If you’re reading this post, you’re probably looking how to start investing with $100. I’m going to share with you a fairly simple method that is easy and practical to do.
This is much like a regular savings plan but much better since you’ll be gaining much more interest than a regular savings plan that you might purchase elsewhere (insurance companies, independent advisors and etc).
With this method you don’t need thousands of dollars as you can simply start with $100 a month and be on your way to making money work for you.
Who is this for?
This method is actually great for investors who are beginners or even seasoned investors who are looking to diversify and spread their risk out.
What Am I Investing Into?
This method compromises of you investing into an Index. In simple terms, an index refers to the market. Every country has a different number of Index.
Each index consists of a group of stocks that represents a portion of a market. Think of it as a basketball team, if one of the player doesn’t perform well, they will be swapped out with a better player. That’s how the index works.
So for the U.S there is the S&P 500 Index, Dow Jones Index and so on. For Hong Kong there is the Hang Sang Index. And for Singapore it is called the Straits Times Index also known as STI. You can refer to this link for the full list of indices around the world.
So the next time if you have a friend asking you, “how is the Singapore market?” You can probably base your answer on the Straits Times Index (STI).
Which Index Can I Pick?
In this practical guide, we will be referring to the Singapore Index, STI.
Let’s take a look at its track records.
In the last 10 years, the annual average return of the Singapore Index (STI) has been about 9.3% per year according to a report from Securities Investors Association of Singapore (SIAS).
Imagine growing your money by 9% every single year.
But we’re not saying that the STI Index will definitely grow and allow you to get 9% every year.
That’s because it all depends on whether we still can perform the same as it was for 10 years ago.
Every and any investment always carries a risk.
But in this case, it is a very much lower risk because when use a Regular Savings Plan with POSB/DBS, you are practicing a concept called Dollar Cost Averaging (more about that below).
So if it performs equally well, then great! You will be able to compound your money every single year.
If you happen to reside in other countries apart from Singapore, go ahead and find out what indices you can buy and its track records. Knowing the track records can give you an indication if it’s a sound investment to enter.
How Do I Start Investing?
You will be applying a concept called dollar cost averaging whereby you will buy the index every month regardless of the price.
Learn more about dollar cost averaging in the video below:
In Singapore, you can automatically buy the Straits Times Index (STI) independently without going to an insurance agent.
You can do this by applying for a Regular Savings Plan with POSB/DBS that allows you to buy the Singapore Index every monthly automatically starting from $100 (in multiples of $100).
We don’t receive any compensation from POSB/DBS for recommending this to you but purely because I feel that it’s a great way to start investing and making money to work for you.
When you buy the Singapore Index, you’ll be buying a basket of the top stocks in Singapore such as Capitaland, SIA, Starhub, DBS and many more.
So to get started in applying for the Regular Savings Plan with POSB/DBS is easy and simple.
You just have to go to any POSB or DBS ATM and follow these 7 steps:
1. Select “More Investment Services” under the “Invest” tab on the top navigation.
2. Select “Set Up Exchange Traded Fund Regular Savings Plan (RSP)”.
3. Select the fund you wish to set up a Regular Savings Plan and click on the “Next” button”.
4. Enter the amount you wish to invest, your contact number and select your debiting account.
5. Once you have filled up all the details, click on the “Next” button.
6. On the new page, check the details of this transaction. If the details are correct, click on the “Submit” button.
7. Your transaction is now complete.
For more details about this Regular Savings Plan with POSB/DBS, you can click here to read and find about other ways to apply or any other terms & conditions.
Go ahead! Do it! Start planting small seeds and you’ll thank yourself years down the road!