Investments might be daunting but if you start on a right track and commit to growing your wealth, it will be a rewarding journey. It is part of developing a good financial habit. I started my investment journey recently and I would like to share 3 tips to start off. Although these tips might sound cliche, but I hope my approach to them will inspire you to take your first step in investments with me.
1. Commit to “study” 5 articles per day on investments
Reading is the best way to gain knowledge, but a lot of people are too ambitious from the beginning and aimed to read investment books, researching on stock markets and reading those complicated charts that does not make sense to a beginner. Don’t be too ambitious, start off with reading a few good articles that are easy to digest. Here are some articles which I have started off:
I love to read Seedly, Dollars and Sense and Moneysmart. Seedly community is also a good platform too. When you first started reading these articles, certain terms might not make sense to you, but go ahead and continue clicking on those recommended articles to read after the first one. Google’s algorithm is fantastic in such a way that they will show you recommended readings on Facebook or on the internet once you started reading on a specific niche topic, e.g. ETFs or REITS investments. Save and bookmark articles that you have read which provides valuable insights to you, and go back to read it again after a few days. The more you read, the more familiar you are with the concepts and each time you go back to the article to read, you are essentially “studying” it and breaking down the concepts. I started off with reading the articles on Boglehead’s three-funded portfolio and didn’t understand it initially, but I went ahead to read up on different investment terms and strategies, and when I went back to the Boglehead’s three-funded portfolio, I had a much clearer picture which enables me to develop my own investment strategy and create my portfolio. Take investments like a subject to study and commit to doing readings per day. If you lack the habit to develop a daily routine, set time for a full Saturday afternoon to read instead.
2. Start a small investment first instead of a lump sum investment
While investing, I hold by 2 theories:
1. Don’t learn to walk when you haven’t even learnt how to crawl
2. Don’t put all your eggs into one basket
Just because you might have accumulated a lot of savings and have a whole lump sum ready to invest, don’t just buy a bunch of stocks or shares off the market, even if you have read up tons of books and articles and have the confidence. People usually learnt best after making mistakes and for investments, these mistakes will be costly. Hence, start something small per month on a regular basis first, and slowly gain the confidence before making big purchase decisions.
In fact, when I started investing for the first month, I only put in a measly $100 into a fund. Only when I read up more and feel more confident about investments, I started to top up the investments from $100 to $300, and then slowly to $500 per month in other funds too. I aimed to invest at least $2-3k per month based on my current financial situation, but I’m taking this progress slowly over the course of a few months instead.
Likewise, as you read up more, you might discover certain opportunities in some funds or bonds, and that is when you can diversify your investments too. Don’t be too hasty to buy in big purchases. Calculate in proportion for each spends and keep to within a percentage, e.g. 10%. This reduces risks as well.
3. Let your friends and peers know that you are investing. Talk to them.
It is funny how I didn’t know that some of my friends have been doing passive investing for a few years. Investment is hardly a topic that people will make the effort to talk about on a daily basis compared to topics like bubbletea stores re-opening after lockdown and the latest general election speeches by the Worker’s Party. Let your friends know that you are investing now, share your thoughts, ask questions. You learn more when you start talking about it with your friends, because they have their own portfolios, their own strategies and their experiences. Draw onto their knowledge and make a decision too. For me, when I first started out, I raised this topic with 3 of my friends. Each gave me different insights to how they are investing and their opinions. 1 told me she bought shares from her company because she is from a financial industry, that’s how she started her investment journey. Another friend is a conservative passive investor hence only bought bonds and ETFs. The last friend only believes in buying stocks of companies he has researched on because he didn’t like how ETFs are fixed percentages and he has no control over deciding the proportion. (At this point, you can save my article and come back to read again after gaining some investment knowledge) So it really depends on individual preferences to build your portfolio. You can read this information in articles, but articles tend to be sponsored or written with an intent to persuade you to take a stand. First-hand personal experiences will allow you to retain information better and learn faster too.
4. Sign up and attend for free webinars online
Don’t be afraid to sign up for these webinars. It is free information for all and there are no investments needed, except for your time. Webinars are usually conducted by investment platforms and the ultimate goal for them to convince you to join them on board your investment journey. It is always good to learn how these platforms work anyway, as long as you understand how each platform works and their methodology for investments in the market. Webinars are just another way to gain information but they take a step further to introduce a product or a service to you. Understand each webinar’s main intention will allow you to make better judgment calls yet gaining some insights to the investment world. I never knew how much tips and tricks there are to passive investments until I started attending these webinars. Syfe and Stashaway are two of the Robo-advisors in Singapore that are quite popular and they have been conducting these free webinars. You can try them out for a start.
I hope these tips have been useful for you to start your investment journey in Singapore and do share your portfolios or your thoughts on investments with me too!