When I first started investing, I seriously had no idea what to do.
I was this working adult who knew that I needed to invest long-term to achieve Financial Freedom like many of my friends have.
I had the money, but the fear of losing it all held me back. I knew I had to take the leap of faith, But should I leap across the lava pits, or across the piranha infested waters, or maybe… the bottomless swamp…?
Well, whatever I crossed, the end is the same for you and me: Passive income.
That was when, a friend started advising me to look at ETFs (Exchange-Traded Funds) and I realised that it’s not any of the pits/waters at all…
ETF was the flower right at my feet waiting for me to pick it up. Why?
What are Exchange-Traded Funds (ETF)?
Here’s an Infographic provided by Mint.com on what ETF is all about
Wow, now that sounded confusing at first. But I started looking at Singapore’s STI (Straits Times Index) ETF and everything became clear. Basically, it is a “stock” that follows the movement of the whole stock market! And that makes it foolproof. While you cannot predict the investment of any single stock in the short run, collectively in the long run, it definitely increases gradually.
Granted, it gives out a lower return but it fulfils the role of a stable and risk-free investment.
There are many ways to start an investment in ETFs, and I will cover that in the (very-soon) future.
So where can you invest in ETF in Singapore?
ETFs are easily provided by 2 banks that I know of providing the option for ETF investments. POSB & OCBC. You can easily check with the banks to enquire about how you can start.
What charges can you expect?
For ETFs, it is a monthly investment with an affordable minimum of $100/month.
As with any investment instrument, there will be a handling fee. Here’s a rough guide:
What is the ROI you can expect?
It depends on the movement of the ETF itself. The stock market is something that increases steadily, so holding your stocks for 10 years would yield substantial returns in the long run.
Overall, the ETF is a good investment to start off with for new investors.
Even if you are an experienced investor, owning stocks in an ETF is still a good stock to have in your portfolio, which most experienced investors do have. So you can expect good things from investing in an ETF. And the longer you hold, the more returns you can reap, so now that you know, why wait?