I Have $100k to Invest in Singapore – Here Are Your Best Options

Reaching the $100,000 mark has long been seen as a significant milestone for many. While $100k may not stretch as far as it once did — especially with the rising cost of living—it remains a substantial amount of money and an important foundation for wealth building. 

For some, disciplined saving and frugal living have allowed them to achieve this in as little as 3 years according to some redditors, while others, particularly those with moderate salaries or financial commitments, may take closer to 8 years since graduating. Regardless of how long it takes, accumulating $100k represents a key turning point toward serious wealth building.

Once you've reached this milestone, it’s time to think about how to make that money grow. With so many investment options available, the challenge is determining the right approach for your situation. Taking things step by step, diversifying your portfolio, and avoiding high-risk temptations are essential strategies. Here's how you can start building a strong investment portfolio with your $100k.

Pre-investment checklist: What to do before you start investing

Before investing your first $100,000, it's essential to lay a solid financial foundation. Managing debt, securing an emergency fund, and understanding your investment style are key steps to set yourself up for success. 

#1 Pay down high-interest debt

Before investing, it's crucial to tackle any high-interest debt, particularly credit card balances. According to recent data for Q1 2024, credit card debt has surged by 15.8% to $14.6 billion, with bad credit card debts jumping by 19.7% to $89.4 million compared to Q3 2023. This significant increase highlights the growing financial burden carried by many individuals due to rising credit card debt.

The typical credit card interest rate in Singapore ranges from 25% p.a. to 28% p.a. for purchases, which makes paying it down an urgent priority. The reason is straightforward: the high interest accumulating on credit card debt can quickly outpace any returns you might earn from investments. For instance, while your investments may yield 5-7% annually, the interest on unpaid credit card balances could be growing at a much faster rate, eroding your overall financial health.

For lower-interest debt, such as a mortgage with fixed rates around 2-3%, there's less urgency to pay it off. Financially, you may be better off investing your money, as the returns from investments could surpass the cost of carrying low-interest debt. However, personal preferences, such as the desire to be debt-free, may also influence your decision.

By prioritizing the repayment of high-interest debt, especially credit card balances, you’ll protect your financial well-being and create a stronger foundation for future investments.

#2 Establish an emergency fund

An emergency fund serves as a crucial financial buffer for unforeseen situations like job loss, health emergencies, or urgent household repairs. It ensures you have quick access to cash when needed, preventing you from relying on high-interest loans or credit cards.

Whether you're replacing broken appliances, covering medical costs, or managing bills after losing income, this fund helps you handle emergencies without disrupting your financial stability.

The general recommendation is to save 3 to 6 months’ worth of living expenses, with the exact amount depending on your circumstances. Households with a single income or multiple dependents should aim for closer to 6 months, while dual-income households or young professionals may start with 3 months.

Freelancers or those with variable income should consider saving more than 6 months to ensure they’re prepared for any financial challenges.

Here’s how to store your emergency fund 

When it comes to storing your emergency fund, liquidity and safety are key. This means keeping your money in an easily accessible, low-risk account where it won’t be exposed to market fluctuations. Some of the best options include:

• High-Interest Savings Accounts: These accounts offer higher interest rates than traditional savings accounts, helping your money grow while still being readily available.
• Money Market Accounts: Similar to savings accounts but often offering slightly better interest rates, money market accounts provide both safety and liquidity.
• Fixed Deposits with Short Maturity Periods: For those who want to earn a bit more interest while maintaining easy access to funds, short-term fixed deposits can be a good option, provided they align with your liquidity needs.

By keeping your emergency fund in a safe and accessible place, you ensure that you’re prepared for unexpected expenses while maintaining the security of your principal. This financial cushion is a vital step before making any investment decisions.

#3 Contribute to retirement plans and tax-advantaged accounts

When considering long-term financial planning, topping up your CPF and contributing to the Supplementary Retirement Scheme (SRS) are two effective strategies for building retirement savings while enjoying tax benefits. Both options serve to enhance your financial security during retirement, but they differ in contribution limits, tax relief, and flexibility.

CPF Top-Ups

Topping up your CPF Special Account (SA) if you're under 55, or your Retirement Account (RA) if you're over 55, is a simple way to boost your retirement savings. However, the total top-ups cannot exceed the CPF annual limit of $37,740, which includes your mandatory CPF contributions for the year. You can also enjoy tax relief of up to $8,000 for cash top-ups made to your own or family members' accounts.

CPF top-ups provide a guaranteed interest rate of 4% p.a. in the Special Account, offering a stable, risk-free way to grow your retirement funds. Additionally, CPF withdrawals are generally tax-free, and you can access your funds when you reach 55 or 65, depending on your retirement sum.

SRS Contributions

The SRS, on the other hand, is a voluntary savings scheme that allows for greater flexibility. Contributions to SRS accounts are capped at $15,300 annually for Singaporeans and PRs, and $35,700 for foreigners, with dollar-for-dollar tax relief on the full amount contributed. 

While the base interest rate for SRS is only 0.05% p.a., the funds can be invested in a wide range of options, including stocks, bonds, and unit trusts, which offer potential for higher returns. 

When it comes to withdrawals, funds can be accessed at the statutory retirement age (currently 63) with only 50% of the amount taxable at that time. However, early withdrawals come with a 5% penalty and are fully taxable. 

Both CPF top-ups and SRS contributions play key roles in retirement planning, and selecting the right option depends on your personal financial goals and risk appetite.

Understanding your investment style and risk appetite

After securing your financial foundation, the next step is to determine your investment strategy. Understanding your preferences and risk tolerance will guide your approach.

#1 Decide what kind of investor you are

Once you’ve established a solid financial foundation by clearing high-interest debt, building an emergency fund, and setting aside for retirement, the next step is to determine what kind of investor you want to be. This decision plays a crucial role in shaping your investment strategy and overall financial journey.

Active vs. passive investment management

The first major decision is whether to take an active or passive approach to managing your investments. An active investor prefers a hands-on approach, making their own investment decisions through research, market analysis, and constant portfolio adjustments. 

Alternatively, passive investing offers a more hands-off approach. If you prefer to delegate investment decisions, you can opt to work with a financial advisor or use a robo-advisor like StashAway. 

A financial advisor can help create a diversified, personalized portfolio based on your specific financial goals and risk tolerance. While they offer a more tailored experience, advisors charge higher management fees compared to other options.

On the other hand, a robo-advisor builds and manages your portfolio based on your risk profile, typically using a low-cost, passive strategy. Robo-advisors use algorithms to allocate your funds across assets like ETFs or index funds, rebalancing as necessary. While robo-advisors may lack the personal touch of a financial advisor, they are much more affordable and can be an ideal choice for beginners or those who prefer minimal involvement.

Choosing your investments: active vs. passive options

After deciding how involved you want to be in managing your investments, the next step is to choose what kind of investments you want to hold. If you lean toward passive investing, you’ll likely favor exchange-traded funds (ETFs) or mutual funds that track broad market indices. These investments are designed to deliver market-matching returns with minimal intervention, making them suitable for long-term, risk-averse investors.

Active investors, on the other hand, may prefer to invest in individual stocks or actively managed funds where a portfolio manager handpicks assets based on a specific theme or investment strategy. While this approach offers the potential for higher returns, it also carries more risk, and some financial advisors caution against it for long-term or risk-averse investors.

Other investment options: holistic approaches

If you seek a more comprehensive, all-in-one service to manage your wealth, consider priority banking services. As a priority banking client, you’ll gain access to a dedicated relationship manager who can provide tailored investment advice, often including insights into private equity markets and exclusive opportunities. This option is ideal for those who want to blend personalized service with the flexibility of having more investment options.

#2 determine your risk appetite

Your risk appetite is key to shaping your investment choices, determining how much volatility you’re willing to accept in exchange for potential returns.

Aggressive Investments

Aggressive investors seek higher returns by embracing more risk, often opting for high-growth stocks and alternative investments like cryptocurrencies. While these assets offer the potential for significant gains, they also come with increased volatility and a higher chance of losses.

Conservative Investments

Conservative investors prioritize stability, choosing safer options like bonds and REITs, which offer more predictable returns but with lower growth potential. Dividend-paying stocks are another popular choice for risk-averse investors, providing steady income with less market fluctuation.

Balancing Risk

Many investors balance aggressive and conservative investments to manage risk while still pursuing growth. 

#3 Define your investment horizon

Your investment horizon, or the length of time you plan to invest, plays a crucial role in determining the level of risk you should take on.

Long-Term Investing

If you have a long-term investment horizon, such as 20 to 30 years, you can generally afford to take on more risk. With more time, your portfolio has the opportunity to recover from market downturns and benefit from long-term growth. High-growth stocks, equities, and alternative investments are more suitable for long-term investors, as they have greater potential for higher returns, despite their short-term volatility.

Short-Term Investing

For those with a shorter investment horizon, such as a few years until retirement or a major life event, preserving capital becomes a priority. In this case, you’ll want to focus on lower-risk investments like bonds, fixed deposits, or dividend-paying stocks to ensure stability and safeguard your funds. These options offer more predictable returns and protect your capital from market fluctuations.

6 Options and strategies to invest $100k 

#1 Invest in bonds

Bonds are a great choice for conservative investors or those nearing retirement, offering a steady income and lower volatility compared to stocks. With predictable interest payments, bonds provide stability, making them ideal for capital preservation.

What is bond and how it works

A bond is a type of debt security issued by governments or companies to raise funds. When you invest in a bond, you are essentially lending money to the issuer for a fixed period. In return, most bonds pay regular interest, known as a coupon, and at the bond's maturity, the investor is repaid the principal amount, or face value.

Bonds are suitable for investors seeking regular income or diversification, though the risk level can vary depending on the issuer’s credit quality. High-quality issuers offer lower returns, while riskier issuers pay higher coupons to compensate for greater default risks.

Types of bonds

• Singapore Savings Bonds (SSBs): SSBs are backed by the Singapore government, making them one of the safest investments. The average return over 10 years on the most recent issuance of the Singapore Savings Bonds (SSB) stands at 2.86% or 2.73% (year 1) - 3.01% (year 10), with the flexibility to redeem at any tim without penalties.
• Treasury Bills (T-Bills): T-bills are short-term government bonds with maturities of 6 or 12 months. They offer competitive returns, with recent yields at 3% p.a. for the 6-month option, providing a secure short-term investment.
• Corporate Bonds: In the SGD corporate bond space, as of January 26, 2024, bonds offer yields of 3.5% to 4% p.a., making them an attractive option for investors willing to take on slightly more risk. These bonds may offer better returns than fixed deposits or government bonds.

Potential risks of bonds

Bonds come with several risks that investors should consider:

• Default Risk: The risk that the bond issuer may fail to make interest payments or return the principal, particularly if the issuer's financial situation worsens.
• Interest Rate Risk: Bond prices tend to fall when interest rates rise. Longer-term bonds are especially sensitive to interest rate changes.
• Liquidity and Market Risk: Selling bonds before maturity can be challenging if there are few buyers, possibly resulting in a loss if market conditions are unfavorable.
• Call or Early Redemption Risk: Some bonds allow issuers to redeem them early, which could force you to reinvest in lower-yielding options.

Read more: Complete Guide to Bond Investment in Singapore

#2 Invest in blue chip stocks

Blue chip stocks refer to shares of large, well-established, and financially sound companies that have been operating for many years. These companies typically have a market capitalization of over $10 billion and are known for their stability, strong reputation, and consistent performance. 

Why invest in blue chip stocks?

1. Stability and security: Blue chip companies are considered safer investments because they have a proven track record of success and the ability to weather economic downturns.
2. Consistent dividend income: One of the major advantages of investing in blue chip stocks is their ability to pay regular dividends. Many of these companies have a history of delivering consistent, and often increasing, dividend payouts over time.
3. Diversification: Blue chip companies often operate in multiple industries and have diversified revenue streams. This means they are better equipped to handle operational setbacks, and as a result, they reduce the overall risk for investors.

Top Blue Chip Stocks in Singapore

In Singapore, blue chip stocks are closely associated with the Straits Times Index (STI), which includes some of the largest and most stable companies in the country. Here are some of the top blue chip stocks in Singapore with high market cap and low P/E:

Source: Yahoo Finance

#3 Invest in funds -  mutual funds, ETFs, and index funds

Building a diversified portfolio by purchasing individual stocks can be time-consuming, costly, and requires extensive knowledge. A simpler, more efficient way to diversify your investments is through mutual funds, exchange-traded funds (ETFs), and index funds. 

These funds offer a basket of different assets, such as stocks, bonds, or commodities, which instantly diversifies your portfolio without having to buy multiple individual securities.

Types of funds

• Mutual Funds: Actively managed by professional fund managers, mutual funds pool capital from many investors to invest in a diversified portfolio. The fund manager makes strategic decisions to optimize returns, such as choosing which stocks or bonds to buy and sell. 

While this active management aims to outperform the market, mutual funds often come with higher fees, including management and operating costs, which can reduce your overall returns.

• Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds but are passively managed and track specific market indices, like the S&P 500. Unlike mutual funds, ETFs are traded like stocks on an exchange, meaning you can buy and sell them throughout the day. 

• Index Funds: Index funds are also passively managed and aim to replicate the performance of a specific index. The key difference from ETFs is that index funds are traded just once a day, after the market closes. This makes them less flexible than ETFs, but they still offer broad market exposure with low costs.

Key differences between mutual funds, etfs, and index funds

Which is right for you?

When deciding which fund is right for you, mutual funds are ideal for those seeking professional management and tailored strategies, especially if you lack the time or expertise to manage your portfolio and are willing to pay higher fees. 

ETFs, on the other hand, provide flexibility, transparency, and lower costs, making them suitable for investors who want to trade frequently or access a broad market. 

Lastly, index funds are best for investors who prefer a passive, low-cost approach without the need for daily trading or active management.

Read more: Exploring Best ETFs in Singapore

#4 Invest in real estate via REITs

Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-generating real estate across various sectors. By investing in REITs, you are essentially buying shares in a portfolio of properties, which can include anything from shopping malls and office buildings to warehouses, hotels, and even healthcare facilities. 

REITs in Singapore are publicly traded on the Singapore Exchange (SGX), and they are required to distribute at least 90% of their taxable income to shareholders, making them attractive to investors seeking regular income streams.

Benefits of REIT Investment

1. Diversification: REITs provide access to a broad range of real estate assets across different sectors, helping to diversify your investment portfolio.
2. Liquidity: Unlike direct property investments, REITs can be bought and sold like stocks on the SGX, offering high liquidity and flexibility for investors.
3. Regular Income: REITs are required to distribute the majority of their earnings, typically in the form of dividends, providing a steady income stream.
4. Professional Management: REITs are managed by professional teams responsible for property management, acquisitions, and tenant relations, which removes the burden of managing physical properties.
5. Lower Capital Requirement: Investing in REITs allows you to access large real estate markets with much lower initial capital compared to buying properties outright.

Types of REITs Listed in Singapore

Singapore's REIT market is one of the most diverse in Asia, offering a variety of sectors for investors to choose from:

1. Retail REITs: These focus on malls and retail outlets. Examples include Frasers Centrepoint Trust and Paragon REIT.
2. Office REITs: These invest in commercial office spaces. Examples are Keppel REIT and Prime US REIT.
3. Industrial REITs: These include logistics, warehouses, and factories. Popular names are CapitaLand Ascendas REIT and Mapletree Logistics Trust.
4. Hospitality REITs: Focused on hotels and resorts, examples include CapitaLand Ascott Trust and CDL Hospitality Trusts.
5. Healthcare REITs: These invest in hospitals and healthcare facilities. Parkway Life REIT is a notable example.
6. Diversified REITs: These REITs own a mix of property types, offering a balanced exposure. CapitaLand Integrated Commercial Trust is an example.
7. Data Centre REITs: A growing sector focusing on facilities that store data. Keppel DC REIT is a prime example.

We have also written a comprehensive guide on REITs investing in Singapore that can give you insights into investing in REITs like a pro.

#5 Invest in robo advisor

Robo-advisors are automated platforms designed to help users manage their investments with minimal human intervention. These platforms utilize algorithms to create personalized investment strategies based on user preferences, such as risk tolerance and financial goals. 

As these platforms grow in popularity, especially among younger, tech-savvy investors, they offer a more accessible and cost-effective way to enter the world of investing.

In 2024, global investors are projected to hold over $1.8 trillion in robo-advisor accounts, according to Statista Market Insights. By the end of 2027, assets under management (AUM) are expected to rise to approximately $2.3 trillion, with around 34 million users.

Benefits of Using a Robo-Advisor

1. Low Fees: Robo-advisors typically charge lower fees compared to traditional financial advisors, as they rely on automated systems for portfolio management.
2. Diversification: These platforms invest across a variety of assets, such as ETFs, providing users with diversified portfolios tailored to their risk preferences.
3. Convenience: Users can manage their portfolios through easy-to-use mobile apps, making investing accessible at any time.
4. Custom Strategies: Through algorithms, robo-advisors create personalized portfolios based on your investment timeline, goals, and risk tolerance.

StashAway: A Leading Robo-Advisor in Singapore

StashAway is a leading robo-advisor in Singapore, offering automated, data-driven investment strategies for individuals. It combines personalized wealth management with financial planning, leveraging its unique Economic Regime-based Asset Allocation (ERAA®) framework to navigate shifting economic conditions. 

StashAway's intelligent investment approach allows investors to build diversified portfolios with minimal effort, making it popular among both seasoned and new investors.

General Investing powered by StashAway

StashAway’s General Investing portfolio is ideal for those looking to build long-term wealth. It allows users to choose their preferred risk exposure, categorized into Core or Higher Risk, and further tailored to different risk levels. The portfolio comprises a mix of asset classes such as government bonds, fixed income, equities, and commodities, designed to endure economic shifts. 

StashAway charges an annual management fee ranging from 0.2% to 0.8% depending on the total amount you invest. While there are no hidden charges, the fee structure ensures that larger investments benefit from lower rates, making it a scalable solution for investors of all sizes.

StashAway manages these portfolios dynamically, ensuring they remain aligned with long-term financial goals. With no minimum investment required, StashAway’s General Investing provides flexibility and ease of entry for all types of investors.

Read more: Best Robo-Advisors in Singapore

Lump-sum investing vs. dollar-cost averaging

Lump-Sum Investing involves deploying the entire amount at once, taking advantage of immediate market exposure. Studies indicate that this approach tends to outperform DCA over the long term, primarily because markets generally trend upward. By investing all your money upfront, you give it the maximum amount of time to grow. 

However, the downside is the heightened risk of investing at a market peak, which can lead to significant short-term losses if the market drops shortly after.

On the other hand, Dollar-Cost Averaging (DCA) spreads your investment over a series of smaller, regular installments. This method minimizes the risk of timing the market poorly, as it averages out your purchase price during periods of market volatility. 

While DCA helps reduce the impact of market fluctuations, it may result in lower returns over time compared to lump-sum investing, especially in a rising market. DCA is ideal for more risk-averse investors or those new to investing who prefer a steady, systematic approach.

Diversifying your portfolio

Diversifying your portfolio is a key strategy to manage risk and enhance the potential for stable returns. By spreading your investments across different asset classes, industries, and regions, you reduce the impact of any single asset underperforming. For example, while stocks might experience volatility during economic downturns, bonds or real estate investments may provide stability, helping to balance your overall portfolio.

A diversified portfolio tends to generate smoother returns over time, protecting you against the ups and downs of individual markets. It also allows you to seize growth opportunities from multiple sectors, such as technology, healthcare, or real estate, instead of relying solely on one area. Additionally, diversification can protect against inflation and mitigate specific risks like company or industry failure, creating a more resilient investment approach.

The goal is to align your diversified portfolio with your personal financial objectives, risk tolerance, and time horizon. Though diversification can’t completely eliminate risk, it significantly lowers the chances of major losses and improves your potential for higher risk-adjusted returns over the long term.

Investing $100k: Balancing growth and risk for long-term success

When investing a significant sum like $100k, it's essential to manage both risk and expectations. No investment is without risk, but a diversified approach helps spread potential losses while capturing opportunities for growth. 

Balancing high-risk, high-reward assets with stable, conservative options ensures your portfolio can withstand market fluctuations. It's equally important to maintain realistic expectations for returns, especially in the short term. By focusing on long-term goals, carefully managing your risk exposure, and staying disciplined, you can achieve sustainable growth and financial stability.