Ready? Set? Go! What you should know before you start your first investment

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So you’re at a place in your life wherein you’re pretty sure you’re ready to make your first investment. This is wonderful, since investing is something I would encourage every woman to do in order to grow her money. This is one surefire way to reach her financial goals and save enough to be comfortable during her retirement years.

However, there are certain things you should sort out before you even begin investing. For one, obviously setting your financial goals before you invest is key. Knowing what you are saving up and investing for will motivate you to do what it takes to get there.

Do you want to retire by a certain age? How about starting your own business? Whether it’s traveling, or buying your own house, you must have specific goals in mind that you are working toward.

Secondly, have you got the math all figured out? Before you invest, find out how much you need to invest in order to achieve your goals. It is also important to know how long it will take to get there.

The New Savvy - Women - What You Should Know Before Your First Investment 2

What does the perfect investment look like?

Many people have asked this question. In an ideal world, three things characterise a perfect investment: safety, growth and income.

Safety, meaning you want your investment to be risk-free. Growth, meaning that your principal would be assured of continuous growth. And finally there is income, wherein you would have enough income to match the rate of inflation.

However, let’s get one thing settled right away: there is no such thing as a perfect investment. Dana Anspach writes, “think of the investing world like a triangle. As you move toward one corner of the triangle you move away from the other two. If you want an investment that is safe, you have to be willing to accept less income and growth. If you want an investment that produces consistent income, you have to understand that it will not grow as much. If you want an investment that grows, you have to be willing to accept less safety.”

Do you need a good place to start with learning the ropes of trading and investing?  Here’s one:  “Basics of Trading & Investing – All You Need To Know.”

Determine what’s important to you for where you are now

As wise men and women say, forewarned is forearmed. Knowing there’s no such thing as a perfect investment is a good first step to investing, believe it or not. Understanding that the basics of investing revolve around the three factors of safety, growth and income, will help you determine what investments are right for you.

One thing you’ll need to do is to determine which of these factors matters most to you right now. For most young people still building up their emergency fund, safety may be the most important factor when looking at investment options. If you are in mid-career and are saving for retirement, you may consider growth as the most important factor. And finally, if you are already approaching retirement age, it makes the most sense to concentrate on income.

Do you know when you need to cash in on your investment?

Another thing to consider is the when of the matter. In other words, when do you need the money you expect to get from your investment?

You may need the money in a relatively short amount of time, let’s say 1 to 2 years. In this case it would be best to opt for a safe investment.

In Singapore, as Dinesh Dayani says, “The investments that are most likely to guarantee your capital and your returns are fixed income investments issued by the government.” He suggests Government Treasury Bills, Government Bonds, as low-risk investments that guarantee returns.

If you need the money within 3 to 9 years, consider some medium-term investments. You might consider an endowment plan, which usually ties up your investment for an average of three years. Another possibility is peer-to-peer lending platforms, which have a significantly higher risk but also higher rates of return.

Yet another possibility is Singapore Savings Bonds (SSB), which is another investment backed by the government, making it very safe.

A long-term investment involves funds that you will not need for at least ten years. A good suggestion for investments of this type are growth investments such as index mutual funds, which invest in stocks.

One safe long-term investment in Singapore is the Central Provident Fund Special Account (CPF SA). These accounts have good returns on the interest rate, with at least 4 percent per year. They require very little effort to maintain. However, this kind of investment is extremely illiquid. The investment is required to stay in the account until you’re 55 years old, otherwise you’d be facing some penalties.

What are my options for getting started with investments?

Once you are ready to start, there are basically three ways to go about investing.

You can give it a go on your own. You’d have to make sure you do your due diligence and educate yourself concerning different investment options. You’d also try out different avenues until you find what’s best for you. Some people do best on their own, and there are types of investment accounts online that are easy to follow. One example of this would be cryptocurrencies.

Secondly, you can get started with investments with someone guiding you or teaching you the ropes. Hire the services of a financial advisor or planner who’ll do some hand-holding concerning different accounts and investments. These licensed professionals can help you do the math on how much to save and the time horizon best for your needs. Check out our post, engaging a personal financial advisor, “Personal Financial Advisor : Why You Should Engage One.”

The third option is for someone else to make and manage your investments for you. Wealth managers and stockbrokers are just two types of professionals whose job is to manage your investments. For the very well-heeled, Singapore is a highly regarded wealth management hub in Asia, with both international and local clients.

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Anna Maria Romero is the Deputy Director of Lifeline Foundation by day and a freelance writer by night. Lifeline Foundation’s advocacy includes empowerment through financial literacy, which is why she has written and taught on this subject on numerous occasions.An educator by profession and training, Anna Maria graduated from the University of the Philippines, cum laude, and taught for more than two decades, having opened a school in 1995. She stepped down as as principal of South City Central School in 2015 in order to pursue a career in the non-profit sector.She is a contributing writer to an online news site, and has been on the creative team of “This Journal Will Actually Change Someone’s Life” since 2008, which is published by FreeSpeech Publications in Manila, Philippines.Anna Maria is a passionate advocate, volunteer, organizer, counselor, communicator, editor, and traveler, who’s always ready to pack up and go where she’s needed.

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