Written by: Ethan Ong & Santa Maria Rebecca Julia
Finally, after a month of hard work, it is finally your payday! While it is tempting to splurge on yourself after receiving your paycheck, we all know the importance of keeping money aside in case of rainy days. This then begs the question, what would be the best use of your money? Would it be better to save the money or to invest it?
There is no real answer to this question, as both are as important. Investing has the potential to yield significant returns. However, it also comes with the risk of possible loss. Thus, it is also important that we learn to separate the money used for savings and investment.
Savvy youths
Even though investments come with risks, many Gen Zs are into investing. According to a survey in July 2022 from Straits Times, four in five teens have the habit of investing. Furthermore, 88 per cent of those surveyed expressed their interest in investing their money by the year’s end. This trend shows that youngsters of this generation understand the importance of financial planning and how starting early can benefit them.
However, many youths underestimate the risk that comes with investments. According to Ms Carol Fong, chief executive officer of CGS-CIMB, “One in four students were not familiar with financial content pertaining to risk management.”
This was one reason why the company decided to launch the CGS-CIMB national investment challenge, officiated by Senior Parliamentary Secretary (SPS), Mr Eric Chua.
Said Mr Chua: “This challenge will teach financial management as well as the risks surrounding it. We also hope to empower youths so that they can make good informed life decisions.” The CGS-CIMB national investment challenge also has a list of webinars aiming to educate youths on how to invest. Topics include Risk Management, Tools of the Trade and True Singapore Horror Stories (Investing Edition).
Investing may sound like a far-away concept for teenagers. Being students who do not have a full-time job, it can feel like investing may not be relevant for them, as they have not accumulated enough wealth. So how can students go about investing at such a young age? There are so many different things to invest in. How do you even start? Don’t you need a lot of money to do so? Here are some tips to help you start your journey to financial literacy.
For starters, you don’t need a lot of money to start investing. Even though putting more money can get higher returns, it is also possible to start investing with a starting capital of just $10, through brokerages that offer free trading and allow the buying of fractional shares. Instead of drinking two cups of bubble tea that week, you can save up that money and start your investing journey.
How can I get started, and what can I invest in?
There are many investment types to choose from, for example, bonds, stocks, options, funds, and even buying insurance can be a form of investment. With so many different types of investments on the market, how do you decide what is best for you? There are always a few things to consider before investing.
One of the things to consider is the timeframe of the investments. Short-term investment offers the chance for higher returns. Still, it is riskier as it attempts to predict the change in the value of your investment. In contrast, long-term investments like insurance are a slow and gradual process of earning interest with little to no risk.
Another critical thing to consider is the purpose of the investment. If you want to make more money in a short period, short-term investment options will be what you might be looking for. With so many investment types on the market, it can be confusing to keep up and understand the latest information on what you want to invest in. Thus, it is good to follow reliable sources of information and use online resources like videos and articles that are all over the internet.
The Singapore government also provides their youths with many resources in teaching them to be financially flexible. As most youths are full or part-time students, they are not earning a living yet, which may make them unaware of how to manage their allowance or savings. However, to have a sustainable future, there is no doubt that being financially literate can help.
One resource recommended by Mr Chua is MoneySense.gov.sg. Launched in 2003, MoneySense aims to educate Singaporeans on finance and how to make informed financial decisions. For youths, MoneySense provides helpful tips on how to save money by setting a budget and how to spend smartly. Youths can even use MoneySense’s tools, such as their financial calculators, such as the savings and debt calculators, to remain updated on their financial well-being.
All in all, one does not remain a youth forever. When adulting comes into the picture, milestones such as buying a home may be of concern. MoneySense prepares one just for that. Some advice given is to understand what the costs are when buying a home and how to set S.M.A.R.T. financial goals, enabling all Singaporeans to be financially literate.
