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Anonymous

07 Jun 2019

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Stocks

How can I best advise someone who doesn't have any concept of saving money on the importance of investment?

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Do u want to cry that you have no money when u start to prepare for retirement?

For myself, I am trying to earn more when I can, so I can start my investments. At 28, I do consider myself late if i were to start investing in my 30s. So yes, if you want to invest, make sure u have capital first, which is done either by saving up or creating more cashflow.

Both steps, saving and investment will ensure that you would be safe when you retire, and that you dont have to rely on people or the govt to help you cross your silver years.

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Well, I feel that this question is phrased inappropriately. (Or perhaps i misunderstood your question)

I feel that if that person has no concept of saving money in the first place he wont have enough funds to invest. Well, its true that investing doesnt requires large amount of funds or savings (using RSP/DCA), I feel that its more important to allow the person to understand the importance of saving first (emergency funds, saving for goals/milestones).

After he/she understand the importance of saving, only then he/she could look into investing his SPARE cash/funds to generate higher returns.

The rule of thumb from most forums or blog is always 50 30 20, 50% of income for expenses, 30% for savings, 20% for investing.

Do note that there's risks in investing and it usually requires commitment. I wont recommend someone to invest without having enough savings to fall back on. My motto for investing is always "I'm prepared to lose 100% of my investments incase theres a financial crisis"

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