Asked on 12 Dec 2019
Profile: 22 years old NSF with 4 months left and have $63k savings. How should I begin my investment journey? Created an account with Interactive Brokers but it looks scary?
Kudos for having such saving at 22!
Begin your journey with reading some investment books, go for courses to express your journey.
Identify your own risk appetite so you know what kind of investment ia suitable for you.
22yo and $63k savings, jeez man! That's an insanely job well done!!
Well for a start, I think you should hold on the IB account first. And set aside about $20K first as an emergency fund (you should always have one). It's good that you want to dive right in, but it's better if you know how to tread water first, and by that I mean building up your investment knowledge by reading books, forums etc. It is indeed scary, I remember my first time buying into STI ETF too!
Next, ask yourself what kind of investor you want to be. Dividend all the way? Growth/value investor? Trader (highly don't recommend this)? That will help you to assess your level of risk. Thereafter, I would advise you to join an investing community to help you on your journey. You might think that what's the point of paying for something you can learn online, but trust me - I was learning by myself for 3 years and thought I knew a lot, but after joining, I only know how little I know, and it fast track me all the way, which I believe will definitely help you too!
If you would like to know about this community, let me know. I can share with you more :)
To reduce your fear, get someone to mentor you! :)
It is very commendable to accumulate 60k in savings at such a young age.
That's said for beginner, i suggest you take the time to read on investment book before investing. A recommendation will be one up on Wall Street by Peter lynch
If you are eager to invest right away, i would suggest investing in the sti etf due to the fact that it is auto diversified across the 30 companies which are of the largest few I'm Singapore and are of in resilient industries
Hi there! Congrats on saving up a sum to start your investment journey!
Before you start, do ensure you have set aside emergency fund for rainy days (6months of savings), and also get yourself covered in case of any events.
Then you can consider reading up some books: Rich Dad Poor Dad, One Up Wall Street, 5 Rules of Successful Stocks Investing.
Constantly read up more, and also watch online videos/investing blogs before you open an account to invest!
I started in this sequence:
Read up > P2P lending(funding societies) & robo-investment (StashAway) > monthly investment via OCBC BCIP & unit trust> individual stock investing
So far, after about 2y, i think I will be doing StashAway and individual stock investment(mainly blue chips).
I guess you need to start somewhere and follow up to see which way you want to invest in. (I used investing note to follow the stock, spreadsheet to track other form of investment)
Congratz, you can consider buying etf if you are still not comortable to select stocks. Since you also have a sizeable capital, you can consider to do DCA if you dont know if the entry price is attractive or not. Also do read up more to figure out your investment philosophy so that you will not be put off by the daily price movement.
Know your risk and personality profiles first before starting out in investing. Are you suitable for equities? Are you able to take a 10+% drop in your portfolio overnight and still sleep well? Knowing yourself better and how you handle money/investments will help along the way.
Once you know your risk profile you can then look into the different instruments that match it. Equities (stocks) are meant for those with a more aggressive risk profile hence you should not include it in your portfolio unless you know what you are doing or are more comfortable later on.
Suggest you read up on investments as well to broaden your knowledge. Books like millionaire teacher and rich by retirement are good for newbies and are written in our local context.
Alternatively, just go with a robo advisory like stashaway if you want to touch equities and you are still unsure how to proceed with investments.
The first step of investing is always scary but whats more scarier is leaving it in the bank account and letting inflation erode its value.
If you have zero financial literacy, then go improve it first before diving into individual stocks. Meantime, if you still want your money to work for you consider ETFs (DIY or Robo-advisors).
link to John Bogle's interview , the Father of index funds
Buy VOO (Vanguard SP500) and never sell.
Awesome work! Second person I see so young to have over 60k in savings.
Well before you invest, make sure you set aside part of that money for an emergency fund, and get yourself insured.
After that, you have to choose if you want to DIY, or hire an advisor. Then would you like your investments actively managed or passively managed and in passive instrument or active instruments.
Lets say you want to DIY, actively manage a passive portfolio. You'll be looking to buy passive index ETFs and look at timing the market for your purchases. Or you might want to DIY, passively manage a active portfolio, so you may be buying actively managed funds like Active ETFs and Unit Trusts.
If you want to hire an advisor, you can either get a portfolio from a digital financial advisor or a human advisor like myself.
But let's say you want to DIY, then I'd suggest picking up some skills and knowledge before diving head first. A brokerage platform like IB may look scary if you are unsure of what you're doing. If you do know what you're doing, it can be quite comfortable.
I always liken this to my first foray into attempting to play Football Manager. It looks absolutely scary as heck. But once you pick up knowledge, practice, maybe even attempt using a demo account first, it may get easier and less daunting.
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?
From here, you will understand yourself and know what type of assets and tools that are suitable for your investment journey. Do proper research onto the tools that suit you so that you will become more confident over time.
Some of the assets include, bonds, equity, and a well-balanced portfolio. This can be acquired through various tools in the market, e.g. Singapore Savings Bonds, ETF, shares, options, unit trust.
Learn about the pros and cons for each of them and use it to your advantage when building your portfolio.
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