National Service (NS)
Asked on 27 Mar 2019
Hi, if you are thinking about this right now, it means you are not ready to invest.
You did not set aside enough funds for your daily usage and emergency fund. (Thus you are afraid of having not enough money in future)
Which also means you have limited capital. I've always shared the following example with my friends that are rushing into investing because of FOMO.
If you only have $10,000 now, investing it and getting a return of 5% p.a. is just $500 a year. Which is around $40 a month.
If you were to save the money in SBC Jumpstart (since you are below age 26), you will get 2% p.a. which is $200 a year and around $16 a month.
The difference between both of them is only $24 a month and the amount of risk is vastly different. The 1st option may end up losing more money (risks of investing) however 2nd option is risk free. Is $16 worth the risk?
I would suggest you to look for alternative sources (side hussle) for more income and build up your savings and capital for investments in future.
All the best!
For now, I think your priority would be saving up for an emergency fund before investing. If you are paying your own school fees, I would advise you to only start investing after you have saved enough for your school fees.
Try and aim for a scholarship so that your tuition fees would be covered! Not only that, some scholarships do give you allowance as well! If there is extra money left from your scholarship allowance after deducting all you expenses, then you can consider investing those!
Yes, if you are worried, it means that you are along the right path of thinking for managing your finances!
It is important to invest the excess amount you have only after you have secured your basic needs, because you would not want to end up in a situation where you are struggling to survive and yet all your money is locked up in an investment or losses.
So first, set up an emergency fund, for 6 months - 1 year of spending. This should cover your MUST-HAVE expenses and not WANTs!!! This is what saving means. You spend only on the essentials and save as much money as possible.
Before you invest, it is important to figure out your finances first and allocate a budget. Think about your cashflows - how much are the inflows (money coming in) and how much are the outflows (going out). There, you will figure out the minimum amount you need for spending and set it aside in a high interest savings account as your emergency fund.
With that secured, you can use the remaining to invest without worries :) It is important that you do not take up investments that are beyond your comfort risk level! That way, you won't be worried about losing money all the time. Trust me, the stress is real and can really get you good :")
Instead of investing all your money, you can set aside a fixed sum of money every month to do dca into etfs. By doing this, you will stil have your savings for you to spend in University.
Sounds like you're thinking of investing all your money.
Only invest after setting aside your emergency expense and immediate needs.
In this case, don't invest the money you have right now, but if you take a side hustle, try investing that instead of increasing your lifestyle.