I’m a 23 year old male and recently got interested in investing. However, I have only made one investment so far in POSB’s Nikko AM STI ETF at $100 a month. Any advice on the next step? - Seedly

Investments

Asked by Anonymous

Asked on 13 Jun 2018

I’m a 23 year old male and recently got interested in investing. However, I have only made one investment so far in POSB’s Nikko AM STI ETF at $100 a month. Any advice on the next step?

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Jacky Yap
Jacky Yap
Level 4. Prodigy
Updated on 07 Jun 2019

Hello there, a lot of people will tell you to start reading up etc. that's a given. :)

Let me share with you my personal experience, but this is by no means a formula or financial advise (im not affiliated with any financial institutions too).

When i started to decide what to invest in, i first decided what is my risk profile.

As an impatient guy, my risk profile is quite high, hence i dabbled into US stocks. US tech stocks have been going up so i was lucky to catch some part of it since i started a year ago. US stocks is probably one of the investment product with the highest risk (daily fluctuation of 1-5%).

Understand that my investing journey will be 10-20 years, so i am more focused on building my capital now (because no money) - hence US stocks fits me best because it can provide a decent capital gain in a short period of time (can go both ways), and i can stomach the risk. Other products like ETFs, REITS etc, you can only see the return in 5-10years for the compounding interest to kick in.

After putting in some money into the US stock market, i realize that i need to balance out my portfolio with lower risk investment products, hence i looked into funding society for p2p lending, and then a little bit in SG REITs to build my long team dividend portfolio. These are done using the capital gain from my US stocks, diverted into my smalll dividend porfolio (ie REITs).

So to sum up:

my first 2 years of investing:

  • US tech stocks for capital gain (super high risk)

  • balance risk of US tech stocks with p2p lending (medium risk)

my hypothetical 2-5th year of investing (not there yet this is my 1st year only)

  • capital gain from tech stock slowly converted to SG Reits for future dividend portfolio (medium to low risk)

my hypothetical 5th - 10 year of investing

  • slowly build up dividend portfolio and waiting for dividend to compound the returns (medium to low risk)

  • CPF should have some money (low risk)

And the constant thing from start of investing:

1) Read up, follow financial bloggers

2) Save money

3) Reduce expenses (sometimes it is harder to think of how to make extra S$200 a month, than to cut down on S$200 a month in expenses, both resulting in +S$200 in wealth)

4) optimize on credit card rewards

5) be insured

6) always remember that this is a long game (10-20 years)

At least that's the plan la hahah.

kthxbye

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Kenneth Lou
Kenneth Lou

22 Nov 2018

Hey Valentina, Interesting, I would say for a single person with no dependents (ie kids or parents) you should focus on having at least 6 months of an emergency fund. And everything beyond that you should be committing it to growing your money (investing). I would still do the RSP, because that 1% of transaction fee for a start is worth it for the convenience of investing monthly (in my view), because I actually set it to run automatically monthly.
Jacky Yap
Jacky Yap

06 Dec 2018

hi @Valentina, sorry just saw this. There are no formula to how much of an initial capital. My first US stock i bought was with S$2000. I trade in lots of S$2000 first and then I increase as my income grow. Even now also around S$2000 - S$4000 per trade. So i dont really have a "initial capital" per se, but if you need an answer, for me was S$2000 lol. I dont really do DCA since i buy from a custodian account which charges me S$4 per trade. So i just buy stocks that i think will grow. Even if the stock falls by 10%, ill probably lose S$200 and the S$4x2 total if i do sell the stock, which is an ok price for me to get started and learn along the way.
Eng You Guan
Eng You Guan
Level 3. Wonderkid
Answered on 14 Jun 2018

If you earn more than 20k for annual income, you might like to also topup your CPF SA/MA for tax deduction and enjoy the CPF interest rates.

If your company has a Employee Share Option, max that out as well. for eg. company matches 50% worth of shares for every 100% that you buy (the amount that you can buy is usually capped at a certain percentage based on your salary)

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Rave Ong Ci De
Rave Ong Ci De
Level 5. Genius
Answered on 14 Jun 2018

Start learning on investing and do it to beat the index. Three things can happen.

A) you lose every single cent of your capital. In this case, your RSP index would save you as you are still getting market returns,ableit lower

B) you make the same returns as the index. In that case, you lost nothing. Maybe can be the next index fund manager.

C) you make better returns than the market. This is the best situation. Now you can let the RSP be your plan B while you focus on plan A, which is pick your own stocks.

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Gabriel Tham
Gabriel Tham
Top Contributor

Top Contributor (Jun)

Level 8. Wizard
Answered on 14 Jun 2018

Next steps:

  1. save more money

  2. add on ABF singapore bond ETF using POSB

  3. Increase monthly contribution to POSB ETF investment

  4. wait for many years, collect dividend while waiting

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Yap Chuen Hwee
Yap Chuen Hwee
Level 3. Wonderkid
Answered on 14 Jun 2018

Apart from reading up on personal finance which is good, think you should also develop a way to track your entire investment portfolio.

Get some excel skills, develop a model so that when the time comes you can compare the performance/correlation of the various investments you are in. Factor how to include cash drag in as well, think that is one area that many people miss out on. This gives you a look into your decision making process and allocation, across time that will be useful to refine your future investment decisions.

It is pretty straughtforward now since you have 1 investment and you can probably just look at your statements from POSB. In future though it will be harder to do a like for like comparison when you diversify.

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Aik Kai
Aik Kai
Level 5. Genius
Answered on 13 Jun 2018

Read up on personal finance and investing through blogs or attending courses.

Also, get your savings and insurance in place first before thinking about where to invest next.

Investments count for nothing if you have no savings to tide through emergencies and no insurance to cover your in unfortunate stuations.

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Xue Yuan
Xue Yuan
Level 3. Wonderkid
Answered on 14 Jun 2018

Buy some A35 bonds, and rebalance your portfolio to 80-20%

Just buying ETF wont make a lot of difference, rebalancing will

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Dylan Teo
Dylan Teo
Level 3. Wonderkid
Answered on 14 Jun 2018

Apart from STI ETF and bonds, you can consider using robo-advisors as well. Low management fees and super easy to use. Don't even need CDP account or broker. I am personally using Stashaway because it's the most popular one (iirc).

I believe Seedly has a comprehensive article comparing all the different robo-advisors!

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Galvin Tham
Galvin Tham
Level 2. Rookie
Answered on 13 Jun 2018

Gain knowledge by reading and doing research . You can also attend investing courses

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Brandan Chen
Brandan Chen
Level 5. Genius
Answered on 13 Jun 2018

read more books on investing

Get yourself insured

Increase your investment in STI ETF

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Lilian Loke
Lilian Loke
Level 2. Rookie
Answered on 15 Jun 2018

Do some risk profiling to determine your own profile. You may not be able to stomach further risk. If that is so, just top up sti etf. If it feels too risky for you, add in some bonds. If you can stomach more risk, go learn about investing before entering into the market.

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