Blog Post: A Fresh Graduate's Guide to Saving Money

01 Sep 2017
10 Mins Read

4 Investment Tips to Get You Started

For those keen but nervous to get started, we've some simple tips to help kick-start your investment adventure.

Millennials are like Scrooge McDuck, we hoard our money like our lives depend on it. When every dollar and cent we earn goes to the next vacation or the future home, investing can seem like a very alien concept. When was the last time any of us thought about investing anyway?

A recent survey answered this exact question. As you would expect, Millennials aren't doing very well in terms of investing. Out of a group of 1,000 young people aged between 18 and 30, around two-thirds had not started investing. Common reasons, according to the survey, include everything from a lack of funds ("No money!") to the lack of knowledge ("No idea!").

Here's the thing: If you invest smartly, you're essentially putting your money in the right place and watching it grow. Sounds great, right?

Investing does require some technical know-how. However, Millennials, more than anybody else, should be the ones investing for one simple reason: Time is on their side. And time, as a wise man once said, is money.

Here are some tips to get you started with your first investment:

"Start With What You Know"

You would not dig into a plate of mystery meat if you didn't know its origins, right? Similarly, if you don't yet understand a business, it's wiser not to dive headlong into it. The great thing about investments is that, no matter what you're actually interested in, it is possible to translate that interest into valuable trading information. If you are a tech geek by day, for example, you may already know a handful of tech start-ups, such as Patreon and Carousell, with a lot of potential. By focusing your picks on companies and industries that interest you, you will likely make more informed choices.

"Balance Your Risk"

Investing for the first time is risky, but then so is driving a car or crossing the road. Everything in life involves a certain amount of risk, but the more important point is to take calculated risks. For example, even though traditional savings accounts (where you deposit some money with a bank and earn its interest rate) are considered safe, they also reap lower rates of return in the long run. So instead of putting all your eggs in the same basket, invest in a variety of things. That way, you will increase your chances of seeing significant financial growth.

"Avoid the Herd Mentality"

Just because everybody else is investing in something, does not mean you should jump on the bandwagon. At the end of the day, it's all about doing your homework and knowing the best move for you before following trends. This goes back to point one: if you don't know anything about gold, don't invest in it just because a friend tells you to. And if you are interested, read up on the topic before taking a leap.

"Find Advice You Trust"

Lastly, finding someone who can offer you unbiased advice is incredibly important to get you started. If you have never delved into the world of investing, it is easy to feel overwhelmed. That is why you want someone to guide you through this unchartered yet exciting territory.

1. Have a Look at Your Lifestyle

Let’s get it straight: I would not be even familiar with this topic if I was receiving an investment banker’s monthly income. Unlike those rarefied wolves of Wall Street, I certainly do not have the means to drive Ferraris and splash out on luxury goods. In fact, the only gold and cash vault I have even a chance of seeing is in J.K. Rowling’s fantasy Gringotts.

What it comes down to, then, is really about adjusting lifestyle expectations. When drawing an allowance from my mum and dad’s pockets, I did not yet feel that financial "pinch" I now feel that I am on my own.

Every dollar I earn now is mine so splurging my paycheck on rounds of drinks or on the latest "it" bag or gadget has become more difficult to justify. Instead, I see these expenses as wasteful and perhaps will lead to future financial regret. But I am not suggesting that all fresh grads turn into home-loving recluses and alternate between two ratty T-shirts for the next decade. What I am suggesting is to moderate both lifestyle and social expenses — a key adjustment in attitude towards financial wellbeing.

The message is simple: everything in moderation. For example, have fun, but not in excess; spend, but don’t splurge.

2. Set a Budget

Perspective changes everything. I initially saw my first paycheck as a monthly in-flow of money, which made me more tempted to spend it. And by it, I mean, all of it. The novelty of earning my own money meant that I felt I had to spend all of it on myself. However, this was when I started to rethink my monthly income as a budget I allocate to various sources, before I earn the right to spend on myself.

First things first, pay off the big stuff first. From the moment your salary is credited to your account, identify big-ticket items that take up a sizeable chunk of monthly expenses. For example, if you are debt-ridden with student loans, repay those debts as quickly as you can to avoid compounding interest. If you owe your parents money or have insurance premiums to debit, these too should be paid first, before you plonk down cash on that shared holiday villa in Bali with your pals.

Another important lesson for budgeting: track your expenses. Whether you choose to jot down expenses the old school way, or use apps to track your daily, weekly or monthly expenditure, is irrelevant. What is important is that you don’t spend blindly. Keep an eye on what you buy.

Some apps allow you to keep your grimy, faded receipts in digital perpetuity, too. And trust me, getting into this habit will enable you to identify your material weaknesses — did I really spend $127 on that collector’s edition box-set of DVDs?! — and scrimp on these areas in the future.

3. Start Saving

Once you are in a more comfortable position, and have more or less settled your loans, start thinking about building a "war pantry". In other words: an amount you are comfortable stashing aside every month, for future emergencies or surprise expenses.

While marriage, home ownership, babies, health issues and retirement seem like centuries away, it is important to at least think about the next stages of your life. It may seem convenient to fall back on Central Provident Fund contributions, but do keep in mind that these funds are not liquid for you to freely use — not now, at least.

You can most certainly enjoy your fresh graduate lifestyle today, but budgeting will make life easier rather than harder. And that compound interest we talked about earlier will start to work in your favour the earlier you start saving and investing. Let’s face it, we are adults now, too.


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