How to Get Started as a Young Investor

Entering the workforce can be an exciting turning point for all of us. If you are only in your 20s, you might be comfortable with simply directing your pay toward settling daily expenses or setting aside the surplus and park it in a bank account.

However, you might soon realise that the above approach will not help you to grow the wealth that you have accumulated. Looking at a longer term perspective, starting early as a young investor can aid you in achieving financial freedom at an earlier stage, enabling you to focus on the things that matter (e.g. starting a business, spending time with family, raising kids etc.). Investing should be regarded as a tool to ease you in reaching the financial objectives that you have in mind, according to your personal timeline.

Investing young can realistically help you to get ahead. Let us help to answer some of the investment-related questions we frequently receive from young investors.


Do I need large sums of money to start?

Contrary to popular belief, investing can be started with a relatively small capital. Investing need not be a costly endeavour and you should not be disheartened if you plan on investing with a budget of a few thousand, or even hundred dollars.

Micro-investing is one method that is helping to transform the notion that large sums of money are a prerequisite to investing. Exploring apps such as Smartly can help to easily kick off your investment journey by starting small. These systems typically make investments on your behalf and mostly do not require a high starting balance, offering an accessible gateway for anyone looking to explore investing.

Saving on a regular basis might also be a habit familiar to some, but cutting down on discretionary spending often might not present itself as an easy task. Savings accounts such as the DBS Multiplier or OCBC 360 Accounts might help you in this aspect. Money can easily be parked in these accounts in order to enjoy an annual interest payback, it is essentially a modern alternative to keeping a piggy bank.


How do I decide what to invest in?

Keeping a long-term view of your life plans can help you to channel funds toward the investment instruments that are suited for the returns that you need and expect. Having simple and clear goals to work toward can help you as you build experience in investing. Planning for retirement might for instance give you a longer timeframe to work around your investments as compared to planning for your kids’ education where you might have to cash out your returns in the near future.

With this in mind, you also need to decide how much you want to allocate to investing and the risk that you are willing to bear.

Placing money in mutual funds or exchange-traded funds, especially those with low initial investment thresholds, might be a good option for new investors. For a beginner investor, choosing the right index funds entails the ability to purchase them on a low budget, offering benefits of diversifying an investment portfolio and being able to relinquish the responsibility of actively managing them.

Depending on how much you have to allocate for regular expenses or to pay off a debt, it is good practice to set aside a fixed percentage of your monthly income to channel into investing. This form of regularity can help to set your investment plan into action. Essentially, it is imperative that you have a clear idea of where your money is going. Keep track of your expenses and be disciplined in where you channel your surpluses.


Can I start with little investment knowledge?

Understanding financial markets and complicated investment jargon will certainly help, but as a young working adult it might be tough to find the time to every detail related to investment. Nonetheless, jumping on the investment bandwagon with little knowledge of the technicalities and procedures behind it sounds a little like a recipe for trouble.

The Internet/Google is often the go-to platform for answers. Investment-focused sites or blogs such as Investopedia or Motley Fool offer a wealth of information pertaining to all aspects of investing. Attending investment courses might be a comfortable next step for you. Seminars organised by the SGX Academy or companies such as DrWealth are easily accessible, and offer an avenue for you to learn from experienced investors.

It is important that you align your investment blueprint with the amount of time you can allocate to monitoring your investments. Investment products such as stocks or cryptocurrencies will demand more of your time and patience when compared to mutual funds or bonds. Each product will have its own pros and cons depending on your investment aims. Needless to say, comprehensive research will be the easiest tool to help you ascertain which form of investing is most appropriate to your schedule and projected goals.


I’m ready to start, now what?

While reading up online and attending seminars are instrumental ways to get you started, nothing can be more valuable than sitting down with an experienced financial advisor who is equipped to offer you customised advice.

Do not let the eagerness of starting compel you to dive headfirst into the investing world. Maintain a clear view of the returns that you envisage to achieve and keep your temperament in check while working towards them.

Investing is for the long haul. So do not be discouraged if the market is volatile or you are not seeing any good returns in the short run. Keep your eye over the horizon and always consider the potential returns on the product or platform you have invested in. Starting early in the game will give you the space and opportunities to learn and improve your returns. If you would like to find out more details about getting started with investing or you are looking out for a financial advisor to help with structuring your investments, do write in to us and our team will get in touch with you shortly!


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