Personal Finance Books
Asked on 01 Jul 2020
Last month I signed on AIA PRO ACHIEVER (100% Investment) 3k/yr & 1 time payment of $200 in stashaway...Thinking that it might be a good way to start off and mayb few years ltr (more financial power) I'll venture into investing myself.
But I see many - comments on ILP and now I'm thinking if is really not worth having the policy... At the same time I need someone to help me to "manage my Investment" because of my inability atm.
Feeling conflicted cuz I want to start investing esp now i'm young
I am 24 right now and am graduating next year, so I believe we are 'peers' in some sense. I totally understand that you are overwhelmed by the tons of options available out there, and everyone tells you different things due to their personal interest/ experience/ knowledge. I would like to share with you what I would do once I graduate next year for your reference.
We are still young, so our goal now is to grow our capital as fast as possible and as aggresive as possible (but hey I am not asking you to gamble). We have at least 3 decades to grow our wealth, so invest in something that can generate us higher return (though riskier) instead of the safer ones such as fixed deposit and bonds. So aim higher! Below are the options you can explore, pick 1, or even do both:
Regular Savings Plan, if you do not have sufficient knowledge and confidence to start picking individual stocks yet, start with RSP, it will not go wrong. Options available now are POSB, OCBC, Phillip Capital and FSMOne. I'd suggest go with FSMOne RSP as they have the lowest fee ($1) and provide the most options (even international ETFs). You can DCA a couple hundreds into each ETF every month, such as iShares Core S&P 500 ETF, iShares FTSE A50 China Index ETF, Vanguard FTSE Emerging Markets ETF, Fidelity® MSCI Information Tech ETF (note: these are my choice, you can choose other ETFs that you personally like on the platform)
Robo-advisors. They are pretty solid option as well, you just have to answer some questions and they will provide you with a customized portfolio that cater to your goals and risk level you are comfortable with. If you want to maximize growth (comes with higher risk), choose a portfolio that has the highest risk-reward. You can invest a lump sum or just DCA every month. Some options are StashAway, Syfe, Endowus, Digiportfolio, Kristal, etc. Personally, I would go for StashAway for general investment and Syfe for their newly launched REIT portfolio.
Both of the options above are pretty 'passive' as it requires minimal effort on your end, so you can focus on your work and maximize your earnings as much as possible (learn some new skills, impress your boss, get your promotion, and invest more!). In the meantime, start learning about investing and stock picking. There are many courses and investing books to get you started. Once you have equipped yourself with sufficient knowledge, you can start to invest in stocks with high growth potential (instead of dividend stocks). This will further accelerate your FIRE (financial independence, retire early) journey. Of course, if you think stock picking is time consuming and you have no interest to do this at all, you can definitely stick to option 1 and 2. If you start to invest consistently at the age of 20, you can live a very comfortable life when you are around 50 years old (instead of 65 :D)
Hope it helps, cheers!
Hi, you must feel really overwhelmed with so many things to consider, especially since you're working as well!
With regards to the ILP that you signed, it does have some benefits of providing you returns which are pretty decent. Though you are paying quite a bit of fees to the insurance company, ultimately you would still have better returns as compared to the banks.
You could take this as a lesson to do your research first before signing up for any policy. I highly recommend you to read through the policy terms and ask as many questions to get a clearer picture on what you're signing up for.
You may not have the time, but I really encourage you to improve on your financial literacy. I really like to listen to podcasts as you can listen to them on the go, especially when you're on public transport!
Here's a list of resources from an article on my blog, I hope that these resources will be able to help you improve your financial literacy!
Awesome that you realised the importance of it at 22. Kudos to you!
Personally, I do not beleive in insurance financial products. I will get a lot of hate for this but this i just my two cents.
Why let others manage it for you when you can manage your investment products yourself?
I have created a step by step in depth video on how you can open a brokerage account.
It is ok to be confused. I was a lost sheep before and I was 25 at that time. Your runway is longer than mine. You are at at advantage!
If I recall correctly, there is a package for AIA, you probably can ask your advisor. You may also want to relook at your policy and relook at your funds in your ilp. You could reduce your position.
Now with roboadvisors, investment are made easier. They also often send out newsletters to improve your financial literacy.
Financial independence is a marathon so go at your own pace, learn while you can. Learn your lesson from the misinformation gained from ilp. You will build a lot of filters along your way.
Understand your ILP
Understand your roboadvisors
Learn things you find curious. Let robo run the show while you gain your knowledge
Investment is a marathon. As much as we can advise you, you need to learn to make your own decision
Hi! I've been in a situation like yours when I started saving up few years ago. I too signed up for an ILP that I wasn't sure if it was the correct option. From what I see 3k/year is a manageable sum, just treat it as a savings that you can benefit from in the future.
For the part you mentioned your inability, I think it's because you are still young and overwhelmed by all the different investing methods out there. The most important thing is to first figure out what you want to get out of your investment. Here is an article I wrote on this topic, I think it will be useful to someone starting out investing like you. Do take a read!
Sharon, Corporate Communications at A Public Listed Company
Answered on 02 Jul 2020
I don't think anyone can manage your investment, even fee-based financial advisors.
What they can do is to give you advice and you will have to do research on their recommendations, then decide for yourself.
No one's more interested in your own finances than yourself.
I had the old AIA Achiever ILP which I surrendered last month. I chose to hold it for more than 12 years until it broke-even. Hope the new version is better for their customers.
If you prefer to grow a sum of money without much effort, I'd recommend savings plans (like NTUC Revosave), or robo-advisors.
Since you already purchased the AIA Pro Achiever (I assume your student advisor friends suggested it), there is nothing much you can do but to hold it for the long term, because surrendering the policy will be detrimental but I hope you are in it for the long term. Don't let what others say affect you and just stick to the ILP since you already comitted to it. For now, you can slowly use stashaway to invest yourself while you build up your knowledge. You can either watch Youtube (eg Graham Stephan/Andrei Jikh/The Swedish Investor) and start reading books (I have a few to recommend.) Seedly is also beginner friendly as ideas are easy to digest but you can also look at Instagram pages like thewokesalaryman, thesimplesum as well.
When I first started I was very confused and overwhelmed as well. Investing is a long term committment so don't rush to invest, just slowly build up the right mindset which can set you up for successful investing in the future. There's alot more for me to share but you can let me know if this helps! Cheers
Our value add comes from a viewpoint where we are able to see where your life will go in 5 minutes because we have walked your path with over 1,000 people before you.
Here's the simple solution to your problem:
Set a budget using the above calculator.
Determine if your plans now fit the guidelines. If it is better than the guidelines, stay on track. If it isn't, you should review it.
ILPs have pros and cons. I will not go into that ring. There are just too many threads on this. Make your own decision based on the information that you have gathered.
Paying someone to "manage" your investment can be as low as engaging a Roboadviser like StashAway. There is no shame in paying someone for what you do not know. I pay for legal and medical advice because I do not have the expertise to make a decision on those matters. There is a reason why there are financial consultants for UHNW and HNW consumers. It is fallacy to expect everyone to learn the finer points of financial literacy because it takes years and experience. Beyond a certain time frame, people simply operate better on autopilot.
Having a plan is better than no plan. You have to decide whether you want to pay for the costs of advice versus DIY which will cost you time.
If you want an adviser, there are many on the forum who will be able to fulfill that role.
I think you should wait until you are able to manage your own investing. Investing does not mean getting rich fast. It's a hard and long process. If you wanna be rich fast without learning and practice, you should do gambling not investing. With that said, I will recommend a book called "Pay back time" which is the investing method of Warren Buffett. You should read that book and a lot of other books to avoid losing your hard-working money. Good luck.
This comment will be quite brief. I believe that when it comes to investing, we strive for lower costs to get better returns. The main reason why ILP is not preferred is the distribution cost is high. One FP shared in a telegram group that upon reviewing his friend's ILP, it will take 10 years to breakeven assuming the returns is 8% p.a.
I understand your concern on having someone to manage your investment. I think with robo-advisor, it feels like it is making FA obsolete due to its low cost structure. I think starting off with robo-advisor or ETF RSP is a great start for starters and it is something that I will advocate for those starting out.
I think you can read more books, blog articles so that you can build your knowledge. Just like body building, everyone starts from square one. If one can, so can you.