Fresh Grad not having idea on insurance and investment? What are some investment plans that I can be looking at?

Investment Objective

Before you start investing, it will be best to understand your objective. Here are some questions to help you:

1. What is your capital?

2. How will you want to invest your capital? E.g. lump sum or an amount on a regular basis

3. How long will you want to stay invested? E.g. 10 years

4. What is your risk appetite? E.g. How do you feel about short-term volatility?

5. What is your objective for investing?

Through a well-defined investment objective, we will be able to create an asset allocation and use the right investment strategies that work for you.

Financial Instrument

However, if you are someone with low risk tolerance level, then investment may not be the best tool for you. This is because all investment yields only non-guaranteed returns and there will always be some form of investment risk.

More Details:

Types of Investment Risk that You should know

Instead, you may wish to explore other financial instruments that provide guaranteed returns, e.g. bonds, participating endowment, annuity.

More Details:

What is a Participating Fund Singapore

While the returns may not be spectacular as compared to the potential returns from an investment, you are protected against the downside. Therefore, such tools are definitely worthy considerations for your situation.

Investment Management

Of course, we can still choose to invest our money. But this will require more work as we attempt to create a well-built investment portfolio that fits your risk profile. Additionally, it helps to have professional advice from global investment firms like Mercer, BlackRock to aid us through this process. In detail, they are able to create an optimised portfolio that suits your risk appetite.

Moreover, we may also adopt investment strategies like dollar cost averaging to reduce short-term price risk.

More Details:

Dollar Cost Averaging

In any case, investing yields only non-guaranteed returns. Therefore, we will need to understand you in further detail before we can suggest the right solutions.

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Hey there! Great job on embarking on your investment journey!

The first few things you want to consider is whether you have an emergency fund that can last you for at least 6months to ensure you dont have to touch your investment in the event of a crisis. The next thing is to consider your risk profile and time horizon: how long do you want to stay invested for and how comfortable are you potentially not getting your desired returns/losing your principal? When it comes with passive investment, it's often a long-term affair. So you might want to use Dollar-Cost Averaging as a strategy (setting aside a sum of money everymonth to put in). For beginners, you might want to consider an ETF to track eg. Vanguard S&P500 etc. I wont recommend stock picking for beginners unless you have set aside time to do your own due diligence in researching on companies.

There are many platforms available eg. Roboadvisors like Stashaway are great for beginners :)

Financial planning is an integral part of life. You can find me at this platform to find out more.

Hi!

It would be better if you start off by protecting your downside before deciding to go for the upside.

What I mean here is to get yourself covered with the important plans, critical illness accident etc.

After which, aim to save up at least 6 months of your expenses as emergency fund (in case of any rainy days).

To even think about investing, settle the above items first! With the cash you have remaining, use some to invest in your own knowledge by reading some books!

Hi Anon,

Just to check, when you say that your company provides you hospitalisation plan for you, you means it's under the company's group insurance right? I think the coverage might be actually quite small, as group insurances coverage usually isn't as high as your personal coverages.

The first thing you definitely want to look at is hospitalisation insurance with the riders as medical bills is starting to be costly in SG. After that look into getting a personal accident plan. These 2 that I just mentioned is really quite affordable and quite crucial for us who just started working.

Once you have that, you can look into getting a whole life or term policy, where this will cover us in the event of death, total permanent disability (TPD), Critical Illness (CI) or Early CI.

Just to ask, in terms of investment, what is your risk appetite like? Will you be able to stomach it in the event you lose the capital that you originally invested due to market fluctuations?