Newbie advice

[WBJR]

Hi all,

I am just 20 year old and quite a newbie in investing. I have
only have a small capital of 7k which mostly by savings. Any advice

Since there are many old bird here. I have a few questions.

- Should I deploy half of it and keep half of it in case just in case of the next crisis. If not, I am afraid that if crisis happen, I do not have any war chest to deploy?

-How many stocks to Invest with 7K?

Thanks

[CY09]

Hi,

It is nice to hear of an individual attempting to start investing at such a young age (in fact younger than I had started).

Yes, it is good to set aside some capital for emergency uses. I will advocate allocating 6 months of expenses from your savings and perhaps 1k more since you will be going out with your friends. For the remainder of the money, it should be used for investments and is advisable to invest in 2-3 stocks. For this you can consider opening a SCB brokerage acc, not sure if it is good to open one now, considering the recent news pertaining to Standard Chartered.

However, if you are only able to open normal brokerage accounts like DBS vickers, limtan, maybank etc instead of Stan chart (SCB). I will advise saving until you have about 10k on top of 6 months expenses+1 k for socializing. That's what I am doing.

<26 year old as of now>

[WBJR]

Thanks for your reply.

This 7K is excluded from the emergency cash.

What I am afraid of is, I only have 7k to invested in 2-3 stocks
as what you say and the market is abit overvalued in my opinion. If
there is a crisis struck. I have no cash to deployed.

[CY09]

The question on setting aside a war chest is a debate among many with some opting to be fully vested while some preferring to keep a war chest. to keep a war chest or not is dependent on your temperament. Maybe given that you are new to investing, you can try out keeping a war chest and note your personality when investing.

[ValueMushroom]

Hi

First of all, I would like to congratulate you on your decision to start your investment journey. The younger you start, the better it is as you would have more time to experiment and derive your personal style of investing. And of course compounding can only work wonder with long period of time.

I guess now you would be very eager to purchase your first stock. Most of us would. But it may be better if you spend some time reading books such as "The Intelligent Investor" if you have not already done so.

I personally would set aside half the amount allocated for investment as cash when I feel that the general market is peakish. The other half would probably be vested in a single stock as you are left with 3.5K to invest. However if you find a value stock along the way, there is no reason stopping you to invest more in it. My investment philosophy: Look for value rather than time the market.

[thor666]

Wbjr - I have been in the same shoes as you did, however at a later age where I was working. I assume you are still studying. In this case, you may consider working part time if resources allow. I did miss out on the chance to accumulate more savings earlier, so my advice to you.

In the case of investing only 7k, it is quite difficult to do individual stocks. I bought sti etf when I started; looking back, that was the right choice as it gave me the know how to buy stocks.

I very much like one of the blogs recommendation, to buy a mix of sti etf, vanguard world etf and bond etf.

http://www.turtleinvestor.net/establishi...singapore/

That may be something you want to look at first, before going deep dive into individual stocks.

Good luck and hope you have valuable experience in the field of investing.

Sent from my D5503 using Tapatalk

[weijian]

hi WBJR,
I am going to dish out what another forumer d.o.g would have done, even though i think i don't know enough of you to give advice/judgement.

Stash that $ into your savings account and focus on upgrading your own human asset first (skill sets for a future career). Most people in their lifetime (including me) are most probably going to earn more from their fixed income jobs, rather than through investing. I wouldn't fight against the odds. Your human asset earning power will also provide the future ammunition should you decide or believe you are going to win through investing. It might be better to think you are the rule, rather than the exception (although you might believe that you are the exception with 7k of savings at 20yrs old..don't ever be deceived by all the praises you get from others ). Don't ever believe those BS that talk about compounding at X% will give Y returns if you start early - These are academic exercises and the real stock market isn't so nearly summarized into that one statement.

There are 3 main ways to make $ for retail investors in the stock market - cyclical investing, asset allocation and superior individual stock selection. 7k isn't going to make asset allocation work and so if you start selecting individual stocks, you are already handicapped with only 2/3 ways (to make $). Do you believe you have superior psychology or insight?

That said, having 7k at your age is a tremendous achievement (definitely better than me!) You already have an advantage with that 7k of savings over your peers i believe. So don't waste this advantage by getting into a rush to invest (throw) it away. Build on this existing advantage by building your knowledge now - read, experiment and most importantly, find out who you are, what is your advantage in this market place?

[Temperament]

hi WBJR,
I am going to dish out what another forumer d.o.g would have done, even though i think i don't know enough of you to give advice/judgement.

Stash that $ into your savings account and focus on upgrading your own human asset first (skill sets for a future career). Most people in their lifetime (including me) are most probably going to earn more from their fixed income jobs, rather than through investing. I wouldn't fight against the odds. Your human asset earning power will also provide the future ammunition should you decide or believe you are going to win through investing. It might be better to think you are the rule, rather than the exception (although you might believe that you are the exception with 7k of savings at 20yrs old..don't ever be deceived by all the praises you get from others ). Don't ever believe those BS that talk about compounding at X% will give Y returns if you start early - These are academic exercises and the real stock market isn't so nearly summarized into that one statement.

There are 3 main ways to make $ for retail investors in the stock market - cyclical investing, asset allocation and superior individual stock selection. 7k isn't going to make asset allocation work and so if you start selecting individual stocks, you are already handicapped with only 2/3 ways (to make $). Do you believe you have superior psychology or insight?

That said, having 7k at your age is a tremendous achievement (definitely better than me!) You already have an advantage with that 7k of savings over your peers i believe. So don't waste this advantage by getting into a rush to invest (throw) it away. Build on this existing advantage by building your knowledge now - read, experiment and most importantly, find out who you are, what is your advantage in this market place?

Young man, no hurry. I had read a book that claim the 3 most important things in investing in the market are Longevity, Deep pocket & Lady Luck ( or GOD' s Blessings if you are a believer).
Will you be surprised if i tell you I started investing only at the age of 40 till now. A total of 26 to 27 years?
I tell you I am surprised by bloggers who even started at the age of 50. Some I think even later.
If you learn nothing from what we say but you have grasped the only idea that investing is a life long journey, I say you have got it. Happy investment journey.

[Porkbelly]

I too started with a modest investment at 21 years old. It was the legal age to open a securities account.

My 1st purchase was OCBC's fund that invested in Malaysian & Singapore stocks. Its now renamed to LION Malaysia-Singapore fund. I bought 2,000 units and they have grown to 4,000.I still own them! (for sentimal reasons.)

Being new, I thought being invested in stocks listed in 2 neighbouring countries could capture the economic fortunes without much brain work!

In some sense, its a very broad strategy.But there are no distributions of any sort... no cash, no units.. it just sits there.

I think one way is to select a company with:

- a business model that you understand

- that pays out dividends

- that is a price that you can afford to own and also to lose!


To motivate you and keep you invested, perhaps a company that pays dividends 4 times a year with a return higher than fixed deposit interest rates.

Dive into it with eyes opened and a consiousness to reflect and to understand your own greed, fear, aspirations, ignorance and stubborness.

Its not only about money
Its about what and who you are.
Its a journey of a lifetime!

[opmi]

Advice

- Treat your $7k as gone/lost when you invest. When it does not matter, then there will be less emotional baggage
when investing. That is important because the markets will test your convictions through your emotions. When you
start personalizing the unrealised gain/loss, the markets will inflict emotional pain to make you cut your position so that
you can feel better despite it is the not the right thing to do at that moment.