Asked on 02 Sep 2019
What are some things I should keep in mind?
Kudos for starting your investing journey early! As a first step, my advice would be to try to save more money. Saving more allows you to invest more, accelerating the rate of your compounding returns and the growth of your money. As you embark on your first job, aim to save 20% of your income and invest it in a low-cost, diversified investment portfolio.
Instead of trying to spot “winning” stocks, a better alternative would be to adopt a passive investing approach and build your portfolio using Exchange Traded Funds (ETFs). Research has shown that about 90% of active fund managers failed to beat their index targets over the previous one, five and 10 years. So why pay more for actively managed funds when they almost always underperform passive investments in the long run?
For young investors like yourself, ETFs make it possible to own a diversified portfolio with relatively low investment thresholds. Investing in an ETF that tracks the broader market e.g. the SPDR® S&P 500 ETF is also a sound choice that allows you to receive fair market returns without having to do much.
If you’d like to invest in a basket of globally diversified ETFs but find the capital requirement a challenge, you could consider investing with a digital wealth manager like Syfe. We don’t impose any minimum investment amount and you can withdraw anytime at no extra charge.
Invest in yourself. The learning should never stop once you step out of school. There are many things in life not taught in school. You are your biggest financial asset. Take time to explore your interests and passion. Increasing your human capital takes time, as with all other types of financial investments.
Whilst you're still earning a basic income as a fresh graduate, perhaps it's also good to look at your financial health and start on the right note. Build your emergency fund, keep expenses in check, and thereafter systematically save and then invest on a regular basis to reach your future goals.
There are many ways to invest. MoneyOwl offers one way which works for most people. It is relatively easy to get started with just $50/month, and no lock-in period (as in the case of endowment insurances). This should give you a good feel of investing in the markets
https://advice.moneyowl.com.sg/the-right-way-to-invest would be a good read for someone just starting out, with a myriad of choices available on the market.
I wish you well in your career and investing journey!
As long as you have a salary, you can do consistently monthly purchase of ETF.
Go for any of the Robo-advisors or any of those stock monthly plans as long as the FEES are low.
Doesn't matter if it's low $200 or $100... consistently. If the market crashed, continue.
if the market keeps booming, continue.
Consistent is the key in the long run.
In the short run, if you are good at saving up, and finding stocks that are super undervalued, kudos. ;) but most of us can only do well in the long run with consistency.
Go buy books or borrow from the library. Read free stuff online or on youtube. I find capital to be very limited when you are a fresh graduate but knowledge is a BIG multiplier.
Stack up on knowledge.
If I knew what I know about the USA market back when I was a fresh graduate, I would probably be richer now... Oh well, the follies of youth. ;)
I believe that before you start investing, you need to first understand what IS investment. For instance, you should start off by understanding investing terminology such as stocks, bonds, ETF, dividend etc.
You can start off with this guide by seedly, which has helped me greatly in my investing journey!
Importantly, you should understand the product/stock/bond you are investing in by reading up on them! Don't invest blindly without knowing what you're doing!
Learning investing is tough at the beginning but I believe a proper background of investment knowledge will pay off in the future. Jiayou in your investing journey :)
The first and most important thing is to save up for your emergency funds of 3 to 6 months worth of expenses. At the same time, as a fresh grad, it is also time for you to consider getting insurance to protect yourself and your family.
Once you have your emergency funds, you can start preparing your capital for investment. You can start slow by investing in ETF and SSB. Once you are more familiar with investment, you should learn how to research and pick stocks that suit your financial goals.
Always do your own due diligence and research before making any investment decisions, avoiding hearsay or stock recommendations can save you from making some mistakes investors make as you start out.
Before you go and invest in anything, you should go read up either online or head over to the library to borrow books about investing. Next, you should have a certain sum of money set aside for expenses and savings and the rest could be used for investing.
1) Save up your emergency funds, typically 6 to 12 months of expenses.
2) Protect your downsides by buying insurance: Health and Life insurance
3) Read up more about investments and understand your risk profile and the different types of investments. I find this article by The Fifth Person useful: https://fifthperson.com/how-to-start-investing-in-singapore-a-practical-guide-for-beginners/
4) To further your knowledge and fast track your learning, do consider signing up for investment courses like Dr Wealth or The Fifth Person. The course fees may be steep if you have limited capital but the contents and value you get from it should be well worth the money spent. You can always make or earn back the money but the knowledge sticks with you throughout.
You could catch some ideas in this compilation of me, but always think for Yourself:
Get your protection plans in place first before investing, especially hospitalisation plan. You won't want to focus on investments then see it all blown away to pay for expensive hospital bills or when you can't work due to illness.
Once these are done, look at why you want to invest. Is it for retirement or a big-ticket item down the road? Set a goal and know your risk profile. The latter can be made known by just creating a Robo-advisory account with perhaps StashAway. Then look at the different instruments that suit your risk profile. This may be bonds, equities or a mix of both. From here see what you can invest into using your limited capital.
Oh, and as Albert has mentioned invest in yourself as well by reading up on financial stuff.
Hope this helps and all the best.
You might want to start up with
Robo-advisory platform to invest monthly with a minimum sum.
start reading up and build upon your investment knowledge.
RSP (regular saving plan) in stocks or funds to get you started with.
These are ways that you can dip your toes into the water to get started.