What are the most suitable investments for a 21 Y/O with no savings and no debts? - Seedly
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Anonymous

Asked on 17 Feb 2020

What are the most suitable investments for a 21 Y/O with no savings and no debts?

Hello. I’m a 21 Y/O with no debts but also no savings.I have a bit of background in finance since I did a diploma in Accounting & Finance.

I’m drawing around $1200 per month from NS

Rn, I have $700 in Stashaway and planning to put in $200/mth.

Just created a brokerage acc with DBS and planning to invest in REITs.

Are there any other forms of financial instruments which could be suitable? I’m ok with taking risks since I have nth much to lose, but i’ll definitely research before jumping into it

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Collin Seow CFTe, CPM
Collin Seow CFTe, CPM, Director at TradingPLC Venture
Level 4. Prodigy
Updated on 17 Feb 2020

Hi , I agree with Aaron Leow.

Do NOT aim to get rich quick. Invest in yourself. Education gives you the best leverage.

We will be rich by 40 if we just avoid the mistakes we make in investment.

Read good books on investing and if you like it trading too.

Personally, I trade index and forex but this is not the cup of tea for everyone. In the end, find out not just about the instruments but also yourself. The best investment is one the suit you the most in term of volatility, returns and time/effort.​​​

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Alex Chua
Alex Chua

25 Feb 2020

But the best way to learn is from mistakes
Collin Seow CFTe, CPM
Collin Seow CFTe, CPM

26 Feb 2020

Can learn from your own mistakes or learn for other people mistakes
Featuring Jayden
Featuring Jayden
Level 3. Wonderkid
Answered 4w ago

Hi there!

You are off to a good start! :)

Continue adding to your investments while building up emergency savings. To decide how much you need in emergency saving, I would say 6 month worth of expenses. This could vary depending of your stage of life, for example, if you start having a family, this could increase.

Investing-wise, you are young and time is on your side. Have a long-term horizon and invest in companies with a strong and growing business model with a good track record. Remember that you are not investing in stock, but rather a piece of the business.

Though young, it's good to start early and build up a stream of passive income. In this way, you start early and prepare yourself for retirement. Dividends from your investments or real estate properties are some of the ways to get started.

I've create a video outlining my Dividend Growth portfolio and how I select companies to invest in. Such companies allows me to obtain a steady stream of passive income and I am able to reinvest the dividends. It also allows me to get ready for early retirement!

Watch the video here and I hope this helps! :)

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Rocker123

4w ago

This is so helpful 👍

You are right on track really.

I would advise to spend money on yourself as well. Education on investments will go a long way in your journey.

Other than that, read Seedly and ask questions like what you are doing.

I highly recommend Jeremy Siegel's "Stocks for the Long Run" a very illuminating read which I have probably read well over 15 times in my career. Never gets old.

Click here to find out more about me!

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Question Poster

17 Feb 2020

Ahh. Thank you for the recommendation. I just discovered this community and the content here is really good. 👍🏻
Aaron Leow, CFA, ChFC®/S
Aaron Leow, CFA, ChFC®/S

17 Feb 2020

We have all been there ;)

Hey,

First of all, given the small capital, you might want to consider other brokers such as Standard Chartered online trading which cost less than half of DBS Vicker's trading fee.

Also, by doing that you will also be opening the standard chartered jump start account which pays you 2% interest and acts just like your DBS savings account.

If you do not mind taking risk, you can try leveraged Index/ Forex on CFD platforms such as Oanda. But please have proper market exposure management and stop loss in placed when playing with leveraged CFDs.

All the best bro, Cheers

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MT2020
MT2020
Level 7. Grand Master
Answered 4w ago

This is a good start. You can read more books about investing and increase your knowledge. Meanwhile, you can continue to invest in robo advisor.

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Ang Kang Jie
Ang Kang Jie
Level 2. Rookie
Answered 4w ago

I would go for a less risk averse approach and build up an emergency fund first. Why not let your money grow in SCB Jumpstart, specially tailored for young people? It provides 2%pa for the first 20k that you have inside

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Since you have no savings, it is better to build your emergency funds first. I would recommend you to save at least 10% to 20% of your monthly salary to build up your emergency funds first, followed by funds for insurance and investment. What is the most suitable investment really depends on your risk profile. I would recommend REITs and ETFs.

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

As you mentioned you have no saving, I think that's the first thing you want to do right now. As you are still young and has minimal commitment, 3-6 months of emergency fund will be a good start.

Once this is done, you can continue with what you are doing with Stashaway. Do not panic or sell when the market is down, continue to put in certain amount every month. 10 years later you will thank yourself.

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Alex Chua
Alex Chua, Freshmore (Engineering System Design) at SUTD
Level 6. Master
Answered on 25 Feb 2020

As someone from your same age, this is my advise in chronological order:

  1. Education is the best investment. Focus on your studies. Pick up on investment (mentioned by others)

  2. Tidy up your personal finance. Can u decrease your expenditure further? Put your savings in high interest saving. Current jump-start Stan chart suits us.

  3. What is your cash flow? So that u can jump into overseas opportunities

For my circumstances, I have no choice but to take up loans. Instead, what I do is to reduce my expenditure. Improve my annual returns.

Alternative financial tools

  1. Robo advisory which u are currently doing

  2. P2P lending.

It is a higher risk investment. (but hey returns come from risk). I have justified why I choose this tool. I did my research and define my rules

  1. Low capital : can start with $500. Recommend :$1000

  2. Well diversified : spread into $20 per loans so my default risk is taken into account.

  3. Illiquid but short time frame (1 - 12months)

So I can plan ahead and withdraw $ when I need them. Otherwise, let my money roll.

4.higher annual returns of avg 10%

5.i treat p2p lending as a social crowd lending. There are social benefits of p2p lending and I want to support it. You can find better examples in Indonesia.

Best of luck. Pm me, fb msg or comment if u r interested in p2p lending. Basic ideas can be found in Seedly

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Before your start investing, it will always be helpful to go back to the basics - understand your cashflow. Here is some basic information: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/

Next, ensure that you are properly insured especially in terms of healthcare insurance. While we chase after our financial goals, do not forget the engine of this race - which is you! Thereupon, ensure that you are adequately covered in case of any health changes. Everyone wants to be healthy, but life is unpredictable.

Thereafter, keep what you need in the bank, which is usually about 3 to 6 months your monthly expenses (as explained in the link above on understanding your cash flow). For the money that you can 'afford to lose', this money can be invested. This is simply because investment returns are non-guaranteed.

Generally, you need to understand yourself and your investment objectives. After you have set aside what you need (from the information above), start investing in yourself and build your knowledge. Understand the various tools in the market that is capable of helping you reach your goals. Then start with those that you are comfortable with.

For instance, I have been helping my clients invest in a well-diversified portfolio in asia equity amongst other assets for almost a decade now. This is what I am capable of - to help my clients generate a reasonable rate of return over time. Hence, I will be more skewed towards investing my money in such asset class - where I have good knowledge, skills, and experience with.

In case you are wondering, here is the latest fund performance: https://www.blog.pzl.sg/aia-singapore-investment-linked-fund-performance/

Of course, your role could be to work with such a portfolio and diversify it with other assets such that you prevent overexposure to unit trust and continue your journey to build a well-diversified portfolio.

Here is everything about me and what I do best.

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Lee Jin Fei Andre
Lee Jin Fei Andre
Level 4. Prodigy
Answered on 18 Feb 2020

Jumping into it is great and all. In this community, we advocate investing your money because money in the bank is not creating any additional value at all (since it doesn't really grow all that much).

However similar advice to all the other gurus, please don't jump in blindly.

When people talk about strategy, it's about knowing your invested time horizon, risk profile, how you should react when markets are correcting for the short term, and most importantly, what asset classes and amount to invest in & diversify based on your goals.

If you have time to analyze and read financial reports, it'll give you some backing to investing directly into certain companies stocks and shares. However if you think you're unable to, or have no interest in it, continuing investing with robo-advisors or even putting your money into globally diversified ETFs/unit trusts will do the trick as well. Returns will be a little lower, but much less work is needed.

Diversification is key to avoiding most headaches (or heartaches) in the long run. Don't be a fool and put all your eggs in one basket.

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport
Top Contributor

Top Contributor (Mar)

Level 8. Wizard
Answered on 17 Feb 2020

Hi,

for the novice, stocks etc. are not the best instrument.

Stick to broad, cheap, largr ETFs and have patience, buy regularly, don't sell.

Active stratregies don't work longterm, just take the simple, successful

passive investing train with index ETFs and S-REIT ETFs (and maybe some physical gold). Stay away from unit trusts, stocks, options, CFDs.

more on my thinking:

https://seedly.sg/questions/what-is-your-general-investing-philosophy-strategy​​​

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Su Jun Hao
Su Jun Hao, Student at Accounting & Finance, Temasek Poly
Level 4. Prodigy
Answered on 17 Feb 2020

Hi, am an accounting and Finance student as well.

If your interested in becoming an analyst or anything investment related, do manage your own money!

Evaluate US’s companies cashflow, financials, and invest them.

Just take note that you should be looking at US stocks or SG REITs (better risk/return ratio)

If a future career in the finance world doesn’t entice you, I would stick to your current contributions in StashAway, and maybe accumulating a warchest for you to pump in (whenever your StashAway balance falls below net contributions or something).

Happy investing!

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Su Jun Hao
Su Jun Hao

18 Feb 2020

Build your skillsets while in army! Come out and you’ll be a god in finance courses.
Ninja

18 Feb 2020

You can actually be a financial consultant ;)

An emergency fund first and then insurance. You shouldn't be investing until you have your downside protected first.

After that's done, just diversify globally, hiring a financial advisor like Stashaway is sufficient unless you want to DIY.

If you're DIY-ing learn to buy funds or individual securities on your own and have proper asset allocation strategies. Invest regularly and stay invested.

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Question Poster

17 Feb 2020

Thanks for the advice :)
Ninja

18 Feb 2020

Yeah life plans are a must when you are in NS ;P