I am currently an undergraduate and will be graduating in 2022. I recently came into a sum of $50,000 and would like to know what you'd do to invest if you were in my position? - Seedly
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Anonymous

Asked on 24 Oct 2019

I am currently an undergraduate and will be graduating in 2022. I recently came into a sum of $50,000 and would like to know what you'd do to invest if you were in my position?

I currently have private shares in a local run crypto-company and am able to purchase more at the preferential rate. I also have a Securities account that I can make use of.

I am considering to invest in a robo-advisory (StashAway). Have been told to consider purchasing a property together with my parents, purchase ETFs etc.

Do not have much savings.

Am open to all suggestions and investments. I have a medium to high-risk appetite personally.

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Hi anon,

First thing would be to beef up your savings a little. Although you will only start graduate and start work in 3 years, it would be prudent to have a small emergency fund of at least 6 months expenses. Also, ensure you have at least a hospitalization policy in place, in the event of any unforeseen health issues. You may consider critical illness coverage after you start work unless you wish to get one now due to lower premiums at your age.

If you have a medium to high-risk profile, then I would recommend that you can consider going 60%-75% into equities, equity funds, or ETFs, depending on the sector and risks that you prefer. This assumes that you do not have any defined timeframe with which that you need the money. The remaining allocation can be placed in fixed income or kept as a warchest for further opportunities.

Property as an investment can be done as well, but capital outlay will be bigger and I do not think $50000 is quite enough to split between all the asset classes I have mentioned.

However, with due consideration to the big picture, also remember to balance your risk, as well as how you will continue to add on to your investments in time to come.

Some question which I will pose to you to think about include:

  • What do I want my money to do for me?

  • What is the level of risk that I will want at different stages of my life?

  • Will the asset class I choose give me the return I want, and with what risk?

It will be advisable for you to understand all the options on the table before selecting the one(s) that you are comfortable with. If you have more specific questions, you can reply to this post and I'll weigh in with my own thoughts.

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Emmelia Elyxis Lim
Emmelia Elyxis Lim

06 Feb 2020

This is so helpful 👍
SGRetirementCalculator

14 Aug 2020

Excellent points. Additionally, you can think about how much would I want and by when? This will help you narrow down your investment options based on your appetite. You will go through many life stages, each incurring a lot of resources. Do not think of money as something to be deployed immediately or strictly for long term, but through a planned and curated approach to help you achieve each life milestone you go through. We have built a free calculator to help people better plan their finances for retirement. Feel free to try it out to see if your plans are realistic to achieve your goal. https://retirementcalculator.wixsite.com/2020
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Daryl Liao, Fti
Daryl Liao, Fti
Level 7. Grand Master
Answered on 05 Dec 2019

Hey there, my take would be as follow:

  1. Set aside up an emergency fund of $12,000 (You're a student so i think 6 months of $2000 should be fine). You can park your monies in Singapore Savings bond to get some yield on it.

  2. Get your Hospitalisation insurance plan to make sure these mishaps don't cost you an arm and a leg.

  3. Build up your knowledge on investment knowledge and expand your horizons to know what you really like. Be it growth investing, dividend investing or you prefer relatively passive investing like ETFS or robo-advisory.

I dont think $50,000 is enough to invest into properties so that option will probably be out. Even if you can, avoid such a high commitment.

Cheers

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Arpita Mukherjee
Arpita Mukherjee, Community Evangelist at Kristal.AI
Level 6. Master
Answered on 24 Oct 2019

Hi Anon,

There are plenty of safe ways to invest your money. 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.

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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Asheesh Chanda
Asheesh Chanda, Founder at Kristal.AI
Level 6. Master
Updated on 30 Oct 2019

Would request you to onboard to Kristal.AI and run the algorithm to see what it suggests. You can always reach out to our advisors over email for their inputs once your KYC is done. Depending on your risk profile, you may consider an All Weather and Global Tech ETF kind of Kristals. Given up to 50K USD we have Zero fees, it may be worthwhile giving it a shot. Investments should be made with a medium to long term horizon and not too short term.

Learn more from us here: http://bit.ly/36ci0yF

Thanks

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Lean Sing Ding
Lean Sing Ding, Client Experience Lead at Endowus
Level 4. Prodigy
Updated on 29 Oct 2019

Hi Anon,

If I were in your position - being the cautious individual and kiasu/kiasee individual that I am - I would do this in this particular order:

1.) Before investing - to research and build my own financial literacy: there are a plethora of good local financial blogs such as https://investmentmoats.com/, https://financialhorse.com/, https://heartlandboy.com/ - pick one and read away. You too can check out https://endowus.com/insights/ (Disclaimer I work for Endowus :)

2.) Since you already have some monies in what is often deemed a "tactical" investment such as private shares in the local crypto company - why not look at traditional asset classes such as bonds and equities to build a "core" portfolio. With this core portfolio - and with time on your side - you can leverage the power of compounding to your advantage.

3.) Evaluate the different offerings of "Robo" Advisors and understand their value proposition, fees, underlying investment instruments and the experience of their management team. All the best in your journey and your studies!

Stay Globally Invested, Keep Cost Low, Diversify

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Bjorn Ng
Bjorn Ng
Level 9. God of Wisdom
Answered on 05 Dec 2019

Hey there! I would suggest to build up your savings first - Assuming that $50,000 is your total sum, do keep away an emergency fund aside, I would think $20,000 is fair enough. For the other $30,000, before you invest, do make sure you have built up your investing knowledge and aware of what you are comfortable with to invest. Always and always INVEST IN WHAT YOU CAN AFFORD TO LOSE.

For robo-advisors, I haven't invest in one but I think it is a good choice to park some of your excess funds inside. You can also consider to create a balanced portfolio, for example some in robo, some in bonds (Singapore Savings Bond), and the other in your med-high risk investments. That way, you create a diversified basket for yourself as well.

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Jonathan Ang
Jonathan Ang
Level 7. Grand Master
Answered on 05 Dec 2019

I would say to invest $1,000 first, to monitor your emotions and validate if your framework works.

So the max you will lose to know if you're right or wrong is $1,000. You don't want to be putting 10k, 20k on the table first :)

I would like you to consider and see who are the richest investors in the world and how they got their wealth, and see if you can invest in the same asset class.

Most people in the forbes list are either business owners or they invest in businesses (stocks). I would think going into equities would be better, given the low interest rates environment and given the amount of successful investors are equity investors in the world.

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Ok since you have stated a medium to high-risk appetite, maybe you can apoortion your portfolio to the following: crypto, stocks, interest rates, cash

  1. For crypto if you don't know much, can just go for BTC and ETH, they are considered as "blue chips of crypto"

More explanation here: https://medium.com/tokenize-xchange/the-blue-chips-of-crypto-d9a74487d4cf

  1. As for stocks, if you are not comfortable picking your own, you can go for ETFs/indexes. I would suggest US stocks as compared to SG stocks.

  2. So for interest rates, this portion is the less risky type of "investments". You can opt for Singlife, which is giving 2.5% APY for 1st 10k, and 1% APY for next 90k. You can also get into crypto earn for USDT using the crypto.com APP, they provide 10% APY on your crypto. However, do bear in mind if forex risk between SGD and USD.

  3. Lastly hold cash for your emergency funds! ​​​

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MT2020
MT2020
Level 7. Grand Master
Answered on 26 Feb 2020

$50,000 is not a small sum of money. First you should split it up into your expenses, savings as well and investment. As i believe you are still at a young age, you could buy more individual stocks to grow your portfolio.

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Nicholas Chiam
Nicholas Chiam
Level 4. Prodigy
Updated on 07 Feb 2020

As mentioned, go invest into the robo-advisors to grow your liquid capital.

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Emmelia Elyxis Lim
Emmelia Elyxis Lim, Financial Planner at AXA
Level 3. Wonderkid
Answered on 06 Feb 2020

Hi Anon!

Though it may be tempting to just “do something“ immediately with a good sum of money you currently possess, however it’s important to get the following sorted out first.

  1. Sorting out your liabilities. (Education Loans, Personal Loans, etc)

  2. Getting basic insurance coverage. (Hospitalization, Critical Illness, etc)

  3. Set aside a rainy day fund. (Typically 6-8months worth of expenses.)

At your current stage in life, I’d advise against investing into properties, though I believe with your capital, it might not be enough.

Read up on investments and build up your knowledge on them. You may also wish to speak to a trusted financial advisor on what you can do with your sum of money.

Cheers!

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Collin Seow CFTe, CPM
Collin Seow CFTe, CPM
Level 4. Prodigy
Answered on 03 Feb 2020

Dont be so eager to make money first.

If I was in your position, knowing what I know now. I will set aside a percent just get education first. Education give us leverage, knowing what to do step by step give us power.

It is not difficult but try not to stumble. (Lose money).Learn the power of compound interest. Come out with a plan preferably not with someone that make commissions from selling you things.

Library, Youtube and Google is your friend. Of course, there are alot of bad advice as well.

In summary, work on the inner game as well as the outer game. Money is an idea.

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Aug)

Level 9. God of Wisdom
Updated on 25 Mar 2020

ETFs buy&hold:

60% VOO

15% VGT

15% CQQQ

10% physical gold

(don't rebalance, let run)

more important: invest more regularly when you are young​​​

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Frankie Rappaport
Frankie Rappaport

02 Feb 2020

And 10% XBI
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Sanchit
Sanchit
Level 6. Master
Answered on 05 Dec 2019

I would suggest keeping some money for a rainy day always - as hard as it may sound, it is always a good idea to keep liquid cash handy (I would say 20% is a good idea in this case but you can take a better call).

For the rest, I would go one of 2 ways. Either do it a lot more passive investments in robo investers (I am sure there is enough material for you to make a sound decision) OR go for a more indepth research about stock and ETFs. ​​​

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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 9. God of Wisdom
Answered on 05 Dec 2019

If your insurance is not in place, do that first while you are still young and premiums are still low. And as the others have mentioned, set aside emergency funds before doing any investments.

What is your goal for investing? There should be something you are aiming at, be it early retirement or for a big ticket item in the future.

If I were in your shoes, I'll park the funds in my options portfolio and use it to generate 30-40% returns onwards.

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Frankie Rappaport
Frankie Rappaport

02 Feb 2020

I disagree
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Sudhan
Sudhan
Level 6. Master
Answered on 03 Dec 2019

Hi anon, congrats on your sum of S$50k. It can be enticing to invest right away but I would recommend getting the basics sorted out.

Some things to consider is getting enough insurance coverage and also having at least some form of emergency fund.

After you have sorted them out, then you can consider investing in stocks, once you have gained sufficient knowledge about the particular asset class. Stocks can be very volatile in the short-term so it could suit your risk appetite. But over the long-term, they produce great returns if the right companies are chosen. ​​​

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Erwin Hartanto
Erwin Hartanto
Level 2. Rookie
Answered on 03 Dec 2019

Pay off all the loan except the mortgage. Then keep the 6-month cost of living in your bank. The rest you can invest in ETF or Stock. Word of advise, learn about value investing before start investing. Another word of advise, be an investor, not a trader.

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 03 Dec 2019

Pay off any outstanding loans and debts, if any.

Put it in a high interest savings account first.

Go build up your financial literacy, objective then strategy, before taking out the money to invest

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N
Ninja
Level 7. Grand Master
Answered on 30 Oct 2019

Just pay back your loans. Don’t fly without wings

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Lilian Loke
Lilian Loke
Level 4. Prodigy
Answered on 30 Oct 2019

Firstly, do you have any study loans? If yes, I suggest you save some to payoff before interest kicks in. Then, put some money in some safe instrument while you learn to invest. Spend some on an actual account. A demo account is good to test things out but real accounts are the real deal! It will confirm whether you are really the aggressive risk profile you think you are!

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