Advice for Beginner

[Eternit]

Hi Guys,

I hope it's not too late to begin financial planning and wealth accumulation, but I'm really noob and have close to zero financial knowledge. I will provide as much details on my current situation as possible, and hope the folks here can illuminate me on some general or specific steps to take. Thanks for your guidance:

1) 27 years old male Singaporean, currently single. No siblings.

2) Graduated from NTU, continuing to do Master's at NTU under research scholarship, humanities area. Planning to do Ph.D (funded) overseas and return as lecturer / professor in the future.

3) Research scholarship pays all fees plus 2.5K monthly stipend, including CPF, so take home about 2K. Commence this August, duration about 2 years. Now doing some tuition while waiting for matriculation.

4) No loans, had a mid term scholarship during Undergrad so only had about 7K study loan which was fully cleared by parents. Both parents working, not high earners, their combined income perhaps around 6 to 7K, they are currently paying all bills + house loan.

5) No insurance at all, terminated Aviva SAF GTL after ORD last time felt no use. May wanna re-activate as I hear it's good? My Prudential agent friend asking me to at least get another hospital plan from her as it's essential.

6) Currently have 15K savings in Bank.

7) invested 2K at Moolahsense few weeks ago, I know many would advice against this but what's done is done, hope can get back everything and interest, will not invest there further until I see it work.

8) Opened a CDP securities account last week, not sure what to do with it. I know can either buy stocks through bank (DBS Vickers etc.) or directly through something called POEMS? Unsure which is better and how to go about doing it.

9) Been reading websites and books on financial stuff, quite hard to absorb as I'm humanities trained, too much info and some conflicting ones not sure which to believe.

Base on what I shared, hope you guys can shed some light on general / specific steps to take in order to build wealth and have a financially stable future. I know the crux of it is to save and invest, just unsure what to do and how to start. Thanks for all your incoming advice.

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[Genosis]

Shiny Things' mantra......DCA into STI etf for 30 years

Go live ur life in the mean time...... Retire like a boss!!!

 

[bibu00]

First
Fire your prudential agent.

Second step
http://deluxeforums.hardwarezone.com.sg/money-mind-210/*official*-shiny-things-club-4866757.html

 

[Eternit]

Shiny Things' mantra......DCA into STI etf for 30 years

Go live ur life in the mean time...... Retire like a boss!!!

DCA as in dollar cost averaging? Yes I see this term mentioned multiple times. I'm just not sure how to start, many banks have investment scheme like POSB invest saver and OCBC Blue chips etc that claim to utilize DCA...not sure to go through them or buy directly from POEMS etc...please kindly advice thanks!

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[Eternit]

First
Fire your prudential agent.

Second step
http://deluxeforums.hardwarezone.com.sg/money-mind-210/*official*-shiny-things-club-4866757.html

She my friend and advice me at least get a hospitalization plan, not right?

Of coz she say after that can also get whole life plan as it will accumulate more when you start young, but I say settle hospital plan first lah

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[disavowed]

First, get rid of the notion that your humanities background handicaps your ability to absorb financial knowledge, that's just bs. Next, go to the library and borrow Burton Malkiel's A Random Walk Down Wallstreet. It should provide you with a decent coverage of the workings of the capital markets and give you a broad enough overview for you to decide how you want to go about investing. PS. I'm from engineering in NTU

 

[akwl88]

She my friend and advice me at least get a hospitalization plan, not right?

Of coz she say after that can also get whole life plan as it will accumulate more when you start young, but I say settle hospital plan first lah

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get hosp and term plan covering death, tpd and ci till whatever age you are happy with

1) Earn more
2) Spend less
3) Invest the rest

 

[Azalea]

Maybe U can try forex , shares are at all time high..


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[xersion]

Maybe U can try forex , shares are at all time high..


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Heaven learn to walk u ask him to fly

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[Eternit]

Maybe U can try forex , shares are at all time high..


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No lah I wana learn about stocks first.

Guys you think OCBC Young Investor Program a good place to start? Thanks!

 

[wahkao3]

First, get rid of the notion that your humanities background handicaps your ability to absorb financial knowledge, that's just bs. Next, go to the library and borrow Burton Malkiel's A Random Walk Down Wallstreet. It should provide you with a decent coverage of the workings of the capital markets and give you a broad enough overview for you to decide how you want to go about investing. PS. I'm from engineering in NTU

i ish also chao engineer

 

[wahkao3]

anyway u my advice for newbies is to attend a seminar and power charge your knowledge in 5 days

but dont just attend any seminar. some seminar are bad. so you have to attend a good one

 

[Darkzi0n]

For a start, get H&S and term plan. They are only no use for immortals and billionaires. If u r neither, u need them.

And to get urself started, u need to plough into it... i know so many ppl who wanted to start investing, but after months (years for some), they still havnt done anything...

 

[Optionstrader]

Dca is quite a good strategy can also be applied on options u can start with investopedia

http://m.youtube.com/watch?v=CfKivhollZc

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[Optionstrader]

Watch the video on lily and doris

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[nydeidith]

to invest you must have the interest...if dont have interest suggest dont waste time....just find someone experienced to teach you how to buy etf and bonds...simple and give you decent returns over time....another way is just save up in cash....wait for stock market to crash...then you go in close your eyes buy some blue chip dvidend stocks...like banks and telcos....hard to lose...

 

[jysw1986]

Alright guys, please give him a break.
Don't jump on all guns at him with forex, options, go for seminars but choose good one and etc, abit too much to absorb as he mentioned earlier he has zero knowledge.

Well, you've come to the right place. I would suggest you to read up more too.
there are several websites / blogs that you may or may not want to check them out. Don't think i can send any here as it may turn out as advertising so i better not. You can look at *Official* Shiny Things club in here as well. I learn a lot from all the information in there and the replies from everyone too. You need to discern for yourself which you think is right and suitable for you.

1. Get yourself insured (insurance) - hospitalisation and surgery plan, personal accident plan, term plan. Early CI, disability income can come later if you think you can afford or want them in future, but for now at least you cover the basics. Avoid endowment and investment linked plan. Keep your investment and insurance separate.

2. Keep at least 6 months expenses as emergency fund in case anything happens. You may never know when you would need such money. Probably for your case you may think that you're all well funded by scholarship, however, you may never know when you might need extra few k cash for any emergency situations.

3. For investment, you must first figure out how much you think you want to save a month. Example, if you think $500 a month is a doable sum, then look for the cheaper option for STI etf and abf bond combo. You are still young, and it is good to set aside some money and do DCA for a long term period. You can consider 110 - (your age) for the % between stocks and bonds. Example, you're 27, you can look at 83% STI etf and 17% abf bond. But oh well, you don't have to be too tight on the %. Just a rough estimation.

4. Once you have a figure to work with each month, open a posb invest saver or ocbc or poems. You decide how much you want to DCA a month, and make the comparison between which is the cheapest and best option for you. Always the lower the cost the better it is.

5. Read up more and learn more as you go along the way. You can look to diversify globally, but first, take the small step and make use of the time to let the compound interest work its magic.

Have fun and just enjoy the process of learning. Good luck and hope you find some guidance through some of the threads in here. There are many good advise in the forum. Take ur time to read and learn and make the best choice for yourself. Cheers

 

[Shiny Things]

Hi Guys,

I hope it's not too late to begin financial planning and wealth accumulation, but I'm really noob and have close to zero financial knowledge.

Hey, we were all noobs once, and it's never too late to start (27 is perfectly fine). Let's see if we can't sort you out.

6) Currently have 15K savings in Bank.

That's great; this is step 1. That's gonna become your emergency fund; it's the fund you tap for any unexpected expenses.

9) Been reading websites and books on financial stuff, quite hard to absorb as I'm humanities trained, too much info and some conflicting ones not sure which to believe.

Step 2 is basically "save as much as you can for as long as you can". That's the simplest, easiest way to make sure you've got enough money to retire with. I know 27 seems like it's a bit early to be thinking about retirement, but it's better to start early than to wait until your 40s and then be all "oh no I don't have enough money I'll never be able to retire".

There's no real trick to investing. The short answer is "keep it simple"; anything too complicated to understand is too complicated to invest in. In that vein...

7) invested 2K at Moolahsense few weeks ago, I know many would advice against this but what's done is done, hope can get back everything and interest, will not invest there further until I see it work.

8) Opened a CDP securities account last week, not sure what to do with it. I know can either buy stocks through bank (DBS Vickers etc.) or directly through something called POEMS? Unsure which is better and how to go about doing it.

So here's how investing in stocks works.

You open your CDP account; you go to the broker (DBS Vickers and POEMS are both brokers); you tell them "I want to buy 100 shares of Amalgamated Widgets at no more than $5 per share"; the broker buys the 100 shares on your behalf, and sticks them in your CDP account. It's dead simple.

The problem is, if Amalgamated Widgets goes bust, then you've lost your $500.

What you can do instead of piling it all into one stock is buy an "exchange-traded fund". It sounds complex, but an exchange-traded fund (aka an "ETF") is just a fund, listed on the stock exchange, that owns a huge pile of stocks.

The best one to start off with is an index fund that tracks the Straits Times Index. By buying that, you get to own a stake in all 30 companies in the STI, all at once. That's the sort of thing you can buy and sit on for thirty or forty years, because the STI isn't going to go bust.

The cheapest way to buy an STI index fund is through POSB's Invest-Saver account: it lets you buy shares in an STI index fund with no minimum brokerage fee. (All other brokers, as far as I know, charge you a $10 or $20 or $28 minimum brokerage fee, and if you're only investing a few hundred dollars, the brokerage fees are going to incinerate your money.) The other nice thing about Invest-Saver is that POSB holds onto the shares for you; you don't actually need the hassle of checking a separate CDP account to see how much you own.

Anyway.

Once you're ready to flip the switch to "investing", go to POSB, open up an Invest-Saver account, and set it up for automatic investments every month. Start by buying the STI Index Fund that they offer. And then sit on it.

(Once you get beyond that, then you can add bonds to the mix as well - basically, bonds are more boring, so you'll make less money off them, but they throw off interest as well, which is nice. And you don't have to leave POSB to do it. But start by buying the STI index fund, and get yourself comfortable with regularly investing every month or so.)

Let us know how you go!