How to invest in the FTSE Straits Times Index
The FTSE Straits Times Index gives you the chance to invest in the performance of a wide variety of companies. There’s no shortage of ways to invest in the Straits Times Index, so we’ll help you find the best investment methods for your own unique set of goals and help you make the best possible investment decisions.
What is the FTSE Straits Times Index?
The FTSE Straits Times Index (also called the STI) is the benchmark index for the Singapore stock market. The STI tracks the performance of the top 30 stocks listed on the Singapore Exchange, as measured by market capitalisation. It’s a large-cap index, with a total market cap of about $300 billion in Singapore dollars.
Is it a good investment?
It can be, but as always this depends on your investment strategy. With just 30 stocks in its index, the STI more closely resembles a blue-chip index like the Dow Jones Industrial Average than it does a much larger benchmark index like the S&P 500. So while you might lose some of the diversification benefits that come with owning, say, 500 stocks at once, you can potentially gain if the STI’s smaller group of 30 outperforms some of the world’s larger stock indexes.
How do I invest in the Straits Times Index?
In this article, we’ll take you through three steps that we recommend when investing in the FTSE Straits Times Index. Here they are:
- Choose an investment type
- Use our top tips to succeed
- Choose a platform to invest with
1. Choose investment type
The investment type you choose should fit with your personal investment goals. Here are some of the different investment types you can use to invest in the Straits Times Index:
An ETF (or exchange-traded fund) is an investment fund that’s traded on a stock exchange during regular stock market hours, in the same way you would trade an individual stock. A Straits Times ETFs are inexpensive to trade compared to some other investment types, and have become incredibly popular in recent years. An ETF can include different groups of assets, such as bonds, commodities, or in this case the 30 stocks that make up the FTSE Straits Times Index.
Another investment strategy, if you want to be selective, is to use individual trades to buy a bunch of individual stocks (or even all 30 stocks) within the FTSE Straits Times Index. The goal would be to gradually sell the worst-performing stocks one by one, until you’re left with a small group of top performers. This is a more expensive and more time-consuming process than, say, buying a Straits Times ETF, but if you’ve got time and money to spare, you could give it a try.
An index mutual fund (also known as an index fund) is an investment fund that attracts pools of money from many different investors, then combines that capital and invests in indices such as the STI. A Straits Times Index funds can only be bought at the end of the stock market’s trading day, and they cost more to trade and to own than ETFs do. Given their relative cost and lack of trading flexibility it might make the most sense to use an FTSE Straits Times index fund only if you’re planning on buying and then holding your investment for a long time.
2. Use our top tips to be a successful investor
Check out our top tips for how to become a successful investor:
- Do your research. Start by examining how the FTSE Straits Times Index has performed in the past, to help predict its future. Then compare the pluses and minuses of investing in the FTSE Straits Times Index vs. other investment opportunities. After that, build a personal investment plan, so you won’t have your judgment get clouded by emotions such as fear and greed when the market becomes volatile.
- Set a budget. Consider how much you can afford to lose before you invest. To manage your risk and limit the size of your losses, you can then set a stop-loss order after you make your investment. For example, if you don’t want to lose more than 10% on your trade, you would set your stop-order price at a level 10% below your purchase price.
- Select the right platform. The investing platform you pick should fit with your investment goals and level of experience. If you’re most concerned with getting the lowest transaction fees, you should probably choose an online broker. If you want lots of investment advice, consider going with a financial advisor instead.
- Grow your investments gradually. You’re going to have a higher success rate once you’ve gained more experience as an investor. So why rush to take big risks? To manage your risk, invest just a small amount of money at first; you can always raise the size of your investment as you gain experience and expertise.
- Think long-term. Thinking long-term means living to fight another day. Remember that a setback or two (or even many more) is totally normal, as long as you’re making strides as an investor. So don’t risk too much at once, and grow both your capital and your knowledge over time for the best results.
3. Choose a platform to invest with
Here’s a look at some of the best places for you to invest in the Straits Times Index:
- Brokers & trading platforms. Online brokers offer some of the lowest transaction fees of any investment method, and are also liked by investors because of their convenience. When these low fees are combined with an easy-to-use investment platform, you have a great option for self-starter investors. That said, if you want more investment help, you might try a different approach, since online brokers don’t offer customised advice.
- Robo advisors. Robo advisors are automated systems that use algorithms to execute trades automatically, making them a useful investment option for traders who can take advantage of their technology. Robo advisors also charge fairly affordable transaction fees, although not quite as low as brokers. Also, some robo advisors will let you discuss investment strategy with an actual person. That said, robo advisors don’t quite offer the same level of investment guidance that dedicated financial advisors provide.
- Financial advisors. Financial advisors offer more hands-on investment advice than any of these other types of platform. They’ll help you set financial goals, explain the pluses and minuses of lots of investment options, and help you build an investment suited to your goals. Financial advisors charge a premium for that high level of service, though, so you have to weigh up the service they provide against the amount they charge. Since investing in the FTSE Straits Times Index is fairly simple, a financial advisor probably isn’t advised.
- Banks. Investing in the FTSE Straits Times Index with your bank enables you to store all of your financial ventures (such as your checking account, savings account, mortgage, line of credit, and investments) with the same financial institution. The problem is that banks tend to charge high fees, yet still don’t offer the same level of service that top financial advisors provide. So unless convenience is your highest priority, you can probably pick a less expensive and/or more helpful option somewhere else.
Here’s a list of our top 3 recommended brokers to invest in indices ETFs:
What should I do now?
If you’re ready to invest, head to your chosen platform’s website, pick the type of investment you want to use to invest in the FTSE Straits Times Index, and click buy. You are now invested!
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