Your first foray into financial planning and investing can be extremely daunting. With a multitude of strategies and platforms to use, it can feel overwhelming and confusing as to where you should start. You might even be wondering whether you’ll need to make some lifestyle changes to accommodate your new financial goals.
Here, we will break down the fundamentals and provide a step-by-step guide on how to get started on investing.
How To Get Started In Investing
1. Set Up An Emergency Fund
The very first step of everyone’s personal finance journey should be setting up an emergency fund. An emergency fund is a cash reserve that is set up specifically for any unplanned expenses or financial emergencies. These include unexpected medical bills, car repairs and even loss of income.
Saving S$1,000 is a good amount for a starter emergency fund. Once you are in a more comfortable financial position, you should aim to increase your emergency fund to at least three to six months’ worth of expenses.
This would give you a comfortable buffer in the event that you need cash quickly and prevent you from going into debt to finance an emergency.
Read Also: 5 Reasons You Must Have an Emergency Fund
2. Pay Off Your Debt
Most of us in our adult lives are in varying degrees of debt. We could have student loans, credit card loans or even a mortgage. While this is normal, debt accrues interest over time, which means that the longer you take to pay off your debt, the more money you will owe on top of the principal borrowed amount.
Your priority should be to pay off your debt as quickly as possible, especially for high-interest debts like credit card debts that charge an average interest rate of 25%, compounded on a daily basis.
It is very unlikely that an investment you make will garner this level of returns. Hence, the best action you can take if you have any spare cash is to put it towards paying off your debt, starting with the ones with the highest interest rate.
3. Create An Investment Strategy
Once you have tackled your debt, it is now time to think about making your money work better for you in the long run. You are now in a position to invest your extra money.
There are two major investment strategies — lump-sum investing and dollar-cost averaging (DCA). Lump-sum investing is when you take a large sum of money, such as a few thousand dollars, and use it to buy a stock or asset at one go. DCA is when you invest equal amounts of money into a stock or asset at set intervals, regardless of market fluctuations.
There are a few things to consider when deciding which approach works best for you. Firstly, consider your current financial situation. What are your current monthly expenses and how much cash can you put aside, both initially and on an ongoing basis? What financial goals are you working towards?
Having a clear understanding of your current financial situation will enable you to make a plan that is both achievable and generates good returns on your investment.
There are pros and cons to each approach. Lump-sum investing historically has had greater returns in the long run as compared to DCA, regardless of asset allocation.
However, a major drawback to lump-sum investing is that you require a large amount of capital. If you are just starting out on your investment journey, you may not have a few thousand dollars to place into the market.
If that is the case, DCA may be a more appropriate strategy for you. DCA creates a more disciplined approach to investing as you create the habit of putting aside money every month towards your financial goals. It is also less risky than lump-sum investing as you do not have to consider timing your entrance into the market to make the best returns.
4. Pick An Investment Platform
Now that you have decided what your investing approach will be, it's important to figure out what type of investment platform will best suit your needs.
If you have decided to take a lump-sum investing approach, a regular brokerage with low transaction fees could be a good option for you.
However, if you do not have the capital, or the amount of money you’re left with changes every month, a more flexible investment approach might be more suitable for you.
How SNACK by Income Can Help You Get Started
SNACK by Income is a lifestyle app that allows you to buy micro-insurance and micro-investment policies without having to compromise on your lifestyle activities. With SNACK, you are able to buy insurance coverage (personal accident, critical illness and term life) from as little as 30 cents and invest from as little as $1.
SNACK Investment is a single-premium micro investment-linked plan (ILP) that combines investment and protection with a protection benefit of up to a sum of $200,000.
How It Works
The concept behind SNACK is that you are able to stack up your investments or insurance coverage by linking your lifestyle activities to trigger a purchase of a micro-premium.
There are currently eight types of lifestyle triggers. Each time you complete a predetermined lifestyle activity such as exercising or taking public transport, a small payment would be triggered to purchase your chosen policy.
For example, one of SNACK’s current industry partners is EZ-Link. If you opt for the investment plan and choose transport as a lifestyle trigger, you can link your EZ-Link card to your SNACK account.
Now, every time you use your EZ-link card when you take public transport, a S$1, S$2 or more (up to S$500) premium would be automatically charged and put towards a micro investment-linked plan that invests in a fund on your behalf.
With the amount of rides you take per month, the small (and painless) injections of money will roll to a significant amount in time.
You will also receive accidental death coverage before the age of 75, be entitled to 105% of the net premium, up to S$200,000 or the cash-in value at the time of claim and will be covered for 360 days.
SNACK uses an approach that is in line with DCA. You are able to purchase small amounts of premiums multiple times a day. These premiums would be used to buy units of a pre-selected sub-fund at the start of every week, allowing your investment portfolio to grow over time.
You are even able to earn a non-guaranteed distribution from the sub-fund which can be reinvested back into your investment portfolio.
By automating your investing, you eliminate the brain power that is otherwise required to pick investments and allow your investments to grow in the background without you even realising it.
Furthermore, as SNACK is triggered by lifestyle activities, you would not have to give up your current lifestyle in order to invest or even build up your insurance coverage.
Instead, the more lifestyle activities you engage in, the greater your coverage and investment will grow.
In other words, it is extremely well suited for individuals looking to start their investment journey but who do not want to compromise on their current lifestyle choices.
SNACK is more than just a standard investment or insurance platform. They have successfully made investing fun by integrating different monthly challenges that give you bonus investment credits.
For example, if you issue S$50 worth of SNACK policies, you will be rewarded with a bonus of S$5 investment credits.
SNACK is also currently running a feature where if you turn on the auto-invest feature and set your weekly cap to a minimum of S$25, you are able to redeem daily bonuses of up to S$200 investment credits.
This gamification of investing makes striving towards stacking your policies even more gratifying. Not only will you turn your day-to-day lifestyle activities into investment activities, you are also able to maximise your returns through a slew of challenges to be completed.
Download SNACK by Income Today!
Take advantage of SNACK's current promotions and get started on your investment journey today. Simply download the SNACK by Income app onto any iOS or Android device.
SNACK is now offering an investment promotion for ValueChampion readers. It includes S$80 worth of investment credits when you sign up with ValueChampion’s referral code ‘VC80’ and start SNACK Investment. You can also head over to the “HOME” tab on the SNACK app to check out other exciting promotions and bonuses!
Find out more here for a detailed step by step guide to start your SNACK Investment.
S$80 Investment Welcome Gift T&Cs: income.sg/si-vc80
Investments are subject to investment risks including the possible loss of the principal amount invested. Past performance, as well as the prediction, projection or forecast on the economy, securities markets or the economic trends of the markets are not necessarily indicative of the future or likely performance of the ILP sub-fund. The performance of the ILP sub-fund is not guaranteed and the value of the units in the ILP sub-fund and the income accruing to the units, if any, may fall or rise. A product summary and product highlights sheet(s) relating to the ILP sub-fund are available online at www.income.com.sg/funds. A potential investor should read the product summary and product highlights sheet(s) before deciding whether to subscribe for units in the ILP sub-fund.
All opinions expressed in this article are solely those of Value Champion and do not reflect the opinions of Income Insurance Limited (“Income”). Income is not responsible nor liable to any party in any manner whatsoever for such opinions, and Value Champion is solely responsible for any opinion and the accuracy and completeness of any information and intellectual property used in this article. The information contained in this article pertaining to any insurance product or plan is provided and meant for general information only and does not constitute an offer, recommendation, solicitation or advice by Income or Value Champion to buy or sell any product(s), plan(s) or investment product(s). It is not and should not be relied on as financial advice and has no regard for any person’s investment and financial needs. If you are unsure whether this product or plan is suitable for you, you may seek personalised financial advice from a qualified insurance advisor. Otherwise, you may end up buying a product or plan that does not meet your expectations or needs. As a result, you may not be able to afford the premiums or get the insurance protection you want. Precise terms, conditions and exclusions of the product are found in the policy contract.
For customised advice to suit your specific needs, consult an Income insurance advisor. Protected up to specified limits by SDIC (applicable for Income products that fall under the Policy Owners’ Protection Scheme). This advertisement has not been reviewed by the Monetary Authority of Singapore.
Information is correct as of 1 December 2022.