What is an Investment?

Wealth creation is a major part of an investment. For long-term security of financial stability, an investment can bring a lot of contributions to an individual.

In general terms, investment happens when we spend a portion of our money to make more money. Sounds interesting? Of course it is, but it requires good investment knowledge for stable investment planning.

There are many ways we can invest. Among them include investing in stocks, bonds, REITs, mutual funds and more.

If you’re planning for financial independence, then investing is a good way to achieve that financial goal in life.

Property Investment

Property investment means to purchase a real estate property then then expect to receive some earnings through rental or capital gain. If you know how to deal with this type of investment, you can contribute financially, but you have to keep in mind that property investment is risky, so some proper advance readings and preparation are needed.

Singapore is a small country, but economically, it is one of the ever-growing cities in the world. Property investment in Singapore is one of the main ways for Singaporeans to get themselves established. You could tick off many great financial benefits for property investment in the country. For those who are considering purchasing a house as an investment in Singapore, this guide is meant to help you as a starter.

Real Estate Investment Trust (REIT)

For new investors in Singapore, Real Estate Investment Trust (REIT) is a good investment in real estate. Properties are seen as a good investment option in the country due to the scarcity of land.

Singapore is a stable and safe country, which brings values to the properties to gradually appreciate overtime. What investors get from REIT is the dividend income from the rental payments of REIT’s properties. Some of the types of properties you can invest with REIT are industrial, offices, retail, hybrids, healthcare, hospitality and residential.

Mutual Funds

You may want to invest in unit trusts or mutual funds where you share your money to a company representing a part of the holdings. This may include stocks, bonds, money market securities, currencies and more.

Mutual funds are profitable to both parties: fund managers and financial advisors.  However, you need to be aware of the numerous charges you will have to pay once you started investing in mutual funds.

In Singapore, the majority of unit funds have proven unsuccessful in the market as the investors had to pay high fees but receiving less than what they were supposed to get.

Stocks

A stock is a share in a corporation’s ownership and makes you a shareholder. The shareholder is entitled to own the company’s assets and receive profits via dividends. Making money with stocks come in two channels: dividend income and capital gain.

This way of investment depends on the percentage of stake you hold; the more percentage you invest, the more money you will get. 

Central Provident Fund (CPF)

Central Provident Fund (CPF) investment refers to a mandatory social security system that requires Singapore citizens and permanent residents (PR) set aside their money for retirement funds.

It is divided into 4 accounts: Ordinary Account (OA), Special Accounts (SA), Medisave Accounts (MA) and Retirement Account (RA). Each account serves it own function and purpose and has its own interest rates.

CPF is where the government handles your funds, all you need to do is to be qualified for the accounts.

Cryptocurrencies and Crowdfunding

Other types of investments like cryptocurrencies and crowdfunding have also been introduced in Singapore.

Cryptocurrency is popularly known as digital currently in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. It uses blockchain, which is a decentralised system that keeps track of the transaction of the crypto.

Crowdfunding, on the other hand, enables retail investors to link with SME companies to get capital repayment and high-interest coupons.

There are many reasons why investing is a good financial practise, such as multiplying your money as well as secure long-term financial planning. Once you have an understanding on which investment you think worth is investing in Singapore, the choice falls on you.