3 Investing Tips for Millennials: Start Investing Early, Aggressively and Independently

With the growing uncertainty in the job market, there is no better time than now to learn how to invest so as to give yourself additional streams of income that are not solely dependent on your day job.


With totally relying on employment income becoming a shaky reality, an increasing number of people are looking for alternative sources of passive income.

Millennials are no exception, as the recent waves of layoffs have greatly affected this group of people. The number of people who were retrenched in Singapore in 2023 was more than double that of 2022. It’s no wonder why young Singaporeans with increasing financial responsibilities are very interested in finding ways to earn a passive income outside of the traditional career path.

In this article, we provide a few key points for adventurous young adults who want to try their hand at investing to supplement their income.

Number of people retrenched in Singapore
Source: Ministry of Manpower

Related: How Freelancers In Singapore Can Save For Retirement

Start Early, Even If It’s Small

First rule of investing is that time is one of the best friends you can have in generating returns. This is because of compounding returns. Compound interest allows your returns on investment to be reinvested and earn even more returns, which can lead to exponential gains over a long period of time.

For example, we compare two people who who invested $10,000 with no additional investments and earned a 10% return every year. The only difference between the two people, however, is that Person 1 began investing at age 20 and Person 2 began at age 30. By age 65, Person 1 would have more than double what Person 2 has thanks to the ten extra years. It’s like what Warren Buffett said: the best thing you can do for your retirement savings is to start investing early.

compound interest over time

Therefore, millennials should start investing as early as possible, even if it’s a small amount. Starting with a small amount can help you learn more about investing through first hand experiences. A great upside to starting small is that you will be less at the mercy of the markets so you would not be financially ruined in the off chance you make a bad investment. Most importantly, you will benefit from the long time frame over which you can compound your wealth.

This point is especially important given the lack of capital gains tax in Singapore. Unlike your normal income, the gains you get from investing is not taxable in Singapore. Therefore, you can trade all you want and benefit from each and every dollar you earn on your stocks, options and bonds.

Related: How to Become Successful and Rich? Take Measured, Asymmetric Risks

investing on phone and laptop
Source: Unsplash

Invest Aggressively

Contrary to the common belief that investing conservatively is the best way to increase wealth, we actually believe young investors should be investing aggressively. This means that they should be exploring international markets to find great investments, and also be employing leverage to aggressively boost their returns. This second concept may be controversial advice, but it is worth expanding on.

Two scholars at Yale published a study that concluded “by employing leverage to gain more exposure to stocks when young, individuals can achieve better diversification across time.” Essentially, what they mean is that, because most people usually only have a lot of money invested when they are old, they are actually heavily underinvested when they are young and have the longest investment time horizon. It could actually be worth borrowing to invest in stocks when you are young and only have a few thousand dollars to spare to increase your exposure to the market.

There are a few ways that a millennial investor in Singapore can achieve this — options and CFDs. Both offer ways for investors to make more than they otherwise would from a pure stock play, though they also come with some possible downsides. It is important to note that as both products are sophisticated financial derivatives, it’s best to do thorough research into how each product works before you try your hand at trading them. If you are interested in how to use leverage smartly, you can read our guide here.

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Don’t Rely On Traditional Financial Advisors

A cardinal rule of investing is that you should always only buy what you know. This means you have to understand what an investment is truly worth. Instead of asking questions like “Will Meta stock go up in the next month or so?,” you should be asking questions like “How does Meta make money,” “How defensible is its income stream if a competitor tries to take away its market share?” and “What should Meta ultimately be worth in the long run?”

It is imperative you deep dive the stocks, ETFs and bonds that you are purchasing, and make calculated decisions to purchase based on a sound logic around what you are paying, how much you can earn if you are right, and how much you can lose if you are wrong. Doing your own due diligence is the only way to ensure that you have true conviction in your investment picks.

Of course, this can pose a rather steep learning curve for most people, but it’s one well worth climbing. Many investors may be tempted to blindly follow recommendations offered by traditional financial advisors under the impression that they are the experts and know better than you. However, this is usually not a good idea.

Financial advisors make money by selling you things, not by helping you make money. They also tend to come with a rather high commission rate. Instead, novice investors who aren’t comfortable with picking their own stocks just yet and opt to invest in broad market indexes. While this is contradictory to our previous advice of investing aggressively, is still a better bet to invest independently as it will help cut out all the commissions and fees that will eat into your profits.

Related: Investing 101: A Basic Guide to Stocks

Parting Thoughts

At the end of the day, the goal of investing is to make money. And to do so, the most important thing to do is pick the right investments. Therefore, it is always a good idea to start making the effort to learn how to invest well when you still have a lot of time left. Starting early is an efficient way of providing both an opportunity learn through small mistakes and a chance to let time create wealth for you.

Ready to start your investing journey? Check out our results page of all the best online brokerages in Singapore to find the right platform to get your started.

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Cover image source: Pexels

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