The short answer is No, you can’t invest if you have no money. The longer answer is, you have to find ways to make money.
In this technology age, there is no excuse that you can’t make money. You can install an app on your phone, and be on your way to making money from food deliveries. Or if you have a car, sign up to be a Uber/Grab driver. You have a home, rent out a room. Or get a job.
I came across this YouTube channel by Ryan Trahan. He has this 1 Penny Challenge series. Give it a watch. See how he hustle and survive on a penny.
Mindset
I know a lot of readers will go like, ‘Sure or not, this thing will not work in Singapore lah’. If you have a mindset that you believe can’t make any money, then yes, you are right, you will not make any money. Maybe work on changing that mindset before doing anything else.
I have a friend who does occasional food deliveries during weekend and she earns extra $50-$60 from this side hustle. That translate to an extra $200 per month.
Build a savings if you do not have one
Once you figured out a way to earn some extra income, that doesn’t mean you can spend these extra money. If you don’t have any savings, then I suggest saving this extra income first before investing.
Build up a savings of at least 3-6 months of your expenses. Once that is done, then proceed to invest those extra income.
How to invest if you don’t know anything about investing
First up, decide on your investment time horizon. Ideally it should be at least 5 years, of course the longer the better.
Are you investing for growth, or do you want to get some income/dividend from this investment?
Investing for Growth
For growth, we should look at Global or US index funds instead of the Singapore’s STI (Straits Times Index). The STI annualized returns for the past 10 years is at 4.19% vs S&P500 index’s 13.80% vs FTSE Global All Cap Index’s 9.71%.
Based on that, we can conclude that Global or US index performed much better than STI.
Investing for Income/Dividend
If we are investing for income or dividend, then we should look into some of our local stocks or REITs, rather than a US or global stocks/fund. This is because there is usually some form of a withholding tax on dividend for US or global stocks/fund.
E.g. there is a withholding tax of 30% on dividend for US stocks. This means, if you receive $100 dividend, $30 will be deducted for tax, and you will only receive $70.
How to invest with little money in Singapore
Once you have decided on growth or income investment, you can then decide on which platform to go with.
I went with robo advisors, based on these assumptions.
- you don’t have a lot of money
- you will be investing every month
- you don’t have much knowledge on investing
- hassle free automated investing
Growth Investment
I went with Endowus for this one because it deals in SGD so there is lesser currency risks and we don’t have to worry about any tax implications for unit trusts.
If you are investing in pure US stocks/ETFs, there is a estate tax that you will need to be aware of. Basically if you have more than $60,000 in US stocks/ETFs, you will be subjected to 40% estate tax on anything above the $60,000 threshold if you die.
E.g. if you have $100k worth at time of death, then $40k will be subjected to 40% tax. This means $16k will be deduct as estate tax.
I know some readers might be thinking, ‘I won’t die so young lah’. I recently had a ex-colleague who drop dead in his early 40s, he was very fit. So death can happen anytime, and sooner than you think.
Which funds to pick?
Not financial advice, but personally, I would go with either Infinity U.S 500 Stock Index Fund for a US centric fund or Dimensional Global Core Equity Fund for a global one.
Income/Dividend Investment
I will have to go with Syfe REIT+ portfolio on this, because you can start with a very small amount as there is no min investment amount. I have a more in depth post on Syfe REIT+. However, there is a caveat, that is you will not receive payout until you have $20,000 or more in your portfolio.
Alternatively, we can always go with bank stocks using OCBC’s Blue Chip Investment Plan.
You can find out how I am personally Building My Income Portfolio.
Lastly, if you are interest in opening an account with Endowus, you can do it via this referral link. Or if you are interested in opening an account with Syfe, you can use my referralcode: SRPSWNAD3 at no extra cost.
As always, None of the content that I write on this site should be taken as financial advice.
