Why and How to Start Investing

Views 5605 Nov 1, 2023

What can you invest in? An overview of different assets (SG)

Investing is the buying of assets with the aim of earning a return. There are various types of assets, and each investor needs to make their own choices.

You can choose one or multiple assets to invest in. Everyone wishes to gain, but that hope doesn't necessarily come true. All investments carry a risk of loss. The choice of investment varieties requires a trade-off between returns and risks. Generally speaking, the higher the potential return, the greater the risk.

So, on moomoo, what assets can investors with Futu Singapore securities account to invest in? The following are some types of investment varieties.

Stocks

Stocks represent a company's ownership, and many people hope to share in the profits of the company's growth and gain long-term asset appreciation by buying stocks. On moomoo, you can trade SG, US, and HK stocks, as well as China A-shares.  Many of the great companies you often hear about are listed in the Singapore, US, China mainland, and Hong Kong SAR.

However, stock prices can be quite volatile and can cause your assets to depreciate or appreciate in a short time. Many factors affect stock prices, including but not limited to company performance, economic trends, and market sentiment.

ETFs

Exchange-Traded Funds (ETFs) are a type of exchange-traded products that offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets and, in return, to receive an interest in that investment pool. Compared to a single asset investment, ETFs can provide better diversification.

REITs

Buying a property is generally seen as a relatively stable investment, and you can often benefit from living in or renting out whether the property's market value rises or falls. For those who can't afford to buy a house, there are financial instruments called real estate investment trusts (REITs). These funds try to profit from real estate, and owning part of them is a way to share in the business.

IPO subscriptions

An Initial Public Offering (IPO) refers to the first time a newly listed company sells its shares to the public via a stock exchange.

When a company goes public on Singapore Exchange, investors can subscribe for part of the companies' shares via moomoo. Investors with allotted shares will gain if the new shares rise after the listing; otherwise, investors will lose if the new shares fall. In addition to the Singapore market, investors can also participate in the subscription of new shares in the US and Hong Kong markets.

DLCs

Daily Leverage Certificates (DLCs) are financial instruments that provide investors with fixed leverage of up to 7 times the daily performance of underlying assets (e.g., market indices or single stocks), regardless of whether the market is rising or falling. For example, if the underlying index moves 1% from the previous day's close, the value of a 3x DLC will move by 3%, and the value of a 7x DLC will move by 7%.

Stock options

Investors in Singapore can also participate in stock options investments in the US stock market. A stock option is a contract that gives its holder the right to buy or sell a stock at a certain price for a limited time. Many investors use stock options for hedging, short-term directional trading, or long volatility strategy. It is worth noting that a single-option investment usually has high leverage, which means relatively higher risks.

Warrants and CBBCs

The structured warrant traded in the Singapore market is essentially an option, a leveraged instrument. Structured warrants are issued by third-party institutions such as banks, and the purchaser has the right but not the obligation to buy (for call warrants) or sell (for put warrants) an underlying asset at a predetermined price either on the expiry date (European-style warrants) or on or before the expiry date (American-style warrants). Eligible Singaporean investors can also trade warrants issued on the Hong Kong stock market.

Singapore citizen investors can also participate in CBBCs on the Hong Kong stock market, which are structured products that track the performance of an underlying asset with leverage. It should be noted that if the underlying stock reaches a level (known as the " Call Price "), the CBBC will expire early and the trading of that CBBC will be terminated immediately.

Futures

Investors trade across time via futures. By signing a standardized futures contract, buyers and sellers agree to deliver a specified amount of the underlying asset at a specified date for an agreed-upon price. According to the type of underlying assets, futures can be mainly divided into commodity futures and financial futures.

Eligible investors in Singapore can trade futures, including stock futures, index futures, and commodity futures in the Hong Kong market, as well as index futures, commodity futures, and exchange rate futures in the US market.

It is worth noting that because DLCs, options, futures, and other products are leveraged, and the volatility is greater than that of the underlying assets, investors can only invest if they are qualified for specific investment products (SIP). SIPs refer to products that may have more complex structures, features, and risks, including DLCs, structured warrants, synthetic ETFs, futures, and options. Investors who wish to trade these instruments need to complete an account review with the brokerage.

The above are the main investment varieties that Futu SG Security account users on moomoo can invest in. Before investing, you need to figure out how much effort you are willing to pay and how much risk you may withstand. Once you have determined your investment risk tolerance and objectives, you can consider investing some of your money in one or more assets based on your own situation.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy.

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