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8 Ways to Invest S$100 Every Month Effectively

Racheal Muriithi

Do you believe investing S$100 can be a life-changing initiative?  This may look like hyperbole but saving S$100 can make life-changing differences. The hardest part of investing is starting it. You may lack S$1,000 or S$10,000, but S$100 is a smart way of starting investing habit and eventually accumulate wealth in the long-term. 

Here are ways of getting a good return out of S$100 monthly investment.

 

1. Open a Savings Account.

Opening a savings account may appear a non-appealing thing, but it’s a highly reliable channel for investing. The idea here is to save S$100 for some period to build a higher yielding investment. After you grow your savings for like ten months, you will be able to start with S$1,000 investment. There are excellent online savings account you can begin to make interest. Many online banks are offering attractive terms.

Don’t put your money in savings accounts that erode you with annual fees. These banks are a significant consideration to stash your cash and include Citibank, CIMB, UOB, OCBC, POSB, DBS among others. For instance, the DBS, their Be-Your-Own-Boss account is currently offering a 4% max-rate. They have no initial deposit. You can plan to build wealth using this method and see a big difference in five years time.

 

2. Invest through P2P

You can choose to invest through Peer 2 Peer lending sites, which helps SMEs raise funds from individual investors. Funding Societies is the most prominent lending and borrowing marketplace in Southeast Asia. You can join it online through easy-to-follow steps. You can begin with as little as S$50 minimum investment and earn pretty good returns at 8%-15% p.a. Funding Societies offer the best known investing environment with the lowest default rate of 1.3%. It provides a high on-time repayment rate of 85%.

3. Invest in Yourself

Enrich your life financially by investing in yourself. Investing in human capital is a proven approach that yields more than investing in financial capital. You can treat a resourceful mentor to lunch and pick his brain on how he invests.  Then turn that into an economic generating idea.

You can also enroll for an online course and sharpen your skills in a particular area. Use the skills learned to create a client base and you could end up earning S$1000 a month just by spending S$100. There are also free seminars offered by Phillip Futures and IG Academy. You can use these seminars or read online investment books to learn trading skills and increase your earning capacity. If online trading is a whole new thing to you, you can read Beginners guide to automated trading.

 

4. Weld The Power of Compounding in The Stock Market

The current annual growth rate in prices has been 6.66% in Singapore. The future is also optimistic with an expected future growth of 17.0%. If you invest S$100 today, the real key behind harvesting good returns is the power of compounding. This simply means that after you earn interest from your initial investment, reinvest this interest to make more interest.  

The stock market returns 6.66% after adjusting for inflation. This means that S$100 you invest will be S$6.7 more in the second year. By compounding, in the third year, the first gain will yield to roughly S$7.15. For over twenty years, the effects of compounding will be a valid driver of wealth. The below graph depicts this scenario.



NB: The annual growth rate is rounded to 7%.

  

5. Starting a Blog

Starting a blog can be a life “Game changer.” You can start a blog with less than S$100 and have your blog live in less than 20 minutes. You will impact not only many lives but also earn extra money through publishing contents. Are you interested in getting ten times your money? Peruse this guide to gain insights on how to start a blog and earn your first S$1,000.

 

6. Use a Robo Advisor

Robo advisor is an automated investment advisor that helps you to manage your money professionally with no human interaction. This Robo advisor can collect your financial situation and future goals online and provide investment advice. Then your money is automatically invested. A Robo advisor is a low-cost investment as most of them charge an annual flat fee of 0.2% to 0.5% on the client’s total amount. This compares with typical 1% to 2% human, financial planners charge. With robo-advisors like Stashaway, there is no account minimum required to register. The service is easily accessible as you only need an internet connection.

 

7. Investing in Exchange Traded Funds (ETF)

An ETF is an investment fund which monitors the market index performance. You can start by investing as little as S$100 per month. ETF assists in spreading your risks making is a safe way of investing. You can invest in over 30 Singapore companies with just S$100 per month. ETF replicates the performance of a market index like the Bond Index. Investing in a particular ETF will mean diversifying your portfolio by buying in all companies underlying in that market index.

There are two ETFs centred on Singapore’s large cap index stocks. There is the SPDR Straits Times Index and Nikko AM Singapore STI. ETFs are cheap to maintain as their management costs are low. They are highly liquid as you can sell them any time the stock market opens.

 

8. Leverage Your Investment

Leverage is a practical and also a savvy tool to materially increase your wealth over time. You can use leverage to improve your returns without exposing yourself many risks. Leverage refers to use of borrowed money to invest and get returns. For instance, you can have S$100 to invest. Instead of buying S$100 of stocks you can borrow from your brokerage firm offering leverage, to buy up to S$1000 of stocks.

Brokerages like CMC Markets, City Index, and IG offer leverage to purchase stocks through CFDs.

If the stock price rises, you earn more than was possible with the initial investment of S$100. What if the stock price goes down? How to use this financial weapon in your favor! You can leap maximumly using leverage by using “Conservative Aggressive” investment. This is whereby you only invest where there is enormous value-price disconnect even with conservative gauges. Then, invest aggressively. Just use leverage when you have adequate knowledge and understanding of the specific investment opportunity

In conclusion, you should always seek knowledge about your investment of choice. Ensure to invest conservatively and carefully, and you can potentially build wealth using the above methods. The driver for investment is saving. Save S$100 a month and make a life difference. “It is not about how much money you make but how much you keep, how well it works for you and the many generations you keep it for”-By Robert Kiyosaki.

(By Racheal Muriithi)

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