Asked by Anonymous
Asked on 11 Nov 2019
Finally open my CDP account, I have 200-500 extra monthly?
Congratulations on starting your investment journey! However, since it is your first investment, there are a few things that you should assess before actually investing.
Firstly, you should arrive at your financial goals and an investment horizon based on those goals. For major goals like retirement, you will typically have a longer horizon and for any other goals, you can have a short horizon. Once this is clear, you will also have to assess your risk profile. This will depend upon various factors including age, knowledge about the markets etc.
Using the above information, you can arrive at the asset allocation and start investing. All of this may seem a little overwhelming since you are just starting out, so I suggest you look into robo-advisors. They will charge lower fees and help you go through your investment process smoothly.
I work at Kristal.AI, and it's my passion to evaluate various upcoming investment opportunities.
Top Contributor (Jan)
It's not recommend to RSP stocks if you are looking at $200-$500 monthly, as the transaction costs as a % of your invested capital is quite high. I would typically aim to keep transactional costs at 0.5% or lesser of the transaction value. Your other option would be to do RSP on UTs, which can have zero transactional costs.
You would be better off saving up your funds first while understanding your options and deciding what to put your money into.
I'm guessing you have the relevant insurance coverage in place, along with a rainy day fund; if not, make that your priority before you start to invest.
Feel free to reply to this post if you have any questions.
12 Nov 2019
It great that you want to start your investment journey!
Before even starting your investment journey, you should be ensuring that your insurance portfolio is covered! For starters, you should have a hospital/health insurance and some coverage on Death, Disability and Critical illness.
After getting your basics covered, it is important to understand the following for your investments:
1) Investment Goal: What are you investing for and how much you aim to achieve?
2) Risk Profile: Understand what kind of risk you are able to take!
3) Knowledge: Based on 1 and 2, what are the options that are viable for you to achieve your goals
If you are investing into individual stocks or ETF, please DO NOT DO SO on a MONTHLY Basis as the quantum you mentioned is not worth the fees! If you would like to, accumulate your monthly saving for 6 months before entering!
Would suggest, that you look at ETFs first since they are much easier to understand and may not be as risky as holding a single counter!
Another alternative is to speak to a financial advisor who is proficient in the markets to assist you with other investment options and portfolio management!
If you would like to find out more, feel free to drop me a PM at https://brandanchen.manulife.sg/
Depending on your risk appetite, you can get either Bond ETF to ETF to individual stocks.
And if each transaction broker fee is $10 ($20 including buy and sell), you need to measure how many % is the fees compare to that transaction.
If you buying $335 worth of sti etf which is 1 lot, fees are 20/335 or 5.9%. This means the first 6% gains are just to breakeven.
It would be better to purchase 2-3 months worth of investments at one go. If it’s a $1k investment, $20 is 2% which is much more achievable.
Of course the usual of setting aside for your emergency funds is done and etc.