You will be able to describe the main types of account used to hold investments in Singapore.
Wei Ling, from lesson 1.3, has an investment account worth S$7,500. She opened it on her phone three years ago after a friend's recommendation, and if you asked her who actually holds the shares in it, she could not tell you. Her name? The app's? A bank somewhere?
Most people are in the same position, and for most of them it never matters. It starts to matter when a provider closes, merges or turns out to be unlicensed, or when you want to move your holdings, receive a dividend or vote at a company meeting. This lesson walks through the main kinds of account used to hold investments in Singapore, and the one check to make before you open any of them.
Shares listed in Singapore can be held in two ways.
The first is in your own account at the Central Depository, known as CDP, which is run by the Singapore Exchange group. You buy through a broker, but the shares are then recorded in your name at CDP. CDP sends you statements, dividends go to the bank account you link, and you receive company meeting notices directly. If you change brokers, the shares stay where they are, because the broker never held them.
The second is a custodian account, sometimes called a nominee account. The broker, or a custodian it appoints, holds the shares in its own name on your behalf. Your ownership is recorded in the broker's books rather than at CDP. You still own the shares, but you see them through the broker's app and statements, and dividends and meeting notices come through the broker. Custodian accounts are common with app-based brokers, and shares listed overseas are almost always held this way.
Neither is wrong. They differ in where your ownership is written down, which affects fees, how you receive dividends and how easily you can move your holdings. Firms holding client assets are required to keep them separate from their own, but if a broker fails, shares in a custodian account can take longer to get back. Shares in your own CDP account were never the broker's to lose. The broker's terms say which kind of account you have.
Robo-advisors and unit trust platforms work differently again. What you own are units in funds. Behind the app, the platform arranges for those units to be held by a custodian, usually a bank or a trust company, which keeps them apart from the platform's own money and records which units belong to you.
Your statement shows how many units you own and what they are worth. The protection for you lies in the custody arrangement and the platform's licence, both of which are described in its terms and disclosure documents. Read the section on how client assets are held before you put money in, so you know who has them and what happens if the platform shuts.
Two accounts are set up specifically for money meant for retirement, and each comes with its own rules.
The Supplementary Retirement Scheme, or SRS, is a voluntary account opened with one of the banks that act as SRS operators. You pay in cash. Contributions can reduce your income tax for the year, and once the money is in the account you can invest it in a range of products or leave it as cash. Withdrawals are meant for retirement: taking money out before the statutory retirement age generally means a penalty and tax on the amount withdrawn. The contribution caps, the tax treatment and the withdrawal rules are on the IRAS and MAS websites, and they change, so check them there.
The CPF Investment Scheme lets you invest part of your Ordinary Account savings, and in some cases your Special Account savings, in approved products, once your balances are above amounts set by the CPF Board. Any gains or losses stay inside CPF. The money is still meant for housing and retirement, and if your investments earn less than the CPF interest the savings would have earned anyway, you are worse off. The current rules are on cpf.gov.sg, and CPF Mastery: every account and the choices you control covers the scheme in detail.
Whatever kind of account it is, check the provider before you sign up. MAS keeps a Financial Institutions Directory on its website listing every firm it licenses or regulates, and what each one is allowed to do. Search the exact company name, not the app's brand name, and confirm that the activity you are signing up for is on its licence.
MAS also keeps an Investor Alert List of firms that may have been wrongly presented as licensed. A provider that appears there, or does not appear in the directory, is a reason to stop. Scam investment platforms often look polished, with real-looking apps and dashboards, and the licence check is one of the few ways to tell them apart from the real thing.
Wei Ling checks her app. Its terms say her shares are held by a custodian in the broker's name, and the company that runs it is in the MAS directory with a licence for dealing in securities. She writes both down, and now she can answer the question she could not answer before.
You can do the same for every investment account you hold. Open each app or statement, and keep the MAS directory open in another tab.
List any investment accounts you have, the type of account each is, and whether you have checked the provider on the MAS directory.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).