Getting started

How much to invest? $10,000? $50,000? $100,000? This is a common question asked by investors, but is also an arbitary number as it all depends on how much you have and your current obligations at the moment. Before we jump into what we will invest in, it is important to highlight that we should only be investing money that we can afford to lose (i.e. we will not need this money for the next 3-10 years).

If you are looking to buy a house next year, we personally do not recommend you to invest due to the volatility of the stock market. Last 2 years was a great example, with the stock market dropping briefly to a bear market with the outbreak of COVID-19, and the strong rebound to an all time high with the release of the unprecendented stimulus around the world. Not forgetting the regulatory clampdown across sectors by the Chinese government over the last year.

It is also commonly advised that we should have 6 months of expenses set aside for a rainy day, before we consider investing. For that 6 months of rainy day savings, there are many places you can keep it in – such as the recently issued SINGA Bonds (by the government to finance major long term infrastructures, and is listed on SGX- more on it here) and Singapore Savings Bond (which can also be redeemed anytime- more on it here) 

Knowing how much you can afford to lose (reality and mentally)

While you may have set aside the above amount as money ready to be invested (or lost in theory), most of us in reality (and mentally) are not ready to lose it all. How do we then determine what is the ultimate amount of loss we are willing to accept before we throw in the towel?

A useful way to gauge will be: if the general stock market or your portfolio were to suddenly drop 50%, how much money will cause you to lose your sleep at night? (That will probably be your threshold- no amount of money is worth it to lose your beauty sleep over) 

Once you have determined how much you can lose, you will also have a better idea of your risk profile (if you are risk averse or a risk taker etc). That will also determine the asset class most suitable for you.

As a rule of thumb, Stocks are always more risky than Bonds – mainly because in the event of a liquidation, the company will have to sell all their assets to repay their debt holders first before repaying the equity shareholders of a company. 

For investors who want to just invest and forget about it (till many years later)

Our top pick for this group of investors will be Exchange Traded Funds (ETFs). ETFs are suitable because they offer several benefits including the ability to build a diversified portfolio quickly and with a small amount of capital.

With the rising popularity of ETFs, there are also now more options to choose from in addition to the traditional index ETFs such as Nasdaq, Dow Jones or Straits Times. They may include ETFs that track various investment themes such as Semiconductor, Cloud computing , Blockchain or even the traditional sectors such as utilities and Oil & Gas.

ETFs are created by various financial service providers who aim to replicate the index or capture the theme that they are looking to target as much as possible. Hence there may be multiple ETFs trying to capture the similar theme (for Eg. ARK vs Blackrock)- which ETF you choose will depend on which financial service provider you trust most/prefer. ( Phillips POEMS have a simple ETF screener for the ETFs they offer on their platform

Other things to consider……


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While I studied in Banking & Finance and Accountancy in school, the best investing knowledge I got was from the books of other investors. This is not to say that the knowledge we learnt in school is useless, but it provides us with the basic fundamentals on how to read the financial statements and value the companies (Discounted Cashflow or Relative Valuation etc).

Over the years, I have scanned quite a few investment books. Below are the top 3 investment books that left the deepest impression on me.

1. One Up On Wall Street – by Peter Lynch

As one of the most famous investors of all time, this classic was among the top read in my list. The classification of the companies into different categories, while obvious can sometimes be oblivion to beginners. It is a good starting ground for investors to decide which type of stocks is most suitable for you, based on your character, and start active looking for them.

The 6 types of companies are:

  1. Slow growers
  2. Fast growers
  3. Stalwarts
  4. Cyclicals
  5. Turnarounds
  6. Asset plays

2. The Guru Investor – by John P. Reese with Jack M. Forehand

This is not the among the classics, but it is hands down my most favorite investment book. Every investor wants to find what is the holy grail to find the perfect stock. Well, there just isn’t a one size fits all solution. However, this book does compile the selection criteria used by some of the most famous investors of all time (eg. John Neff, Martin Zweig, Joel Greenblatt etc). While it may not always be practical to use some of these criteria in entirety, it help to shape some of the metrics and filters that I use when I look at a company.

The top criterias that I look out for includes:

  1. Cashflow (operating, investing and free cash flow)
  2. Net debt to equity
  3. Revenue and earnings growth
  4. The size and trend of profit margins
  5. Dividend payout ratio and trend
  6. Management

3. Hit Refresh – Satya Nadella

This is not exactly an investment book, but I believe the concepts behind it is applicable to life as well as in investment. This is a book by the current CEO of Microsoft, Satya Nadella, which talks about his life story from his childhood in India to ultimately becoming the CEO of Microsoft. Under Satya’s leadership, Microsoft reinvented itself to help the tech giant remain relevant.

One of the main themes highlighted in the book is the importance of empathy which drive the innovation behind Microsoft’s transformation. It is the ability to understand customers’ unarticulated and unmet needs to drive the innovation to come out with the great products to satisfy these needs. Products that solve the needs of users will ultimately sell themselves, driving profitability and make the basis of a good investment.

Investing is all the rage these days. Even if you’re not actively investing, you probably would have felt its rise in popularity with the numerous YouTube and Facebook ads by so-called “investment gurus”.

I’d hazard a guess that the financial instability and uncertainty in 2020 (now spilling into 2021) has got more people thinking about ways to make more money. Investing is surely one way for that to happen.

But let’s not forget that investing in itself bears a certain level of risk – and therefore instability and uncertainty as well.

Though it might be tempting to jump into the investment bandwagon when you see the kinds of returns that people claim to have received, the truth is that there are no guarantees to investing.

So for everyone who’s just beginning to invest, or even just thinking about investing, here are some soft truths to think about before you put your money anywhere.

Make sure that you’ve got a solid foundation to stand on

If you’ve got a large debt to pay for, and only a not-so-stellar savings account to depend on, it’s probably a wise move to sort through your finances first before committing to anything.

Like mentioned above, investing is a risky move to make. If your current finances are already standing on shaky ground, adding more risk factors into play can easily topple your balance.

While I’ve heard of people that managed to turn their finances around by investing, the flip side is true as well.

We need not look far for examples. The shockwaves from the 2008 Global Financial Crisis could be clearly felt in Singapore, and the aftermath of it still a stinging memory for many.

It’s important to note that sometimes putting your money into investments may not be the best way to manage your current situation.

I’ve read that by making extra payments for a high-interest debt, it’s also equivalent to investing that money and getting an annual percentage return. And there are many more boring but necessary financial management tips that we should probably heed, rather than jumping into some shiny investment vehicle.

Which leads me into my next point.

Do your research

This is really straightforward, but something that’s often ignored especially for beginners who aren’t financially savvy. 

It’s easier to just trust what a friend says or watch your financial advisor scribble away impressive calculations and simply take it as that.

But nothing beats doing your own research and making your decisions for yourself.

I know it’s boring to plough through the numbers. And with investment schemes available, it’s not necessary to do all the legwork ourselves.

However, I think it’s wise that we know what’s going on with our money rather than sign it away on some mysterious plan.

The best teachers? Books. That’s where you can get detailed explanations by investment experts. But if that’s too much content for you, hey, blogs like these and YouTube videos are your next best bet for investment tips.

Know what you are investing for

The next thing to think about is your investment goals and timeline. What exactly are you investing for, and how much time do you need to raise this amount of money? 

We all have life/financial milestones. Some of us want to own a house by 30. Others are eyeing for that dream (but expensive) car. It’s perfectly fine to splurge, just make sure that you’ve got everything sorted out before you make that huge purchase.

Especially if you’re planning for a big purchase, like a house, a car, or a big wedding, making an investment plan will help you to move faster towards that goal.  

It’ll also help you to answer very important questions like: How much money should I invest in? What should I invest in? How much risk can I tolerate? These are the questions that usually boggle beginners the most, but can be answered with relative ease once you know where you want to go with your money. 

Money goals can get quite existential at times, simply because of how tightly linked it is towards our life goals. And it can just get tempting to put the entire accounts aside and not have to face the truth.  

There’s really no two ways around it other than to look at it and start making plans to clear up debt and start making plans for the things that you really want.

It’s pretty simple. Begin by making a list of your financial goals, find out how exactly how much you need to achieve them, then start planning the best route to get there.

All the best in your investing journey folks!