Expat Investing: Understanding Different Types of Investments

Investing may seem particularly complex for an expat and you may be dissuaded from learning more. Don’t let fear or foreign-sounding terminology prevent you from embarking on a fulfilling journey of investing. In this guide for expats, we break down seemingly difficult concepts and provide information on the different types of investment options available to you. In this way, you’re in the best position to become a competent investor and to grow and manage your wealth.

What to consider when you begin investing?

It’s important to assess your finances before investing: What are your financial goals? Are they short-term or long-term? Do you have reserves that would last you up to 6 months in the event of any emergency? Achieving clarity through planning, plotting milestones and a timeline, you will know why you’re investing and how much money you can put aside to invest.

Understanding your appetite for risk is also important so you know the type of investment to go for. The different types of investments, also known as ‘asset classes’, include shares, bonds, foreign currency and property. It is advisable to keep your portfolio diversified and to spread your risk across asset classes.

Stocks, shares and equities

Buying stock from a well-established corporation in the form of shares is an attractive investment option. All you need to do is follow a few simple steps to start trading. Simply open an online investment brokerage (OB) account. The Central Depository (CDP) Account lets you trade on SGX for a fee. You can choose from several types of stocks. Blue chip stocks are stable and have little risk, and are recommended for their long term dividend payouts. Exchange Traded Funds (ETFs) are a mixture of the top earning stocks and REITSs (Real Estate Investment Trusts) provide good dividends.

Fixed interest securities or bonds

Bonds are loans issued by governments or corporations when they need to raise money. They are paid back to their investor, in this case you, within a certain timeframe. You will also be issued interest payments during this time.

Singapore Savings Bonds (SBSs) are safe and flexible bonds for the expat investor. They are backed by the Singapore Government and are a low-risk type of investment. Some benefits you enjoy when buying SBSs include interest that increases with time, as well as the flexibility of withdrawing your investment at any time and not incurring any penalty.

Forex trading

Foreign currency exchange involves exchanging money in one currency with money in another. Whenever we make an exchange, we either gain or lose money depending on the rate and the two currencies. In forex trading, you are trading currencies with the sole intention of making a profit and not to simply acquire the money in that currency, say for travel.

By monitoring currencies over time, you have an idea of the best time to make an exchange so it works in your favour. Major global events or political instability can cause significant changes to a country’s currency rate and it’s good to stay abreast of developments in the regions you wish to trade in.

Property

You can choose to invest in property not just in Singapore, but back in your home country, whether UK, Australia and New Zealand. Property is an asset class that appreciates in value and so is a worthy investment of your time, effort and money. Investing in property is also a great way to earn profits from rental properties. It’s good to first reflect on your motivations. Are you buying property that would function as a holiday or retirement home? Or simply for investment’s sake? Knowing these things would help you determine location and market.

Investing in a diversified portfolio to grow your wealth

Now that you’ve an idea of the different types of investments available to you, the next step would be to compare the different types. From here, you can determine which combination of asset classes you would like to have in your portfolio. Whether you’re from Australia, Britain or New Zealand, Singapore Expat Advisory provides financial planning services catered to your specific background and needs. With our investment consultancy services, we help you weigh your options with your financial goals in mind and manage your investments effectively. Achieve the life you’ve dreamt of with investments that give your greater returns on your savings.

Singapore Expat Advisory is an advisory platform for Promiseland Pte. Ltd Pte Ltd and are authorised and regulated by the Monetary Authority of Singapore (MAS).

General Information Only This article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any products (including funds, stocks) mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment