Investing can be one of the most rewarding ways to grow your wealth—but for beginners in Singapore, the sheer range of choices can be overwhelming. With a vibrant financial ecosystem, low barriers to entry, and easy access to global markets, Singapore offers numerous opportunities for wealth creation. Yet many first-time investors make avoidable missteps that can limit their long-term gains or even lead to financial losses.
This guide outlines five of the most common investing mistakes made by beginners in Singapore, along with practical tips on how to avoid them. Whether you’re just starting with your first online brokerage account or looking to build a long-term portfolio, steering clear of these pitfalls will put you in a stronger financial position.
1. Ignoring the Power of Compounding / Delaying Investment
One of the biggest misconceptions among new investors is the belief that investing is only worthwhile when you have a large amount of capital. As a result, many Singaporeans delay investing, thinking they’ll start “when they’re ready” or once they’ve saved more. This mindset, however, overlooks the critical advantage of compounding.
Compounding is the process of earning returns on both your initial investment and the returns that investment has already generated. Over time, this snowballs—so the earlier you begin, the more powerful the effect.
Consider this example: if you invest S$5,000 at an average annual return of 6%, starting at age 25, you could have over S$51,000 by the time you’re 55. If you wait until 35 to invest the same amount, you’d only have around S$28,000 by age 55. That’s a staggering difference of over S$20,000—just for starting a decade earlier.
Tip:
Start as soon as possible, even if it’s just S$50 or S$100 a month through a Regular Savings Plan (RSP). Many local brokers like FSMOne and Syfe allow you to invest small amounts regularly into ETFs or unit trusts with low fees.
2. Putting All Your Eggs in One Basket (Lack of Diversification)
It’s easy to be drawn to a “hot” stock that’s trending on forums or social media, especially if it seems like everyone else is getting rich from it. However, betting everything on one asset—whether it’s a stock, cryptocurrency, or real estate investment—can be extremely risky.
Diversification is a fundamental principle in investing. It means spreading your money across various asset classes (stocks, bonds, real estate, cash equivalents), sectors (technology, healthcare, finance), and even geographical regions. This helps to reduce the impact of any single underperforming asset on your overall portfolio.
In Singapore, it’s quite simple to diversify your investments thanks to products like Exchange-Traded Funds (ETFs), Real Estate Investment Trusts (REITs), and robo-advisors that automate the process for you.
Tip:
Use tools like ETF Screener platforms or consider a diversified STI ETF (Straits Times Index) if you want exposure to blue-chip Singaporean companies. For international exposure, global ETFs like the S&P 500 or MSCI World Index are easily accessible via most local brokers.
3. Emotional Investing (Fear of Missing Out and Panic Selling)
Emotions can be one of the greatest enemies of a successful investor. New investors often fall victim to FOMO (Fear of Missing Out) when prices are rising or experience anxiety and sell in a panic when markets dip.
For instance, during the 2020 COVID-19 market crash, many investors sold off their assets in fear, locking in losses. Yet those who stayed invested, or even bought more at lower prices, saw significant gains when markets recovered.
Similarly, jumping into a stock just because it’s “going to the moon” can lead to overpaying and then panic-selling when the hype fades.
Tip:
Have a long-term plan and stick to it, regardless of short-term market fluctuations. If you’re investing for retirement, for example, short-term volatility shouldn’t scare you. Consider using dollar-cost averaging (DCA) to invest a fixed amount regularly, reducing the impact of market timing.
A well-known principle to follow is “Time in the market is better than timing the market.”
4. Not Understanding What You’re Investing In / Chasing Trends
Another common mistake is jumping on the latest investment trend—be it cryptocurrencies, meme stocks, or speculative tech startups—without doing proper research. Just because everyone is talking about a certain asset doesn’t mean it’s suitable for your goals or risk appetite.
For example, investing in a REIT may offer stable returns, but if you don’t understand how rental yields, property values, or interest rates affect it, you may be caught off guard by poor performance. Similarly, buying a stock without understanding the company’s business model or financial health can lead to nasty surprises.
Tip:
Before you invest, always ask: What is this product? How does it generate returns? What are the risks involved? Read the prospectus or fund factsheet, look up financial ratios, and evaluate industry trends. For beginner-friendly research tools, MoneySense, Singapore’s national financial education programme, offers excellent unbiased resources.
→ Visit: MoneySense Investing Basics
5. Overlooking Fees and Charges
Fees might seem small—1% here, 0.5% there—but over time, they can substantially erode your returns. Singapore investors often overlook brokerage fees, platform fees, fund management charges, and even currency conversion costs when buying overseas stocks.
For example, if you invest S$10,000 into a mutual fund charging a 2% annual fee, that’s S$200 a year—S$2,000 over 10 years, not including the opportunity cost of that money not being reinvested.
Tip:
Always compare the Total Expense Ratio (TER) of funds and understand all the costs involved. Opt for low-cost ETFs or commission-free brokers when possible. Robo-advisors like Endowus, which rebates trailer fees and allows CPF investing, are gaining popularity for their cost transparency.
→ Learn more: Endowus: CPF Investing with Low Fees
Final Thoughts: Lay the Groundwork for Long-Term Success
Investing in Singapore doesn’t need to be complicated, but it does require discipline, patience, and a willingness to learn. By avoiding these five common beginner mistakes—delaying investment, under-diversifying, giving in to emotions, chasing trends, and ignoring fees—you can build a stronger foundation for your financial future.
Here’s a simple checklist to get started:
- Start early, no matter how small the amount.
- Diversify across sectors and geographies.
- Stick to your plan and don’t be swayed by market noise.
- Understand what you’re investing in—don’t rely solely on tips.
- Watch out for fees and always compare options.
Remember, the goal isn’t to get rich quick—it’s to build lasting wealth. So take your time, keep learning, and invest wisely.