Don’t we all want to earn a bit of side cash or potentially something that would give us better returns rather than just stashing our money in a fixed deposit bank account? Don’t we all want to earn more in order to have a better quality of life, to be able to improve our family’s lifestyle? These are some of the questions that would lead you up to this term; “investing”.
“Investing is to put money into a financial arrangement, property, shares, or any other profit making arrangements in hopes of attaining a profit.”
The moment “investing” is being mentioned, things like stocks, shares, forex, commodities, ETF, properties, and money are some thoughts that would come to mind naturally. Many would deem that investing is some complex and only suited for those who have the knack for it. However, investing is after all not that complicated at all.
NOTE: Every investment strategy/method entails their own set of risks and benefits.
Here are some ways to refute how investing is tough and perplexing, and that anyone can start investing in Singapore, at any stage of their life.
#1 | Do your homework
Before starting your investment journey with friends, or something you have heard of, or a recommendation by friends and families, you should do your due diligence by reading up and researching on that particular investment technique, look for feedbacks and reviews online, check with those who are already in the game to substantiate or validate their claims. Investments should not be seen as a gamble, but rather a smarter, more efficient way to make more money. Hence, the more knowledgeable you are about certain investment strategies, the more prepared you can be.
#2 | Set a financial target/goal
Everyone has an amount that they would want to see in their bank account at the end of X number of years. Say for instance, a 28 year old would like to see a million dollars by the time you retire, and that would be 65 years old onwards. This may sound simple, but by calculating the number of years left and that would be the time frame you have till then. The number of years apart is 37 years and that is the duration that you have before reaching that age. Identify how much is the amount exactly and the time needed when you set a financial target for yourself.
Stop spending on the wants and start saving up for rainy days and spending only on necessities. Depending on the lifestyle you are currently living, thinking of the bigger picture, for your next generation, your family and your loved ones. By cutting down on your expenditure and spendings, you are not being thrifty, but rather, making smarter choices when it comes to money.
#3 | Set aside money for your “investment”
At your own discretion, you may want to tabulate a list of expenses that you are currently financing, your savings, and how much are you bringing home at the moment. Once you have established your personal financials, you should ideally have a surplus amount and not just to make ends meet month to month. Be comfortable and generous with that amount which you have to set aside for a long period of time.
“To suffer first and enjoy later”
Many Singaporeans would have came across this phrase, mentioned by our parents in our early days and this is relatable in just so many ways. A chinese saying where one has to go through hardships before savouring the fruits of labour. Though it is painful to watch your friends own branded goods or go on many vacations all the time, this is a choice you ultimately have to make if you wish to retire smoothly.
Set a comfortable amount aside, and by setting it aside, this amount is not meant for savings, this amount is for your investment. This is where strong self-disciplinary skills comes in, in order to achieve that financial goal you have set for yourself and make sure you are taking steps, working your way towards it. Knowing how much disposable cash you have every month is also an insight that many lack of these days. It is common for people to spend money that is unaccounted for all the time, but if they are dealt with adversities, only those who have made prior plans would survive the ordeal. Be discipline and set aside an amount which you are comfortable with, this will be your investment amount.
#4 | Identify the kind of investment strategy you want in
Above are some investment strategies where you are able to adopt depending on how much you are willing to risks.
“No pain, no gain”
There is no SINGLE investment method that is guaranteed when it comes to investing.
There are just so many financial instruments one can invest in. However, it is especially painful and harmful if you were to start “gambling/investing” in certain investments where you have no knowledge of. Do not step or enter into any investment, especially long-term contractual investments if you have no clue what you are up for. Look for a particular investment strategy that you are comfortable in, proceed to research and read up more about it before getting your head in the game, fully immersing yourself. A general rule of thumb is to factor in your investments with inflation by at least 2%, so any investments that would bring you 5% – 7% or more returns is definitely worth considering.
#5 | Educate yourself and enter the market
Before entering the market, as mentioned earlier on, it makes financial sense to educate yourself about that particular investment strategy before diving head in. This way, you will know about its pros and cons, any pitfalls to look out for, any preventive measures to be taken, how and when to exit to minimize your losses etc. Education crucially important especially when it comes to money.
“Investing without proper knowledge is as good as taking a gamble”
Attend courses, google up that particular investment strategy and there will be tons of FREE online resources that will educate you in starting your investment journey. Make sure to start your investments right, else it will only result in a snowball of disappointments. Online websites such as investopedia, investing.com, Moneysmart, and DollarsandSense provides materials, resources, and information that are completely FREE to utilize. After which, you should diversify your investment portfolio by through various types of instruments which will help counteract the risks and profits overall.
It will definitely be tough in the initial phases, setting money aside, researching, reading up on strategies, but by building a good habit like this, and start investing as early as you can, it will only place you in a better financial situation in future. Upon establishing the above simple steps, will you be able to start investing in Singapore in 2018.
(By Lionel Lau)