Asked on 22 Mar 2019
Hey there! Well, honestly it takes time, it's great that you are building up your investing knowledge, keep it up! As a start, you can consider POSB Invest Saver Regular Savings Plan, where they will buy in to STI ETF/ABF Bonds every month based on the amount you allocated. Then, maximize your bank account through DBS Multiplier, UOB One, SC Jumpstart etc.. That's another way to let your money grow. And last, see how you can further gain more cash - for me I gave tuition in addition to my full time job. I too had little cash in the beginning so I have to work hard to generate more to invest.
Might want to learn how to do in depth research on individual company since you got the interest i believe. Can start to either save more money to attend courses or can buy investing books where they teach you how to look into a company businesses. If not, you can do DCA on index fund where i would recommend only go for SPY index as in the long run it will always go up.
You don't need alot of cash to start investing, really.
How to Start Investing
1. Accumulate capital. Everyone needs to start with some investment capital. Also of your pool of available capital, decide how much you want to invest.
2. If you can, start as early as possible. Compound interest allows your account balance to snowball over time.
3. Open your CDP account (which you have already). For the benefit of those who haven't, sign up via the instructions here: https://investors.sgx.com/cdp-account-opening/#/form-selection
4. Open your brokerage account, and link your CDP account to it.
5. Understand your investment options.
There is a whole world of investment products out there from stocks, bonds, ETFs, mutual funds to the more exotic or less mainstream ones like art pieces, scultures, gold, and cryptocurrency.
Read up lots to understand your risk appetite, and form your own investment strategy.
6. Execution is everything
One can spend a decade reading and not deploy a single cent because of fear of procrastination. I always say to start early, and start investing in small amounts so that you can better understand yourself as an investor.
Well, with little cash on hand I assume let's say, $1000. With this $1000 you can actually do quite abit - for example you could go ahead and put a good amount ($300) into shares within the Nikko AM STI ETF, which allows you to tap onto the stable and high dividend paying market. Of course, this willbe a long term investment, so don't go expecting any windfalls in the near future, since I wouldn't say that the Singapore exchange market is particularly "exciting". The payouts in dividends and be used to be redirected and buy more shares within the ETF, but I suggest that you instead accumulate a good amount of money each time to do so - the trading costs of even the lowest online brokerages in SG are about $5? This constant buying of stock will add up, But, giving yourself exposure into an ETF will definitely make you start learning more about the STI 30 companies, and make you more aware of the weakness of the singapore economy eg. too reliant of financial companies - financial industry bad news will lead to a bigger than proportionate fall in the STI as compared to other indexes, for example.
you could also place half within SSBs - which enjoy near impervious from defaulting status given that it is backed up by the Singapore Government itself.currently if I'm not wrong SSBs are yielding about 2.4% long term if you hold them to maturity, meaning 10 years. This will allow you get an idea of how bonds work, their payment methods, and the way to go about getting government securities. They cost $500 per bond, which you need to subscribe for by the end of the month, so do look up more info about SSBs! it's a unique instrument to Singapore's non- debt financing government context!
Then comes the final about $200 dollars. this $200 dollars is leftover for you to try out the stock market, not just Singapore, but perhaps US as well. I truly think the best way to learn the stock market is not only to read more books, but to literally trade yourself. Use this money to pick a few stocks in invest in - justify your reasons why you want to invest in them (please make sure it makes logical sense why you invest. not just by gut feel or because you heard of them before) and then go ahead and put money into them! And continue to track their progress with the news, you will see a trend where particular news will affect particular stocks differently! Eg. When oil prices fall, Ultility stocks like SP Power mostly will rise in price (given lower cost of producing electricity) and your Electrical Vehicle stocks prices will fall (given that oil is cheaper = normal cars cheaper). this is just a rough example!
So I hope this helps you a little, it's just a passing thought of mine, but I really think that no matter what you do, putting real money in as a commitment will really make you learn alot more about the financial industry and about yourself as a investor. Good luck!
#1 U.S. or global large & cheap passive indexing ETFs like VOO or IVV
#2 World passive indexing ETFs like VT
#3 Lion Phillip S REIT ETF
#4 some physical gold (for later, when You experience then better cashflow in)
Start by investing in yourself!
Before you start investing, it will be best to understand your objective. Here are some questions to help you:
What is your capital?
How will you want to invest your capital? E.g. lump sum or an amount on a regular basis
How long will you want to stay invested? E.g. 10 years
What is your risk appetite? E.g. How do you feel about short-term volatility?
What is your objective for investing?
By answering these questions, you will have a better understanding about yourself and the type of instruments that will fit into your needs and objectives. Thereafter, create a budget that you will be comfortable with losing (this is because investment yields only non-guaranteed returns, hence only invest money that you can afford to lose!).
Here is how I do my budget: https://www.blog.pzl.sg/how-to-create-a-monthly-budget/
Thereafter, you can consider entering the market based on the instrument that you are comfortable with or to create a simulation to help you understand your judgement better. Learn along the way so that you can improve your knowledge, skills, and experience over time.
Here is everything about me and what I do best.
Build up some cash reserves (emergency fund) and get your insurance medical and protection in place first. Will be good to also know your personality and risk profiles. This will help determine how you manage money and the types of instruments suitable for you.
Have an end goal in mind. Think of why you are investing. Is it for retirement nest egg? A big ticket item in future? Find your why, then look at how.
If you are stuck and overwhelmed by all the information you have read so far, consider starting out with a robo advisory first while getting more familiar with investing and knowing what you want.
If you are quite confident with finance, start saving money first before investing. Saving will always be the building block for your investments.
After which, prepare yourself by opening stock brokerage account and then taking your time to read up on company's annual report and financal results to do your investment prospecting
You can go for RSP (regular savings plan). Start small. https://blog.moneysmart.sg/this-vs-that/dbs-ocbc-poems-regular-savings-plans/
Once you enter the workforce, save up and build up your warchest. Once you settled your insurance coverage and emergency fund(3-6 months of your monthly salary), then you can start your investment journey.
The first step of your investment journey would be to read up and understand what investing is and I glad you're already upto it. Although there are so many financial advisors out ther who can help you with this, I'd suggest that you go for a robo-advisory platform to do the job of assessing your current financial position and recommend a portfolio strategy after reviewing your risk profile. As for the "catch", I would say that Robo-advisors are still not very different from your ordinary financial advisors as both options will still have a management fee incurred for users. The difference lies with the amount, as Robo-advisors have lower management fees.
I work at Kristal.AI, and my mojo is to help people make the right financial decisions. If you think I helped you, do give me "Thumbs up". If you think my response was biased let me know, I will work on it.
One important factor to consider when you’re investing with a small capital is the transaction costs and your room for error. although many people advise that “time in the market is better than timing the market”, choosing the wrong company to buy in just because you want to get”time” in the market can lead to a bad outcome.
nonetheless, it would serve as a good lesson in your investment journey. I think choosing your investment strategy is a good way to start your investment journey, are you more of a risk taker or you prefer a more conservative way of investing. From there on, you will have a clearer picture on how you can begin your investment journey.
wishing you a wonderful investing journey ahead!
20 Dec 2019