Karen Tang, a certified financial planner and senior wealth management consultant at Infinity Financial Advisory, has this advice:
Learn before investing
Learn about the different types of investments, such as stocks, bonds and ETFs by reading books, attending webinars, or follow reputable financial blogs and YouTube channels.
Start with a small investment budget
Treat investing as a fixed expense, like a utility bill, and prioritise it in your budget.
Start small and learn as you go. You could begin investing with as little as S$50 or S$100 per month. Even modest contributions can grow significantly over time through the power of compounding. Plus, any mistakes will be more manageable and provide valuable lessons.
This approach also allows you to take advantage of dollar-cost averaging – investing a fixed amount regularly, regardless of market conditions. This strategy helps you avoid the stress of timing the market and averages out costs over time, reducing risk.
Diversify your investments
Spread your investments across asset classes such as stocks, bonds, real estate or funds to reduce risk. Diversification ensures that losses in one area are balanced by gains in another.
Invest for the long term
Choose investments with long-term growth potential to maximise returns through compounding. Avoid frequent trading, which can incur high fees and lead to emotional decision-making, such as selling whenever stock prices drop.
Review investments regularly
Monitor your investments regularly to understand how they are performing. Tracking helps build familiarity with the process and boosts confidence. You could also benefit from periodically assessing your portfolio to ensure it aligns with your goals and risk tolerance.
