Where should a part-time student park his money at? - Seedly

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Asked by Anonymous

Asked on 29 Jul 2019

Where should a part-time student park his money at?

Hi, I’m a 23 year old part-time student with $40k in savings and can save $3-5k a month. Where do you suggest I park my money? I'm pretty new to the personal finance world.

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Sarah Chan
Sarah Chan, Business Administration at NUS
Level 6. Master
Updated on 31 Jul 2019

Hi anon,

To begin, good job on saving this much by the age of 23 while studying! As a fellow newbie in the personal finance and investing world, I found the following steps really helpful as I dived into things.

TL;DR: As a newbie in the investing world, you should:

  • Check everything in the investment checklist, do your financial planning and work out the most ideal portfolio based on it
  • Park the rest of your savings in an account that will reward you with decent interest rates based on how much savings you have and your spending behaviour
  • Begin with an SSB, STI ETFs and Robo-Advisors portfolio as they are passive investments with low to moderate risks.

Here are 3 simple steps to help prepare you before you begin your investment journey:

#1 Start off by ensuring you’re ready to begin investing.

Do give our Ultimate Investment Guide a read! It summarizes everything a newbie in the investing world should know before they commence their investing journey. For starters, use this investment checklist to determine whether you’re ready to begin investing:

  1. Have no debt on hand
  2. Have spare cash (i.e. up to 6 months worth of emergency funds)
  3. Possess investing knowledge, or else do your research first
  4. Be ready to do your due diligence

#2 Do your financial planning

You can either DIY this on your own or get a financial advisor/planner if you require further guidance along the way. This Seedly article should be able to help you through your financial planning. Remember to answer the following questions during this stage too:

  1. What’s your risk appetite?
  2. What are your return expectations?
  3. What’s your starting capital?
  4. What are your financial goals for the future?

#3 Work out a financial portfolio

Now that you’ve done all the prep work, let’s move on to selecting the investment product(s) of your choice to build a well-diversified financial portfolio. Your portfolio should be built based on your answers to the 4 questions above in #2.

Here are some really useful Seedly articles that can help you pick the investment product of choice:

Now that I’ve introduced investing in 3 straight forward steps, let’s analyse your specific scenario and see where you can park your money to grow it.

$40k savings till date

For starters, I cannot stress how important it is to place your savings in an account that will help grow it at a decent interest rate as you focus on growing the rest of your money through investments. Here are our Ultimate Savings Account Guide and 3 Best Bank Account for Undergraduates articles that would be really helpful in deciding which savings account to get based on how much you have and your spending behaviour. Still not convinced? Did you know that parking $10k savings in the DBS Multiplier account can earn you over $2k of interests after 10 years (which is sufficient to fly you to & fro Iceland!) compared to leaving it in your POSB Kids account, which would only earn you a measly sum of $50. Read more in this article of ours!

Investing your $40k savings till date + $3-5k savings every month

Savings account aside, let’s talk about growing the rest of your money through investments. As a beginner, I’d recommend investing your money in:

These investment products generally have low to moderate risks which would be great for investing beginners. They’re also passive investments which would be great for you since you’re still part-time schooling. The above articles I shared with you provide a great summary of these 3 investment products but please do your due diligence learning about them too! Making a lump sum investment would be appropriate with the remaining $40k savings after you’ve set aside your emergency funds and cleared any outstanding debt. On top of that, you can also do dollar cost averaging (DCA) with a regular shares savings (RSS) plan using your monthly $3-5k savings.

I hope this little guide was helpful and succinct. Once again, good job on making it this far and all the best for your future financial goals! :-)

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