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Complete investment guide covering risk profiling, unit trusts, equities, bonds, REITs, derivatives, and investment strategies. Build wealth through informed investment decisions.
An investment is a commitment of funds to a specific asset to generate a favourable future return. Investments can be made in financial assets (stocks, bonds, unit trusts) or real assets (property, gold, commodities).
The fund management process lies in managing risks while seeking to maximize returns. An investor must always consider both risk and return when making investment decisions - one cannot be separated from the other.
Receive regular cash flows through dividends from stocks or coupon payments from bonds.
Protect your capital against inflation during volatile investment periods.
Grow your wealth through price increases on investments over time.
In Singapore, the average inflation rate is about 3%, while the average bank savings rate is below 0.5%. This results in a loss of over 2% in purchasing power every year.
Compounding works both ways: when your investments generate returns above inflation, your wealth compounds and grows. If returns fail to keep pace, the value of your money erodes year after year.
Unit Trusts offer a convenient way to begin investing with professional management and built-in diversification.
True financial independence means being fully self-sufficient and no longer relying on work as your primary source of income.
Money today holds more value than the same amount in the future. By harnessing compound interest, your capital can multiply significantly over time.
With inflation at ~3% and savings rates below 0.5%, you lose purchasing power annually unless your investments outpace inflation.
When your investments generate returns above inflation, your wealth compounds. If returns fail to keep pace, the value of your money erodes.
Many people are concerned that their personal savings and CPF balances may not be enough to support the lifestyle they envision in their golden years.
With a well-structured investment plan, your money continues to work for you, building long-term financial security and peace of mind.
Foundation
Before diving into specific investment products, it is essential to understand the foundational concepts that govern all investment decisions. This section covers the building blocks of financial markets and how they work.
Represent financial claims documented in legally enforceable form:
Claims on physical assets you can touch:
Where new issues of securities are sold to the public through IPOs. The proceeds go directly to the issuing company to raise capital for business operations or expansion.
Where securities are traded after issuance. The proceeds go to the selling investor, not the company. Secondary markets provide essential liquidity to the capital markets.
Before you can begin investing in Singapore, you will need to open a Central Depository (CDP) account. This account holds all the stocks you purchase on the Singapore Exchange (SGX) under your name. You must be at least 18 years old and not be an undischarged bankrupt.
Holds your securities in your own name, ensuring safe custody of shares purchased on SGX.
Facilitates buying and selling of investments, linking directly to your CDP account for transactions.
Timely and accurate information on prices, volumes, and all outstanding bids and offers.
Ability to buy/sell securities quickly without significant price concession. Requires market depth.
All aspects of transactions entail low costs including brokerage and transfer fees.
Narrow spreads indicate efficient markets with active market-making activities.
Prices adjust quickly to new information, reflecting all available data about the security.
Transparent and responsive pricing that accurately reflects market forces and conditions.
Unit Trusts simplify investing by letting professional fund managers handle the complexities for you. No need to track individual securities or time the market.
Core Concept
The phrase "no pain, no gain" describes the relationship between risks and returns. All investments have some degree and forms of risks. It is prevalent for investors to understand this relationship before investing to prevent misalignment of objectives and market conditions.
Low Risk
Cash
Low-Medium
Bonds
Medium
Unit Trusts
Medium-High
Equities
High Risk
Derivatives
Higher risk = Higher expected return, and vice versa
Affects the full spectrum of the economy. Cannot be diversified away.
Specific to individual companies or industries. Can be minimized through diversification.
Variability in returns from changes in interest rates. Bond prices move inversely to interest rates.
Variability from fluctuations in the overall market, including recessions, political instability, and wars.
Decline in purchasing power of invested dollars. Even "safe" investments can lose real value.
Risk of doing business in a particular industry. Companies face challenges in rapidly evolving sectors.
Risk from debt financing (leverage). Higher debt = greater variability in returns.
Difficulty selling a security quickly without significant price concession.
Uncertainty in returns due to currency fluctuations when investing internationally.
Political events affecting investment legality and liquidity. Civil strife or war severely impacts investments.
Risk that the other party in a transaction defaults on their obligations.
Current Income
Dividends from stocks, interest from bonds received during holding period.
Capital Gain/Loss
Difference between purchase price and selling price of the investment.
Total Return
(Income + Capital Gain) / Purchase Price
Inflation-Adjusted Return
[(1 + Nominal) / (1 + Inflation)] - 1
The Chicago Board of Exchange (CBOE) Volatility Index (VIX) shows the market's expectation of 30-day volatility. It's also called the "investor fear gauge."
< 20
Low Volatility
Market Calm
20-30
Moderate
Normal Conditions
> 30
High Volatility
Fear/Uncertainty
During the 2008 Lehman crisis, VIX shot above 80. During normal periods, it stays below 20.
Unit Trusts spread risk across dozens or hundreds of securities automatically. Professional fund managers actively monitor and rebalance portfolios based on market conditions.
Investment Products
Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. A diversified portfolio will, on average, yield higher returns and pose lower risk than any single investment. The proverb "Don't put all your eggs in one basket" captures this wisdom perfectly.
Invest across various sectors of the economy (technology, healthcare, finance, etc.) instead of concentrating in one sector.
Invest across different countries and regions. Economic downturns in one country may not affect others equally.
Invest across stocks, bonds, real estate, commodities, and other asset classes that don't move in the same direction.
Studies have shown that maintaining a well-diversified portfolio of 25 to 30 stocks yields the most cost-effective level of risk reduction. Investing in more securities still yields diversification benefits, albeit at a drastically reduced rate.
Most retail investors have limited resources and find it difficult to create an adequately diversified portfolio on their own. This is why unit trusts have become popular - they provide instant diversification through professional management.
Highly liquid, low-risk instruments including T-bills, commercial paper, and certificates of deposit. Maturities typically under 1 year.
Debt securities with periodic interest payments. Include government bonds, corporate bonds, and Singapore Savings Bonds.
Ownership stakes in companies. Offer potential for capital appreciation and dividends. Higher risk, higher potential returns.
Physical property or REITs providing rental income and potential appreciation. Singapore is a global REIT hub.
Physical goods like gold, oil, and agricultural products. Often used as inflation hedge and portfolio diversifier.
Contracts whose value derives from underlying assets. Include futures, options, warrants, and structured products.
A strategy where you invest a fixed amount at regular intervals, regardless of market conditions. This approach:
A single Unit Trust can give you exposure to stocks, bonds, and multiple sectors across different countries - achieving diversification that would otherwise require significant capital and effort.
Stock Investing
Equity represents part ownership of a company. When you invest in stocks, you become a shareholder with voting rights (for ordinary shares) and potential to receive dividends. Over the long term, equities have historically provided higher returns than other asset classes, but with correspondingly higher risk.
High-quality companies with long track record of earnings, dividend payouts, and growth. Examples: DBS, Singtel, Keppel.
Sensitive to economic cycles. Outperform in expansions, underperform in downturns. Examples: Auto, construction, hospitality.
Stable regardless of economic conditions. May lag in upswings. Examples: Food, utilities, healthcare, pharmaceuticals.
High potential for capital appreciation, growing faster than market. High P/E ratios, often pay little/no dividends.
Mature companies with stable earnings distributing significant earnings as dividends. Higher dividend yield than average.
Currently out of favour, trading at low P/E or P/B ratios. Believed to have underlying value that market hasn't recognized.
P/E = Share Price / Earnings Per Share
Shows how much investors pay for each dollar of earnings. High P/E suggests expectations of higher future growth.
Yield = Annual Dividend / Share Price × 100%
Cash flow return on investment. In absence of capital gains, this is your return on investment.
P/B = Share Price / Book Value Per Share
Compares market value to book value. Useful for asset-heavy companies like banks and real estate.
Payout = Dividend Per Share / EPS × 100%
Proportion of earnings paid as dividends. Mature companies have higher payout ratios.
Singapore offers no dividend withholding tax for residents, making it attractive for income investors. The Straits Times Index (STI) tracks the top 30 companies by market capitalization. Singapore has significant concentration in banks (DBS, OCBC, UOB) and REITs. Note: US dividends are subject to 30% withholding tax for Singapore investors.
Equity Unit Trusts let professional fund managers analyze companies and market trends for you. Get diversified exposure to blue-chips, growth stocks, or value plays - all managed by experts.
Fixed Income
Bonds are debt securities where the investor lends money (the principal) to the issuer, who agrees to make periodic interest payments (coupons) and return the principal at maturity. Bonds provide a predictable income stream and are generally less volatile than equities.
Face Value / Par
Amount paid at maturity (usually $1,000 or $100)
Coupon Rate
Annual interest rate paid on face value
Maturity Date
When principal is repaid to bondholder
Yield to Maturity
Total return if held until maturity
Bond prices fall. Existing bonds with lower coupons become less attractive compared to new bonds with higher rates.
Bond prices rise. Existing bonds with higher coupons become more valuable compared to new lower-yielding bonds.
Duration measures sensitivity to interest rate changes. Longer duration = more sensitive to rate changes. Match bond duration to your investment time horizon.
Issued by governments to fund operations. Generally considered safest. SGS bonds are backed by Singapore government.
Issued by companies. Higher yields than government bonds to compensate for credit risk. Rated by agencies like Moody's and S&P.
Unique product for individuals. Step-up interest rates over 10 years. Fully flexible - redeem anytime with no penalty.
Can be converted to company shares at specified price. Offers bond security with equity upside potential.
International bonds denominated in a currency not native to issuer's country. E.g., Eurodollar bonds, Euroyen bonds.
Bonds rated below investment grade (BB+ or lower). Higher yields compensate for higher default risk.
Bond prices fall when interest rates rise. Longer-term bonds are more sensitive.
Risk that issuer fails to make interest or principal payments. Check credit ratings.
Risk that coupon payments are reinvested at lower rates when rates decline.
Singapore has one of the most developed bond markets in Asia. MAS issues Singapore Government Securities (SGS) with maturities up to 30 years. Statutory boards like JTC and HDB also issue bonds. The Singapore Savings Bonds are unique for retail investors with guaranteed capital and flexible redemption.
Individual bonds often require $250,000+ minimums. Bond Unit Trusts let you access diversified bond portfolios from just $1,000, with professionals managing interest rate and credit risks for you.
Collective Investment Schemes
Unit trusts (or mutual funds) pool money from many investors to invest in a diversified portfolio managed by professional fund managers. They provide instant diversification and access to markets that would be difficult or expensive to access individually.
Investors contribute money which is pooled together into a fund
Professional fund managers invest the pooled capital according to fund objectives
Investors receive returns proportional to their unit holdings
Instant exposure to a portfolio of securities, reducing single-stock risk
Expert fund managers make investment decisions on your behalf
Start with small amounts; access markets otherwise out of reach
Buy or sell units at current NAV (Net Asset Value) on any business day
Regular reports on holdings, performance, and fees
Regulated by MAS with investor protection requirements
Annual fees range from 0.03% (passive ETFs) to 2%+ (active funds). A 1% difference compounds massively over decades.
Most active funds underperform benchmarks after fees. Consider low-cost index funds as core holdings.
Look for funds with sufficient AUM (Assets Under Management) and at least 5-year track record.
Invest primarily in stocks. May focus on regions (Asia, US, Global), sectors (Technology, Healthcare), or styles (Growth, Value).
Invest in fixed income securities. May focus on government bonds, corporate bonds, or high-yield bonds.
Mix of equities and bonds in a single fund. Provides built-in asset allocation and rebalancing.
Invest in short-term debt securities. Low risk, low return. Good for parking cash temporarily.
Singapore offers tax advantages for unit trusts: no capital gains tax and dividends from Singapore-focused funds are often tax-free. The CPF Investment Scheme (CPFIS) allows investment of CPF-OA and SA in approved unit trusts, classified by risk levels (Lower Risk, Medium-High Risk, Higher Risk).
Whether you're just starting out or have a busy lifestyle, Unit Trusts offer the perfect balance of professional management, diversification, and accessibility.
Expert fund managers make investment decisions, saving you time and research.
One investment spreads across 50-100+ securities, reducing single-stock risk.
Start with as little as $1,000 or set up monthly investments from $100.
Rebalance your portfolio without incurring additional transaction fees.
No lock-in periods on most funds. Access your money when you need it.
Through our advisory, access premium funds normally reserved for high-net-worth investors.
Real Estate & Exchange-Traded
REITs allow you to invest in real estate without the hassle of property ownership. They own and operate income-generating properties and are required to distribute at least 90% of taxable income as dividends, making them attractive for income investors.
Commercial office buildings
Shopping malls & centers
Warehouses & logistics
Hospitals & nursing homes
Distribution Yield
S-REITs typically yield 4-8%. Higher yields may signal higher risk.
Gearing Ratio
MAS limits REIT leverage to 50%. Higher gearing = more interest rate risk.
Occupancy Rate
Percentage of space that is rented. Higher is better.
WALE
Weighted Average Lease Expiry. Longer WALE = more income stability.
ETFs are funds traded on stock exchanges like individual stocks. They typically track an index and offer instant diversification with lower costs than actively managed funds. ETFs combine the diversification of unit trusts with the trading flexibility of stocks.
| Feature | ETFs | Unit Trusts |
|---|---|---|
| Trading | Throughout the day on exchange | Once daily at NAV |
| Pricing | Market price (may differ from NAV) | At Net Asset Value |
| Fees | Generally lower (0.03% - 0.5%) | Higher (0.5% - 2%+) |
| Minimum | 1 share (varies) | Often $1,000+ |
| Management | Mostly passive (index tracking) | Active or passive |
Singapore is a global REIT hub with over 40 listed REITs and property trusts. S-REITs offer tax advantages: distributions from Singapore properties are often tax-exempt for individual investors. Popular S-REITs include CapitaLand Integrated Commercial Trust, Mapletree Industrial Trust, and Ascendas REIT. The STI ETF tracks the Straits Times Index, providing broad exposure to Singapore blue chips.
Our Unit Trust Advisory can help you access REIT funds and property funds that invest across multiple properties in Singapore, Asia, or globally - giving you rental income exposure without the hassle of being a landlord.
Income Investing
Dividend investing focuses on generating regular passive income from your investments. Through dividend-focused unit trusts, you can receive regular distributions without picking individual stocks, with professional fund managers handling the selection and management of income-generating assets.
Tax-Exempt Dividends
Dividends paid by Singapore resident companies under the one-tier corporate tax system are not taxable for individual shareholders. This makes Singapore an attractive location for income investors.
REIT Distributions
Income distributions from REITs are generally tax-exempt for individual investors in Singapore, except when derived through a partnership or business.
Unit Trust Dividends
Distributions from Singapore unit trusts are typically not taxable, as they fall under the one-tier system. Check your dividend voucher for confirmation.
Foreign Dividend Consideration
Foreign dividends received by Singapore residents are generally not taxable. However, US stocks carry a 30% withholding tax at source.
Source: IRAS - Dividends Tax Treatment
Fund managers research and select quality dividend-paying companies, analyze payout sustainability, and manage the portfolio for optimal income.
A single dividend fund invests across dozens or hundreds of companies, reducing the risk of any single company cutting its dividend.
Many dividend funds distribute income monthly, quarterly, or semi-annually, providing steady cash flow for living expenses or reinvestment.
Invest in dividend-paying stocks from mature, profitable companies. Typically target companies with consistent dividend growth history.
Typical Yield: 3-6% annually
Invest in government and corporate bonds that pay regular interest (coupon payments). Generally lower risk than equity funds.
Typical Yield: 2-5% annually
Invest across multiple REITs, providing diversified property exposure with high distribution yields. Required to distribute 90% of income.
Typical Yield: 4-8% annually
Blend of dividend stocks, bonds, and REITs in a single fund. Provides diversification across asset classes with balanced income.
Typical Yield: 3-5% annually
Beware of Yield Traps
Very high yields (10%+) may indicate distress. The market often prices in expected dividend cuts, resulting in artificially high yields.
Total Return Matters
Don't focus solely on yield. A fund that grows 8% with 2% dividend beats one flat with 5% dividend. Consider total return perspective.
Distribution Sustainability
Check if distributions are from actual income or capital returns. Sustainable funds distribute from earnings, not by returning your own capital.
Fund Fees Impact Income
Annual management fees reduce your effective yield. A 1.5% fee on a 4% yield means you keep only 2.5%. Compare total expense ratios.
A unit trust is a collective investment scheme that pools funds from multiple investors to invest in a diversified portfolio of assets. Each investor owns units representing their share of the trust's assets and profits.
Low Entry Barrier
Start investing from as low as $100-$1,000. Regular savings plans allow monthly contributions.
CPF/SRS Eligible
Many unit trusts are CPFIS-approved, allowing you to invest your CPF-OA/SA or SRS funds.
Open-Ended
Buy or redeem units at any time at the prevailing Net Asset Value (NAV).
Learn more: Complete Guide to Unit Trusts in Singapore
Let us help you select the right dividend-focused unit trusts based on your income needs, risk tolerance, and investment timeline. Professional fund managers handle the work while you receive regular distributions.
Advanced Products
A derivative is a financial security whose value is linked to the value of one or more underlying assets. The payoff depends on the performance of underlying assets like stocks, indices, currencies, or commodities. Derivatives can be used for hedging, speculation, or gaining leveraged exposure.
Derivatives are sophisticated financial instruments that carry significant risks including leverage, which can amplify both gains AND losses. They may not be suitable for all investors. Ensure you fully understand the product before investing.
Insuring against risk by taking positions that offset potential losses in other investments.
Taking a view on future market direction with leveraged exposure to potential gains.
Exploiting price differentials between markets to make risk-free profits.
Standardized contracts to buy or sell an asset at a predetermined price on a future date. Traded on exchanges like SGX.
Right (but not obligation) to buy (call) or sell (put) an asset at a specific price within a time period.
Right to buy shares from the issuing company at a specified price over a given time period (usually years).
Agreements to exchange cash flows or other financial instruments between parties.
Singapore is a major derivatives hub in Asia. SGX Derivatives Trading (SGX-DT) offers equity index futures and options (Nikkei, MSCI), currency futures, and commodities. SGX AsiaClear is Asia's first clearing platform for OTC derivatives. Singapore is the second-largest OTC derivatives trading centre in Asia.
Most investors don't need derivatives. Unit Trusts offer a simpler path to grow your wealth with professional risk management - no margin calls, no leverage worries, no complex payoff structures.
Complex Products
Structured products are complex derivative financial products that allow risk/return customization through a combination of two or more underlying instruments. They typically combine a fixed-income component with derivatives to create specific payoff profiles.
Structured products are Specified Investment Products (SIPs) in Singapore. Investors must demonstrate competency through a Customer Account Review (CAR) or pass the relevant assessment before investing. These products may have complex payoff structures, limited liquidity, and significant risks.
Debt instruments with returns linked to underlying assets. Examples include:
Unit trusts using derivatives for specific outcomes:
Exchange-traded funds with derivative strategies:
Insurance products with investment components:
Risk that the issuer defaults on payment obligations.
Value can fluctuate based on underlying asset performance.
May be difficult to sell before maturity without loss.
Difficult to understand payoff structures and risks.
Issuer may redeem early at unfavorable terms.
Leverage can amplify both gains and losses significantly.
Structured products can be confusing with complex payoff structures and multiple risks. Unit Trusts are transparent - you know exactly what you're invested in, with clear NAV pricing and regular reporting.
Putting It Together
Portfolio management is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation, and balancing risk against performance. The goal is to maximize returns while managing risk according to your individual circumstances.
Define objectives, constraints, and risk tolerance
Asset allocation and security selection
Track performance and market conditions
Adjust portfolio to maintain target allocation
Long-term target allocation based on expected returns and risk tolerance. Set your base policy mix and stick to it.
Example: 60% equities, 30% bonds, 10% cash as your permanent baseline.
Short-term adjustments to exploit market opportunities while maintaining core strategy.
Example: Temporarily overweight equities when valuations look attractive.
Longer horizons allow more equity exposure as you have time to recover from downturns.
How much volatility can you emotionally handle? Your true tolerance is tested during downturns.
How much risk can you financially afford to take based on your situation?
How much do you need access to on short notice? Keep emergency funds separate.
Retirement? Children's education? Define specific goals with target amounts.
Consider all assets including CPF, property, and other investments when planning.
Your risk tolerance during a bull market is NOT your true risk tolerance. Assess during calm periods.
Reassess your risk profile after major life changes: marriage, children, job change, inheritance.
Don't let market emotions drive allocation changes. Stick to your plan through volatility.
Time in market beats timing the market. Start early and stay invested.
Rebalance regularly (annually or when allocations drift significantly) to maintain discipline.
Focus on what you can control: costs, diversification, and contribution rate.
Don't navigate the investment world alone. Our Unit Trust Advisory service helps you build a diversified portfolio matched to your goals, risk profile, and timeline - all with professional ongoing management.
Free Consultation
Risk Profile Assessment
Personalized Fund Selection
Ongoing Portfolio Review
Complete this assessment to determine your investment knowledge and risk profile.
The CKA serves as a tool to assess your knowledge or investment experience in Investment-Linked Policies (ILPs) and Collective Investment Schemes (CIS) so that appropriate advice and recommendation can be provided.
1) Do you hold a Diploma or higher qualification in any of the following?
• Accountancy, Actuarial Science, Business
• AFP, AFC, CFA, Capital Markets, Commerce
• Economics, Finance, Financial Engineering/Planning
• Insurance, Diploma in Life Insurance/Financial Planning, ACCA
2) Have you performed at least 6 transactions in sub-funds of ILPs and/or CIS which qualify as transactions in unlisted SIPs in the past 3 years?
Examples: New ILP/unit trust purchase, Premium top ups, Switching, Withdrawal
3) Do you have a minimum of 3 consecutive years of working experience in the past 10 years in the following?
The following questions determine your investment risk profile. Please answer honestly based on your true feelings and financial situation.
4) Please select your preferred risk / return objective
5) How much time have you set aside to achieve your investment/financial objectives?
6) What average annualised gross return do you expect from your investment portfolio over 10+ years?
7) What percentage drop in major market indices would you consider a severe crisis?
8) If stock markets dropped 20% in a year, how would you respond?
9) Which $100,000 investment range would you be most comfortable owning after one year?
Green = Gain | Red = Loss potential
Please answer all 9 questions to see your results
Investment is one part of a comprehensive financial strategy