The 8 Most Popular Investments In Singapore In 2023

In this article, the OctaFX experts explore the eight most popular investments in Singapore, their drawbacks and advantages, and how to make your savings work for you.

Singaporeans are very interested in investments. According to Syfe’s ‘Singapore Investor Pulse Survey 2022’, 68% of Singaporeans had investments and remained interested in investing in 2022. In 2023, Endowus’ Wealth Insights Report similarly found out that over 60% of Singaporeans have investing experience. However, there are different worlds of investment goals, styles, and methods behind those large numbers. 

In this article, the OctaFX experts attempt to deliver the most comprehensive profiles for eight investments popular with Singaporeans, including their risk level, pay-off speed, investor control and minimum budget. Those profiles can help novice investors decide on the type of investment that suits them best.

CFD Trading

Forex trading involves buying and selling currencies through contracts-for-differences (CFD) in the foreign exchange market to make profits. Recently, many Forex brokers have expanded their offerings to include various CFD instruments like commodities, indices, stocks and cryptocurrencies. CFD trading offers several advantages:

• Accessibility. CFD trading is accessible to traders with smaller to medium-sized budgets.
• Risk management. CFD trading enables risk mitigation through tools like Stop-Loss and Take-Profit orders, helping safeguard against market uncertainties.
• Cost-efficiency. Opening Sell orders in CFD trading is more cost-effective than traditional stock trading, allowing for potential profits during market downturns.
• Investment control. CFD trading appeals to those who want full control over their orders at all times.
• Speed and leverage. The fast-paced nature of CFD markets, combined with leverage, allows traders to magnify returns and expedite return on investment, resulting in shorter payback periods compared to other methods.

The rapid pay-off and profit generation of CFD instruments makes them a preferred choice for both short-term traders and individuals seeking early retirement savings. Singaporeans willing to invest time in learning often favor Forex and CFD trading as a source of additional income over more conservative, lower-return investments.

CPF Investments

The CPFIS (Central Provident Fund Investment Scheme) lets Singaporeans invest their CPF savings in various financial instruments such as bonds, shares, insurance products, unit trusts and fixed deposits. There are two types of accounts under CPFIS – the Ordinary Account (OA) and the Special Account (SA). Below are their main differences.

Another investment scheme, the Special Discounted Shares Scheme (SDS), aims to make Singapore a share-owning society and give Singaporeans a greater stake in the country. However, it is only applicable to Discounted Singapore Telecom (Singtel) shares offered in 1993 and 1996.

Both CPF investment vehicles are conservative in nature and may not bring high returns. However, they are reliable long-term options which are worth using to diversify your portfolio and keep up with inflation.

Supplementary Retirement Scheme (SRS)

The Supplementary Retirement Scheme (SRS) is a Singaporean retirement savings program with tax benefits. Individuals voluntarily contribute to SRS accounts, receiving tax relief on these contributions. SRS allows you to choose several investments, including:

• stocks
• bonds
• Singapore Government Securities/Singapore Savings Bonds
• fixed deposits
• unit trusts
• insurance plans.

The income generated within the SRS account is tax-deferred. Withdrawals can be made from age 62 onwards, with preferential tax rates compared to regular income. Early withdrawals incur penalties. At retirement, funds can be converted into an annuity. SRS serves as a tax-efficient retirement savings tool, but it's important to consider it as part of a broader financial plan, which would include other, more short-term investments.

Crypto Investments

Cryptocurrencies such as Bitcoin and Ethereum are notably volatile digital assets that might deliver both rapid gains and substantial losses within a short timeframe. While they offer the potential for significant returns, they also carry high risks and uncertainties. Digital currencies use intricate technologies and have security considerations, making them less suitable as investments for individuals without a deep understanding of these complicated systems.

Furthermore, market sentiment, news events and even seemingly trivial factors like Elon Musk's posts on X (formerly Twitter) can substantially influence cryptocurrency prices. However, these very characteristics render cryptocurrencies appealing to professional contract-for-differences (CFD) traders who seek to profit from price fluctuations without owning the underlying assets.

Bank Deposits

A bank deposit is a type of bank account that allows individuals to deposit money at a bank and earn guaranteed interest. Despite offering relatively low interest rates, it is regarded as a secure and reliable method for saving funds. Investors frequently opt for savings accounts or fixed deposits (FDs) when establishing an emergency fund, saving for specific objectives, or setting aside money for future expenses. While a bank deposit may not yield substantial profits unless significant sums are invested, it does serve to partially shield your money from inflation. Typically, investors have limited control over their savings accounts.

Bonds

Bonds are debt securities issued by governments or corporations. They have fixed maturity dates and typically provide regular interest payments. Bonds offer a relatively predictable pay-off timeline, with ongoing interest earnings until the bond matures, at which point the principal amount is returned. Bonds, particularly those issued by governments, are generally perceived as lower-risk investments than stocks and cryptocurrencies. Nonetheless, corporate bonds do carry some level of risk, as there is a possibility that the issuer may fail to make interest payments or fail to repay the principal amount.

The Singapore government issues Singapore Savings Bonds (SSB) and Singapore Government Securities Bonds (SGS). Both types of securities are considered long-term investments. However, there are some differences between them.

Stocks

Stock investing entails purchasing shares of promising companies to profit from their potential increase in value over a specific period. Stock prices are subject to significant fluctuations influenced by market dynamics and a company's performance. It is a highly complex investment option, requiring you to research individual companies and evaluate their financial performance.

Investing in stocks requires a relatively high budget, starting from thousands of dollars. The speed of returns from stock investments can vary widely based on company performance and market conditions. Some investors may experience rapid gains, while others may need several years to achieve similar results. Investors have significant control over their stock investments. However, executing Sell orders in stocks is generally more complex compared to CFD assets.

ETFs

Exchange-traded funds (ETFs) are investment vehicles traded on stock exchanges, comprising diversified portfolios of assets. Their returns are contingent on the performance of the underlying assets. For instance, investing in the Straits Times Index (STI) via an ETF means gaining exposure to the top 30 companies listed on the Singapore Exchange without the need to hold individual stocks. ETFs provide risk mitigation through diversification, spreading exposure across various assets. The risk level primarily depends on the assets within the ETF. Investors typically have limited control over these investments since they are essentially buying into a pre-constructed portfolio of assets and do not select them personally.

Each investment option has its own unique characteristics. Therefore, choosing the best investment in Singapore should be based on your financial objectives, risk tolerance, investment horizon and available financial resources. It may be beneficial to diversify your investment portfolio across various approaches, taking into account their risk levels and pay-off speed. This diversification strategy can help strike a balance between short-term gains and long-term, low-risk capital protection schemes.

About OctaFX

OctaFX is an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services already utilised by clients from 180 countries who have opened more than 42 million trading accounts. Free educational webinars, articles, and analytical tools they provide help clients reach their investment goals.

The company is involved in a comprehensive network of charitable and humanitarian initiatives, including the improvement of educational infrastructure and short-notice relief projects supporting local communities.

In Singapore, OctaFX received the ‘Broker with the Fastest Withdrawal Singapore 2023’ and ‘Most Secure Trading Platform Singapore 2023’ awards from International Business Magazine and World Business Outlook, respectively.

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. This contains sponsored content and is for informational purposes only and not intended to be investing advice.