Asked by Anonymous
Asked on 22 Jul 2019
Hi, I am looking to start investing but I'm quite clueless. I am 21 years old with a full-time job and decent savings. Any tips for me? Like which investment schemes would you all recommend?
Top Contributor (Jan)
Hi, start by getting more knowledge first. You can find many resources online, and beefing up your own knowledge doesn't cost a cent, but will save you from making the wrong financial decisions later on.
The worst thing you could do now is to rush in. As you are just 21 years old, time is still on your side. Ensure you build up your emergency funds and your insurance coverage is adequate before you commence.
Once you have a firm grasp of the fundamentals, you can speak to a independent financial advisor like myself to refine your knowledge and plug any gaps before you start.
It is encouraging to see young individuals like yourself keen to start investing early. The effects of compounding over the long term are definitely in your favour. Your time horizon is also much longer than most people and that translates to a higher ability to take risks.
Agreed with Elijah on the need to first build your emergency fund before you even start investing. There is a sequence to financial planning and it starts with building a strong financial health. Investing is a marathon, not a sprint. Before you go for one, it's advisable to look through a few ratios such as emergency fund for liquidity and debt service ratios assuming you are servicing a study loan.
Thereafter, a good way to get started is probably to invest small amounts on a regular basis to capitalise on the effects of Dollar Cost Averaging. DCA will be a more assessible way to invest for the young and just starting out. MoneyOwl offers $50/monthly investment amount to help you get started.
The more you read, the more you know. Read about the many instruments available to the retail investor in Singapore. Learn about the risks involved, relevant regulations etc. Some investments are more complex than others, some are more costly than others. You then need to ask yourself why are you investing. Aligning your need, ability, and willingness to take risk will help you gain clarity ahead of your journey of investing.
https://advice.moneyowl.com.sg/the-right-way-to-invest/ should provide good background knowledge for a beginner investor like you.