Arpita Mukherjee, Community Evangelist at Kristal.AI
Answered on 05 Nov 2019
The first step of your investment journey would be to read up and understand what investing is. Although there are so many financial advisors out ther who can help you with this, I'd suggest that you go for a robo-advisory platform to do the job of assessing your current financial position and recommend a portfolio strategy after reviewing your risk profile. As for the "catch", I would say that Robo-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.
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I hope this helps you make the right decision.
As stated by fellow community members, build up your investment knowledge, there are a few financial bloggers who touch on personal fiannce and warn you on the trappings of Singapore society. Some of them include Budget babe and me (yours truly); however if you want in depth and comprehensive table form, you can consider investmentmoats by Kyith. He is very detailed in his write up and puts in mathematical concepts.
As self advertisement: Below is my guide for young investors to know of basic finance
Adrian Goh Jun Wei, Computer Science at Nanyang Technological University
Answered on 13 Aug 2018
Hi anon, I've shared my thoughts for a question that's very similar to this!
A portion of savings monthly into Robo-advisors and Regular Savings Plans -> doesn't require much knowledge + easy to set up
Put mid-term savings into savings accounts that give bonus interest if you do not withdraw + no penalty for withdrawing
Attend investment courses and events to gain exposure -> mostly affordable and some are free
Check out this article by Seedly's team
Hope these helps, all the best! :)
My advice is that its importance to increase your financial knowledge first and understanding your personal risk appetite! This would require some effort put into research and self-reflection. Take the time as you are still young and in no rush.
Some questions: "Am I investing in hopes of realising it all in the future to fund my child's future education/buy a house?" or "Do I want it to be an alternative source of annual income that can come in terms of dividend?"
Important thing now is do not rush into buying popular stocks now just because they're cheap. You need the financial knowledge first to pick good stocks and evaluate them yourself. The notion of what goes down will come up worked in the last recession but this one seems to be an unpredictable battle to be honest.
I would recommend investing 50% in a market portfolio like S&P500 ETF as it historically yields 10% return and has a general upward trend. Another 50% can be other individual stocks that you like and see a potential of 10% return. Diversification is always important. There is no reward for bearing unnecessary risks.
While building up your knowledge, you can think about investing in low-risk savings plans (e.g. from banks, SSB) first to gain some extra interest, instead of keeping cash in the bank.
Before you start investing, it will be best to understand your objective. Here are some questions to help you:
What is your capital?
How will you want to invest your capital? E.g. lump sum or an amount on a regular basis
How long will you want to stay invested? E.g. 10 years
What is your risk appetite? E.g. How do you feel about short-term volatility?
What is your objective for investing?
By understanding yourself, you will find out what type of assets fits into your needs, e.g. bonds, equity, or a balanced portfolio.
Thereafter, start reading into the asset class alongside with market news about it. Once you are comfortable and confident enough, consider making the first step to start.
As always, be open to seeking a second opinion from a professional who is open to share with you. Ask to see their portfolio and find out what makes them successful.
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From someone who started off in the same situation as you, nothing beats education and immersive yourself in that environment. I would say that the first and most difficult obstacle to overcome is having an interest or developing a rationale to start personal finance. But since you have asked this question, I presume that you're past it!
Firstly, as many others have suggested, education on investing is important. While it may be stressful to expect yourself to get a complete grasp of the financial knowledge at one go, take comfort that you do not have to. To start with, understand all the basic terms and concepts that people usually throw around (methods of investing/types of asset classes/platforms available for use).
To go along with the first step, I would suggest that you immerse yourself in a community or find like-minded friends who are willing to discuss and talk about personal finance with you. From my experience, it is crucial that you maintain an open mindset and take criticisms constructively as that will build your knowledge on financial concepts immensely when you are first starting out.
As many would have suggested, you could explore RSP areas if you are currently (or intend to be) studying because you wouldn't have much time to dedicate learning all the financial concepts or have the ability to do some within a short span of time. The 3 investment vehicles I suggest you start with could be STI ETF RSP, Robo-advisors and the SSB. The underlying concepts of these investments are the same for any other instrument so understanding these 3 local ones would be good to start with!
As always, start reading up first before beginning your investment journey and do not invest in something blindly. All investments carry risks so the money that you invest should be the amount of money that you're willing to lose should anything happen. Thus, set up an emergency funds/savings first before investing. To start off, you can consider the STI ETF or robo-advisors
Learn some basic account and learn how to read financial statements! Understand some of the financial ratios commonly used. Also, don't get swayed when people tell you xxxx stocks will be making big money soon. Base your decisions on your own research!
Before you start investing, you have to consider your objectives.
Many people don't plan, and become resentful later as a result. If their investments are liquid, they'll have many excuses to take them out. Their returns and their capital becomes abysmal over time, instead of high.
I've also seen people invest out of convenience alone, like in the STI where they've given up their monthly payment plans halfway when they don't get or understand the results they're getting. It's a phenomena developing recently, which I've written over here: https://www.moneymaverickofficial.com/
For first timers, I'd love to take you through a good mix with dividends - so you can see how profits are generated from actual companies you're invested in, and be motivated by the balanced growth before deciding what kind of investment result you want to aim for in line with you objectives.
Do drop me a PM and we can always talk about how I can help you. As an investment specialist, I made 32.7% last year. https://www.facebook.com/luke.ho.54