New to investing? If you're not quite sure about how to go about your first investments, these tips from our friends at BankBazaar.sg should help.
Picking the right investment to grow your money can be challenging even for a seasoned investor. There are a number of variables involved and, in most cases, returns are not guaranteed. When investing for newbies, it is a good idea to start off small and minimise risk.
Here are 3 low-risk investing for newbies options and what is needed to get started
1. Go long-term with fixed deposits
Some people may not see fixed deposits as an attractive investment as the interest rates are not that high. However, they can make for a good first investment as they are virtually risk-free. Your returns are fixed and stable, the principal amount remains safe for the period of the deposit and you can earn an interest rate higher than your regular savings account.
Fixed deposit accounts are offered by various banks in Singapore. The tenure can range from 3-60 months with a minimum deposit amount of S$1,000. Remember to do your research for the best fixed deposit rates before making a choice.
2. Say yes to Singapore Savings Bonds (SSBs)
SSBs can be a great investment vehicle for newbies. You can invest in the bonds for up to 10 years and earn interest that increases over time. There is very little risk involved as SSBs are fully backed by the Singapore government. You are guaranteed the return of your principal amount and there are no penalties for early withdrawal. In addition to being safe, they are also affordable as the minimum investment amount is just S$500.
To buy SSBs, you will need a bank account with DBS/POSB, OCBC or UOB, and an individual
Central Depository Pte Ltd (CDP) Securities account linked to any of your bank accounts through direct crediting service (DCS). Applications can then be made through an ATM or iBanking. Further information can be found on the Savings Bonds website.
3. Top up your Central Provident Fund (CPF)
For Singaporeans and Permanent Residents, topping up your CPF is a pretty simple and almost risk-free way to invest in your future. The investment allows you to earn a relatively good rate of interest and cash top-ups to your CPF Special Account are also eligible for tax reliefs.
Top-ups can be made in a number of ways, including CPF transfers on the CPF website, and cash top-ups via e-Cashier (CPF website), AXS, GIRO, Internet Banking (OCBC) and cheque.
However, for all its benefits, it is important to note that there is no turning back once the top-up has been made. It is a long-term investment and you will only be able to reap the rewards once you turn 65 and start receiving payouts from CPF Life. Get more information here.
There are many ways to grow your money based on your investment and risk appetites. A little research can go a long way in finding the options best suited for your needs and making you a prudent investor.
This article was written by BankBazaar.sg.
We hope you found this investing for newbies article helpful!
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