Sure, most of us know that we should save, but investment feels like a whole different can of worms. So what most of us end up doing is avoiding it, with the excuse that we're too young, or we don't have enough money after savings, or more often than not, that we just don't know how to invest. 60 women in their 20s and 30s shared with us what they wanted to know about managing investments, and we called in the experts to get their answers.
Get an independent financial adviser
A financial adviser from a bank is likely to recommend you investment products that are already on their shelves, and this could end up limiting your options.
“Independent financial advisers tend to focus on holistic financial planning, and may have a wider selection of products from various investment companies that could be mixed and matched to suit your needs,” says Gina Heng, CEO and co-founder of private investment firm Marvelstone Group.
Still, you have to own it and know what you want from your financial planner. Pick someone whose compensation model aligns with your financial goals. A planner whose income is strongly commission-based might have incentive to steer you in a particular direction.
“Choose a financial planner you are comfortable with – someone you can open up to with regard to your financial situation, needs and goals,” says Gina. “Ask yourself what kind of support you need in planning your finances, and how much independence you want in managing your wealth.”
Only invest money you don’t need right now
Burn this into your memory: No investment is entirely risk-free, and timing is everything. So don’t count on making the most of your investments if you pull the cash out to channel it to more urgent needs. Gina’s got a great analogy for it. “Imagine if the sweetest apples are only ready to be harvested in October each year, but you decide to pick them in August. The apples you get would be considerably fewer and less tasty, compared with if you had waited a while more.”
Invest – because stashing your cash does little for you
Put money in the bank and you’ll generate a regular interest on that amount. But in certain cases, that interest is less than the current inflation rate. So the worth of your savings is going to depreciate in the long run, says Gina.
Invest your cash instead – wisely. If you’re new to the game, go for a fixed deposit account at a bank. It’s one of the most reliable ways to invest – especially if you’ve got a large sum of cash just lying around. The longer you leave that money in the account, the higher your returns.
If you’re not into that kind of commitment, get a short-term fixed deposit – which gives you greater liquidity. “There’s a bit of leeway to backtrack in case you decide you don’t want to invest further, don’t want to lose money, or have money tied up in other products for fixed periods of time,” says Gina. “They are relatively low risk, and can mature in as short a time as a month.”
Another investment tool that’s likely to give you decent returns? Government bonds. The Singapore Savings Bonds, for example, are a lowrisk option to add to your investment portfolio, she says.
A “balanced portfolio” is a real thing – promise
What experts really mean when they bandy about the term “balanced”, is that you shouldn’t put all your eggs in one basket.
“Instead of storing all your investments in just one or two stocks, spread them across different stocks, industries and products in case any one of them does not perform as well at a given time,” says Gina.
Go for exchange-traded funds (ETFs) – which are made up of a basket of securities like stocks, commodities and bonds. Investing in an ETF means the returns you get are a weighted average across different types of asset classes, industries and even geographical regions.”
Anna Haotanto’s (CEO of The New Savvy) take is that if you have a lump sum, a diverse portfolio would mean first investing in health-care insurance. Then, channel the rest towards an ETF – for example, The Straits Times Index (STI), which comprises 30 of the best companies in Singapore, and is an easy way for new investors to participate.
Investing is always a gamble, but it also helps if you’ve an eye for key industry trends. Skip investing in cyclical industries like the automotive sector – these are sensitive to the economy’s ups and downs. Water and electricity companies (known as defensive industries) tend to be safer portfolio fixtures, adds Anna. “During a recession, defensive industries do better than other industries. When central banks lower interest rates to encourage spending, defensive stocks continue to pay high dividends.”
Invest in a second property, but only if you can afford it
The key word here is “afford”. That means being able to sustain the monthly mortgage and quarterly maintenance fees for at least six to 12 months – in case you don’t manage to attract a tenant. Steer clear of major errors by getting in-principle approval for your mortgage before you visit the showflat. It’ll tell you where you stand when it comes to how much you can borrow, says Rhonda Wong, CEO of online property platform Ohmyhome. “It will also help you avoid situations where you act on impulse during heated balloting moments.”
Once you’re in the clear, make sure you purchase the right property for the location. For example, don’t buy a three-bedroom apartment in the Central Business District, adds Rhonda. “There are more single or coupled-up expats working in the CBD, so it makes sense to purchase a one- or two-bedroom unit instead.”
Anna Haotanto, CEO, The New Savvy, and director, Tera Capital
Gina Heng, CEO and co-founder, Marvelstone Group
Rhonda Wong, CEO and co-founder, Ohmyhome
This article was first published in the June 2017 issue of Her World magazine.