Many expats launch a small business during their stint here, and raising funds and investing in Singapore is an essential part of the entrepreneurial process. Here, OANDA online CFD trading brokers offer seven investing tips to help small business owners understand the great opportunities available to them.
A bit about OANDA and the Singapore market
Despite their name, small and medium enterprises (SMEs) are actually big business here. According to the latest Singapore Department of Statistics SME report, a whopping 288,000 were registered in 2022! With the re-opening of business opportunities worldwide, this figure has grown in recent years.
Naturally, business owners are interested in gaining insights into investing in Singapore. As an online CFD trading platform OANDA helps people trade smarter with competitive pricing on indices, cryptocurrency and commodities. It also has loads of great tools and info on leveraged trading, technical and fundamental analysis, advanced charts, oscillators and risk management. Here are their seven investing tips to build a savvy trading strategy.
#1 Understand market dynamics
Before diving into investments, it’s crucial to grasp Singapore’s distinctive market dynamics. This thriving city-state has a diverse economy and a strategic position in Southeast Asia, making it a hub for trade and finance. Singapore’s GDP grew by 3.1 per cent in 2022, showcasing its resilient economy coming out of COVID. And it’s this resilience that will also help in the current uncertain financial climate that has seen GDP drop back down to 1.2 percent in 2023. As an entrepreneur or small business owner, its best to align your investments with sectors showing growth potential, such as technology, finance and sustainable energy.
#2 Diversify your portfolio
Diversification is crucial in mitigating risks. Spread your investments across different asset classes – such as stocks, bonds and property. Investing in Singapore real estate makes sense, as it’s one area that has shown steady growth, with private property prices increasing by 2.4 per cent in Q4 2023. This makes it an ideal proposition for a long-term investment. A diversification strategy can help cushion against market volatility, providing an added layer of security.
#3 Leverage government schemes and grants
Singapore’s government offers various schemes to support small businesses and start-ups. One is the Enterprise Financing Scheme (EFS), which provides funding for SMEs in different stages of growth. It was enhanced in 2023 by providing extensions to trade loans and working capital loans. Also, the Business Improvement Fund (BIF) offers funding specifically towards tourism-related SMEs. The level of support is up to 70 percent of SMEs’ qualifying costs. Taking advantage of these available resources can free up capital for other investment opportunities.
#4 Look into CFD trading
Contract for Difference (CFD) trading is an investment option where you speculate on the rising or falling prices of fast-moving global financial markets. While it offers the potential for high returns, it also comes with higher risk. It’s essential to approach CFD trading with a solid understanding and strategy. In 2023, the Monetary Authority of Singapore (MAS) updated regulations on CFD trading, emphasizing the need for investor education. There are many trusted brokers in Singapore, so it’s worth looking at reviews and testimonials before trading.
#5 Long-term investing in Singapore
It’s tempting to seek quick profits within the fast-paced world of business. However, long-term investments usually offer more stability and potential growth than short-term investments. The Straits Times Index (STI), which tracks the performance of the top 30 companies on the Singapore Exchange, has historically provided average annual returns of around six to seven per cent. This means that investors who have invested in the STI over a long period have typically seen a steady growth in their investment.
#6 Stay informed about tax benefits
Singapore offers a favourable tax environment for businesses, including various exemptions and incentives such as a three-year tax exemption scheme for start-ups. There’s also the investment allowance scheme, where profits are exempted from tax up to a specific limit. This is determined as a specified proportion (potentially as high as 100 percent) of the capital outlay spent on qualifying projects. It’s worth looking online at all the tax benefits that may be applicable to you.
# 7 Embrace technology and innovation
In today’s digital era, investing in technology is a good choice due to its stable growth, and the right tech investments can directly improve your business. In particular, Fintech, AI and e-commerce are all sectors witnessing rapid growth in Singapore. The government’s Smart Nation initiative further highlights the importance of tech investments. Navigating investing in Singapore requires a balanced approach, combining market knowledge with strategic diversification and leveraging local resources.
Whether you’re a seasoned entrepreneur or a new business owner, these tips on investing in Singapore can guide you in making informed investment decisions, setting a solid foundation for success in Singapore’s vibrant economy. If you want to learn more, check out OANDA online or download the OANDA App to see how you can kickstart your investments.
Written in collaboration with OANDA
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