It was 2013. When I was fresh out of JC and entered NS. One of the benefit of NS was not needing to spend much as most of the time would be spend in camp. This led to me being able to accumulate quite a small sum of cash.
Having learnt Economics, this sum of money sitting idling in the bank would not win inflation. Began researching online and realised that we should invest in stocks. This was just the beginning of my investing journey. As I researched more I became more aware of the various stocks / investment / insurance instruments to the consumers. Being a young 18 year old I was definitely confused by the variety of ways to invest! The last thing I wanted to do was to invest my allowance into some stocks and end up with nothing in the end.
It was one fine day when I came about a rather thin book (compared to the other financial books available); Millionaire Teacher. It mentions about being a millionaire on a teacher salary, the author focuses on investing in low cost index funds. Emphasising that we should build a portfolio of diversified, low cost index funds for the long term.
In Singapore, the index funds available are ES3 and G3B. Having an small initial amount to invest in these would not be cost efficient as the commission rates would be huge. Good thing was POSB had POSB Invest Saver which allows us to invest as low as $100 into the STI ETF and it charges a flat rate of 1% in total. The young 18 then, began putting monthly contributions to this and reinvested whatever dividends was given out. I have been investing in this counter for the past 4 years and would say that the results really paid off. The magic of compound interest began to do its work and it was a good first investment for me compared to putting those money into investment funds managed by insurance companies (would blog about this next time).
That being said, I also bought into company with good prospects of growth. Dollar Cost Averaging (DCA) into OCBC through OCBC Blue Chip Investment Plan (BCIP) and recently sold off at an all time high.
For those young people who are lost into what to invest, investing into index like what I did could be one of your choices. Not needing to pay high fees to salesman, brokers, maintain a monthly investment no matter how small you can commit, and hold it long term term (preferably at least 5 years). If you are into fast cash, then index investing would definitely not be for you. Like Warren Buffet mentioned, index investing would beat 80 – 90% of all professional investors.
Short Term Goals:
Recently, cashed out on most of my investment with POSB and OCBC DCA plans. With the capital on hand, the plan is to build a long term, diversified low cost index funds coupled with stocks that pays out stable and good dividends.
By Age 25: 100k in assets (~60% in progress)
By Age 28: 250k in assets