I am 22 yo this year. After working 1+ years, I've managed to save up about $10k. Planning to do my degree next year & thought of investing, but I might need that money to pay for a part of the school fees next year. Hope to receive some advice.? - Seedly
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Anonymous

Asked on 02 May 2018

I am 22 yo this year. After working 1+ years, I've managed to save up about $10k. Planning to do my degree next year & thought of investing, but I might need that money to pay for a part of the school fees next year. Hope to receive some advice.?

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Arpita Mukherjee
Arpita Mukherjee, Community Evangelist at Kristal.AI
Level 6. Master
Answered on 07 Nov 2019

Hi Anon,

Here's what you can do. You can go for REITs, other ETFs and bonds, but before you do that, I'd suggest you read up as much to understand what a Robo-advisor really does. Robo-advisory platforms assess your current financial position and recommend a portfolio strategy after reviewing your risk profile. These bionic 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. And the best part is that they give you the most unbiased advice.

You can read here for a better understanding.

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.

I hope this helps you make the right decision.

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Angeline Teo
Angeline Teo
Level 3. Wonderkid
Answered on 24 Apr 2019

Hi there, I have to say great job at saving that $10k!

At that age, I think I only came close to saving around 10% of that figure. My take for this will come through on the know how to fund your degree portion. The portion of investing you might have to do your own research, because I am still trying to figure that out for myself. :)

This was how I funded my school fees, which totaled up to $40k not including interest or admin fees. Although I wasn't able to pay my school fees before school finished, I would have to say there were a few things that helped. I hope to share my story so you can also have a feel of the possible scenarios you can try or not try for your own journey.

So some of the things which I felt helped:

  • Due to my family's financial situation at that time, I had to pay off most of my loan. Or I had the perception that I would need to pay off most of it by myself. Therefore I considered help from the school as I wasn't confident of being able to do it alone. Hence I took it on myself to do a check through on the possible financial assistance the school provides. Once I checked that I fit the eligibility criteria, I did up my application and also spent time writing why I needed the bursary and how it will help me and my family's financial situation. I did this on the second year and third year of my degree. Both times I was fortunate to secure a different bursary to help fund some of my school fees. The total bursary amount came up to $7,000 which helped fund 10% of my school loans.

  • Being determined to pay off most of my school loan before school finished and being focused on paying up my school loan within a year of working. I felt this helped minimize the amount of interest I had to pay, I could also start earlier on putting most of that money into my savings and building my emergency funds, etc.

For my case, I managed to pay for up to 70% - 80% of my loan before I graduated. To ensure I can pay within a year or less, I took $500 of my salary every month to pay my loans. It was a high percentage of my salary then, however I could get by as I didn't go for any major holidays during that year and my cost of living at that time was pretty low.

It is important to know that there will always be opportunity cost to how you use cash - whether to put it into investing or to fund your education. I hope this helps you see better the opportunity costs of not paying your school fees before graduation (haha that there are implications post graduation). Also wishing you the best in your investment journey. :)

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Oh Yi Ning
Oh Yi Ning
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Top Contributor (Aug)

Level 8. Wizard
Answered on 22 Apr 2020

Hey! You might wanna consider using a safer option for starters such as an endowment. Its looking long term; the endowment may form your housing funds or nest to invest. It may not be advisable to attempt to invest while you're on a loan. The investment, if fails, might end up adding to your already existent liability.

If you are still keen on trying, try ETFs :) STI is a good place to begin with but the returns may not be fantastic compared to say, the US ETFs. Also because ETFs are diversified so you don't have to be worried if your stock pick fails. S&P500 is great for tracking the top companies in the US while NASDAQ are mostly for tech stocks.

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MT2020
MT2020
Level 7. Grand Master
Answered on 24 Feb 2020

If you are intending to use the money for your school fees, i wouldnt recommend you to invest in stocks or any high risk investments. This is because you will never know what will happen in the stock market and your investments might not give you a positive returns by the time you need it. i would reccomend you to park your money in high interest savings account and bonds such as Singapore savings bond as they are considered the "safest" form of investments.

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Frankie Rappaport
Frankie Rappaport

24 Feb 2020

Exactly!
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Kenneth Lou
Kenneth Lou
Level 9. God of Wisdom
Answered on 02 May 2018

I would continue saving at this rate which you are doing... and also focus on educating yourself by reading books, joining communities like this one and set saving target goals. If you have $10k investible cash (outside of rainy day expenses) then I think you are in good shape to start your investment journey! :)

All the best :) Study hard and do well in your school... the investment part can come later in year 3 or 4 of your education journey where you can start with a safer footing... not potentially screwing up your career opportunities down the road just cos you wanna get 5-6% p.a more each year on your investments. I'd rather a higher starting salary!

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David Ko
David Ko
Level 2. Rookie
Answered on 02 May 2018

Heylo! Kudos to saving and setting your goal to do your degree. Depending on your degree, it might actually cost more than 10K now. I think you have to be clear by setting goals. It seems like you have 2 goals. One is to get a degree, one is to invest. While you can do them both together, studying is a huge commitment in terms of your time and of course $. So you might have to prioritise what is more important to you. For me, I would avoid loans (unless interest free) to pay for my study!

Good luck!

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John Lim
John Lim
Level 3. Wonderkid
Answered on 14 Aug 2020

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Summer
Summer
Level 5. Genius
Answered on 13 May 2020

1) Budgeting

Look at your current expenses and try to cut them as much as possible! This way, you will have more spare cash which will serve as your principle to invest regularly, aside from doing a lump sum investing. The power of compound interest should not be underestimated! Always be investing into your future regularly, you will be grateful to yourself in the future :)

2) Investing

I would recommend putting half the money into money into S&P500 which will guarantee about 10% returns. (around 14k after 4 years) and half into more risky individual stocks. You may consider disruptive tech company stocks, as they have shown exponential growth rates in the last few years.

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I would recommend you to keep the money in fixed deposits or Singapore Saving Bonds since you need the money to pay for your school fees. This is a fund that I feel that you should not use it for investment. Hope it helps.

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Frankie Rappaport
Frankie Rappaport
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Top Contributor (Aug)

Level 9. God of Wisdom
Answered on 24 Feb 2020

Good job you achieved already. if there is a high probability that you will be need to pay the school fees next year, don't invest into equity.

Instead first pay your fees to be debt free, then create an individualized emergency fund four yourself, only then start diversified investing.

you already demonstrated that you are very able to effect regular savings.

more on my thinking :

https://seedly.sg/questions/what-is-your-general-investing-philosophy-strategy

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You might not need to pay the entire cost of your degree upfront. Find out how the school fees are supposed to be paid, e.g. every semester/year?

Then see if it may be worth it to take a student loan too. I’m thinking loan would be good since you’re intending to invest the money anyway. If you repay the loan immediately after graduation, there’s no interest charged I think.

But please invest wisely to make sure you still have that money to pay off your loans after graduation, and also invest in a way that does not remove your attention from your studies. No point “studying” for a degree if you’re gonna have to spend alot of time playing stocks.

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Gabriel Tham
Gabriel Tham
Level 9. God of Wisdom
Answered on 03 May 2018

Good work saving up 10k so quickly! That itself is an achievement.

Since you need the cash to pay for degree, it would be safer to opt into safer investments such as Singapore savings bonds or high interest savings account like DBS multiplier, OCBC360 etc

As your timeframe is pretty short, the stock market might not be suitable due to higher volatility and risk.

Otherwise, as some have mentioned, use a small portion for automated passive investing via POSB investsaver, Robo-advisors and such. These are longer term investments but can be done with small amounts of available cash.​​​

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Yeap Ming Feng
Yeap Ming Feng
Level 6. Master
Answered on 02 May 2018

If you were to use the 20/30/50 rule, here's how we usually allocate a certain budget.

50% which in your case, will be $5k, can be allocated to your needs. In this case, it can be set aside as funds for rainy days and possible spendings when you start school.

20%, which is $2K can be the portion you use to invest.

The remaining $3K will be flexible spending and you can allocate it anywhere to your liking, in this case, it can be the interest of your school fees.

22 years old is a good age to explore, so do read up more if you plan to invest that 20%. All the best! :)

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Bryan Chong
Bryan Chong
Level 4. Prodigy
Answered on 02 May 2018

Student loan, continue increasing our capital and look for passive returns. Also look for opportunities to make fast cash instead of Long annualised returns

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