Where to invest S$10,000 today? Here’s what financial experts recommend
Straight to your inbox. Money, career and life hacks to help young adults stay ahead.
[SINGAPORE] Earlier this month, The Business Times taught us how to invest S$50,000 – great, if you’ve got that kind of cash.
But for us just starting out, getting anywhere near that amount is no small feat.
So, I asked the experts: where should young investors put their first S$10,000?
Here’s what they shared:
💡Timothy Phillips, founder of Tim Talks Money and Inkcome
Just keep it simple, Phillips says.
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He notes that young investors may not need to hold bonds at all – as stocks are the best long-term wealth generator out of all the traditional asset classes.
There will always be a “hot” trend or stock, but low-cost, broad-based market exchange-traded funds (ETFs) produce the best returns over time, Phillips says.
While ETFs may seem “boring”, they will always include the big winners in the stock market and exclude the biggest losers, he adds.
“I started out investing in individual stocks but that really should come after you’ve come to grips with the stock market as a whole via ETFs,” Phillips says.
More importantly, understand what you’re buying and what the underlying holdings are, to avoid overlaps and prevent overconcentration in a single sector or country.
Phillips recommends ETFs that track global stock indices such as the FTSE All-World or the MSCI All Countries World Index (ACWI), citing them as good foundations for one’s portfolio.
He is currently more positive on Asia in the next decade, which includes exposure to the Singapore market via a Straits Times Index ETF. Over the longer term, he prefers countries like India, where the structural growth story is still in its early stages.
📊 Ishan Sarkar, head of wealth and premier solutions, HSBC Singapore
When starting with a smaller investment sum, the focus is often on diversification and cost efficiency rather than fixed allocations, Sarkar says.
“The right mix of assets depends on an investor’s objectives and their ability to withstand volatility,” he adds.
In the current macroeconomic environment, he notes that investors may wish to focus on quality large-cap companies that demonstrate strong balance sheets, recurring revenue streams and pricing power.
When asked what regions young investors should target, Sarkar says the bank currently favours equities in the US, China, Singapore and other selected Asian markets.
At the sector level, IT and communications remain key beneficiaries of accelerating AI adoption. Globally, financials and industrials look well-placed, he adds.
For alternatives, Sarkar recommends exposure to infrastructure funds, thematic ETFs, real estate investment trusts (Reits) or commodities such as gold.
🏦 Gidon Jerome Kessel, group head of deposits and wealth management, personal financial services, UOB
Young investors may want to adopt a core-tactical portfolio strategy, Kessel says.
Core allocations are the foundations of a portfolio. This typically consists of diversified, low-cost, passive investments – using ETFs or unit trusts – that deliver consistent returns over time.
Tactical allocations capture targeted short-term opportunities through investments in specific sectors, themes or stocks expected to outperform the market in the short to medium term.
“In an environment where global interest rates are gradually coming lower, stocks and bonds tend to respond positively, if there is no recession,” Kessel says.
Bonds stand to benefit from interest rate cuts because prices rise, and investors who buy earlier can lock in yields before they drop further.
For the types of fixed-income vehicles he’d recommend, Kessel points to investment-grade bond unit trusts as a more suitable option for young investors with limited capital.
For investors who prioritise liquidity and capital preservation, money market funds or Singapore Savings Bonds (SSBs) are worth considering, he adds.
💲 Eugene Puar, head of wealth solutions, Singapore, Asean and South Asia at Standard Chartered
Young adults should build diversified portfolios that emphasise long-term growth while maintaining a modest safety buffer in cash or bonds, Puar says.
For aggressive or growth-focused investors:
Once your foundational portfolio is in place, you may then add opportunistic investments. But limit opportunistic assets to only 10 to 30 per cent of your portfolio – so they enhance rather than derail your long-term strategy, Puar says.
He adds that they remain constructive on sectors such as technology, financials, and communications.
Structural themes such as artificial intelligence and sustainable energy also stand out as long-term growth drivers, according to Puar.
The bank favours Asia ex-Japan equities, which should benefit from a weak US dollar and policy support.
“Given their long investment horizon of 30 to 40 years, Gen Zs are uniquely positioned to harness the power of compounding and to ride out periods of volatility,” Puar notes.
⭐ Vasu Menon, managing director, investment strategy, OCBC
For a young adult who can stomach risk and has the patience to stay invested for the medium term, equity markets can offer attractive opportunities, Menon says.
That said, he recommends allocating some funds into less volatile asset classes like investment-grade bonds or gold – given that economic and geopolitical uncertainty have become fixtures in the investment landscape.
The bank remains optimistic on equities and currently prefers Europe and Asia ex-Japan – especially China, Hong Kong and Singapore because they seem reasonably priced and could benefit from government support measures, Menon says.
But investors should consider a globally diversified basket of four to five funds that invests across US, Japanese, European and Asia ex-Japan equities, he adds.
Investors should leave these investments in their respective asset classes for at least 12 months and review them regularly, he says.
“It is important for young investors to remember that they should never fall in love with specific sectors or stocks,” Menon says.
Young investors should also invest smaller amounts at regular intervals, to smooth out the average investment price over time – also known as dollar cost averaging, he adds.
TL;DR
- Young investors are advised to build a diversified portfolio, even amid today’s macroeconomic uncertainties
- Starting with ETFs reduces the need for individual stock picking
- Experts recommend allocating more to equities for long-term growth, as young investors have time on their side
- Thematics and alternatives are nice-to-haves, but they should not take up too much of your portfolio
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