest.

Supplementary Retirement Scheme (SRS)

Unlike the CPF scheme, participation in SRS is voluntary and contributions are eligible for tax relief. The contribution cap is $15,300 for Singapore Citizens and Permanent Residents; and $35,700 for foreigners.

Nevertheless, a personal income tax relief cap of $80,000 applies to the total amount of all tax reliefs claimed (including relief on SRS contributions) for each Year of Assessment.

2. Fixed Deposits (FDs) and Robo-advisors

Fixed Deposits (FDs)

You can earn higher interest through FDs than leaving cash in your savings account. It pays a fixed amount of interest on a lump sum of money over a specified period spending on the different banks rates. If needed, you can withdraw prematurely but fees will be incurred and may result in ineligibility for any accrued interest.

Robo-advisors

As the name suggests, each robo advisor uses a different investing strategy based on the company’s algorithms and will recommend an investment portfolio for you. They automatically monitor the investments and adjust your portfolio to keep it aligned with your goals and risk tolerance. Those who prefer the human touch should consult professional and qualified financial advisers or brokers.

Check the tiered fees and charges involved carefully since it doesn’t cost you to register with the platforms. Read the fine prints! Though the robo-advisors operating in Singapore are regulated by MAS, there will always be risk that these algorithms may not perform as expected and you may experience losses as per market fluctuations.

3. Stocks / Shares

Stocks, or shares of ownership in publicly traded companies, have long been a cornerstone of investment portfolios. Investing in stocks offers the potential for capital appreciation through rising share prices and dividend income. However, it also comes with inherent risks, including market volatility and the possibility of loss. This requires deep research into market trends and individual stock performance based on personal preference.

Companies listed on the Singapore Exchange (SGX) offer a diverse range of blue-chip and dividend-paying stocks, tailoring their portfolios to their investment objectives and risk tolerance. Investors can choose individual stocks to build a diversified portfolio or opt for exchange-traded funds (ETFs) that provide exposure to a basket of stocks across various sectors and regions.

4. Singapore Savings Bonds (SSBs) and Treasury Bills (T-bills)

Singapore Savings Bonds (SSBs)

A government-backed investment option for a safe and stable long term return. Offering higher returns than traditional savings accounts and fixed deposits, SSBs are an attractive option for conservative investors seeking capital preservation and steady income.

The ability to redeem SSBs at any time without penalty provides investors with flexibility, making them suitable for emergency funds, or long-term savings.

Treasury Bills (T-bills)

The Government issues 6-month and 1-year T-bills and you can receive the full face value at maturity. With its AAA credit rating and minimum $1,000 investment amount, it offers easy access to funds and risk is lower. However, returns on T-bills can fluctuate based on market conditions. When interest rate rises, value of existing T-bills usually decreases so note this if you intend to sell before maturity. Check the auction dates and learn more about competitive and non-competitive bids before starting.

SSBs present a longer-term investment opportunity with increasing returns over time, whereas T-bills provide a shorter-term alternative, potentially yielding better returns compared to standard bank savings, particularly amid a high-interest rate environment. These financial instruments serve as a valuable means for individuals to broaden their savings portfolio while ensuring both security and adaptability.

5. Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) allow investors to gain exposure to the real estate market without the hassle of property ownership. By investing in REITs, investors can access diverse asset classes, including retail malls, office buildings, industrial properties, and hospitality assets.

REITs typically distribute a significant portion of their rental income to shareholders in the form of dividends, making them an attractive option for income-oriented investors. Additionally, REITs often exhibit lower correlation with broader equity markets, providing diversification benefits to investment portfolios.

6. Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) have surged in popularity due to their low costs, diversification benefits, and ease of trading. These investment vehicles track various market indices, sectors, or asset classes, allowing investors to gain exposure to a broad range of securities through a single investment.

ETFs offer flexibility, transparency, and liquidity, making them suitable for both short-term trading and long-term growth. With ETFs, investors can construct diversified portfolios tailored to their specific investment objectives and risk preferences.

7. Cryptocurrencies and Gold

Cryptocurrencies and gold represent alternative asset classes that have gained traction among investors seeking diversification or alternative stores of value.

Cryptocurrencies, such as Bitcoin and Ethereum, operate on decentralized blockchain networks and offer potential for capital appreciation, albeit with significant volatility and regulatory risks. Investors interested in cryptocurrencies should conduct thorough research and exercise caution due to their speculative nature.

Gold, on the other hand, has long been considered a safe-haven asset and store of value during times of geopolitical turmoil and inflationary pressures. There are different forms of gold, such as bullion coins and jewellery. Do compare gold products' prices for their investment value.

In conclusion, eligible investors have a myriad of investment options at their disposal, ranging from traditional assets like stocks and real estate to innovative alternatives such as cryptocurrencies and gold. By understanding the features, risks, and potential returns of each investment option, Singaporean investors can craft well-diversified portfolios aligned with their investment objectives, risk tolerance, and time horizon.

Whether building wealth for retirement, funding children's education, or preserving capital for future generations, a disciplined and diversified approach to investing can help you to navigate market uncertainties and achieve long-term financial success.

This article provides a guide and does not constitute financial advice. You should get professional help when needed.

Invest and Grow Your Money Wisely,

Value Vaulter