Time value of money, long term equity fund investment for sustainable growth, financial concept

One of the popular ways to invest money in Singapore is mutual funds. Most people use a representative agent or a broker to purchase their units for them; however, if you are only getting started now, here are some tips on how you can start investing today.

Why invest in mutual funds?

Investing in stocks is risky and volatile. Investors should know their risk appetite before going into it, as it can lead to significant gains or huge losses. Mutual funds are a more passive investment as you pool your resources with other investors and choose a portfolio manager who will make decisions for you within the fixed guidelines of the fund.

It makes it easier for people to do stock investing without going through all the hassle of making actual trades themselves or hiring an expert stock broker like those offered at Singapore Brokerage, for example (Brokerage Review).

How much money do you require to start investing?

Most mutual fund companies require a minimum net personal worth of $30,000 to be eligible for their services. For S Pass Holders, the amount is about $15,000.

How do I start investing?

To start investing in mutual funds, you will have to choose a fund or several funds that meet your investment objective and risk appetite. However, note the ongoing management fees every year, which is required by law to be disclosed by all fund houses when choosing this option instead of buying stocks directly (ST Guide).

The next step is making an account with them online or through an agent who can give you advice on where to invest within specific guidelines. Deposit some money into it via POSB/DBS bank etc., and wait for your chosen fund managers to make trades based on the portfolio and hopefully make you money.

What are some worthwhile funds to check out?

There are funds like NTUC Income fund (NTUC1605) that have low risk and aim for capital preservation and high liquidity. It can be beneficial to those who just started investing or retired people who want a stable flow of returns every month instead of going for something too risky, which will cost them more time and money.

Check here to view some top-rated mutual funds in Singapore.

What should I not invest in?

Investing in foreign stocks is illegal here because these are considered speculative investments that could come with huge risks if you don’t know what you’re doing. If you choose to go into it without adequate knowledge of the market, you could get scammed or lose money, so stay away from things like forex trading unless you know what you’re getting yourself into.

Do remember that mutual funds are not risk-free either. If the fund manager makes terrible decisions, for example, your capital can suffer losses, so do read up on their past track record before deciding to put your money with them! Always consider your options and time your investments to take advantage of certain market conditions.

In the long run, mutual funds have been proven to have a better ROI than going into the stock market directly as a beginner investor if you do not know what you’re doing. It’s safe, inexpensive and offers a more passive form of investment for people who don’t want to go out every day and track stock prices etc., but at the same time, there are risks involved too.

Bottom line

Like any other product purchase, it is essential to read up on them before committing yourself financially. While charges vary from one fund to another, there might be hidden fees such as trailer fees that will reduce the returns on your investment. Check out whether these changes can make a difference in the long run before making any decisions.