Advantages Of Investing In Singapore Stocks

Many investors in Singapore may overlook the Singapore stock market for “more exciting” prospects overseas. This is unsurprising since the local stock market only has around 700 listed companies to choose from compared to the thousands abroad. Singapore may also not have that many exciting global enterprises or tech giants.

However, before you completely overlook Singapore stocks, you should note there are in fact a few good reasons to at least hold some of them in your portfolio.

No tax and hidden fees

Unlike investing in overseas stocks, investors are not taxed on their dividends or capital appreciation. Tax can be a big dampener to your overall investment returns. For instance, when you invest in American stocks, you will be charged 30% on all dividend paid out to you. This is a substantial amount that should not be taken lightly.

Fortunately, that same tax law does not bind Singapore stocks. In Singapore, investors are not taxed on dividends or capital appreciation. This means you are able to keep everything that you earn, which is a giant advantage.

Furthermore, many brokerages charge a custody fee when you hold onto overseas stocks. This is usually charged monthly and can also eat into your investment returns.

Many different stocks from different sectors to choose from

Although the Singapore stock market may not be home to any large tech or e-commerce companies, there are still numerous others to choose from. Many of these companies have performed well in the past and are likely to continue to reward shareholders handsomely.

For instance, the Straits Times Index (SGX: ^STI) has returned around 195%, including dividends, in the last 15 years, outpacing other Asian indexes. The index consists of stocks ranging from oil and gas companies to telecommunications companies. Most of these companies also have operations outside of Singapore and have diversified business models. It is, therefore, untrue that there are no good investment opportunities within the Singapore stock market.

Singapore boasts a strong and stable economy that continues to grow

Singapore’s economy has performed admirably over the years. Its economy has grown faster than most in the past 30 years and continues to grow at a steady rate. This year, for instance, Singapore’s economy is expected to expand around 3-4%.

Singapore has been able to diversify its offerings from finance to the oil and gas industry, meaning it is well placed to withstand any single sector risk. In recent years, the little red dot has also managed to develop its manufacturing sector, which has been the shining light in our economy.

The Foolish bottom line

As an investor, I have set aside a portion of my portfolio in Singapore stocks. Besides the lower fees and taxes, there are also opportunities aplenty in Singapore that could help to boost my portfolio returns.

Meanwhile, for more (free!) investing insights, sign up here for your FREE subscription to The Motley Fool's investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.