If you’re a student reading this article, props to you! You are way ahead of the game when it comes to investing and personal finance, and have probably heard the saying:
The best time to invest was yesterday. The next best time is today.
That doesn’t mean that you sign up for an online brokerage now and immediately buy a stock that you’ve seen soaring in price, without any prior knowledge.
So here’s what you need to do before investing as a student, whether you have $100 or $10,000 to invest!
TL;DR: How to Start Investing As a Student in Singapore
In this article:
- Before Investing As a Student
- Pick Your Investing Strategy
- Set up Your CDP account
- Choose Your Investing Platform & Assets
Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock.
Before Investing As a Student
Before we dive into the nitty gritty of actually investing in an asset, you must understand that the biggest investment that anyone can make is in yourself. Yes, it may sound cliche but it is true, having a diploma or a degree is necessary for you to get your foot in the corporate door unless you’re a genius like Bill Gates or Steve Jobs.
So, you should be prioritising your studies first and invest in something that you can safely ignore.
On the financial side, you need to ensure that you:
- Have paid off high-interest debt
- Have enough insurance coverage
- Have at least 6 months of emergency funds
- Have some spare cash
- Have an investing horizon of 5 years or more
- Are ready to do your own due diligence and research
Pick Your Investing Strategy
Once you have checked off all the above and have some spare cash ready to deploy, you need to formulate an investing strategy based on your risk appetite.
If you can tolerate seeing red (your assets losing value) of 80-90%, while still focusing on your studies, there’s nothing wrong with picking your favourite stock after you’ve done the necessary research and have a super strong conviction about it.
However, that is not the case for most of us. From my experience as well as from the advice of the top investors in the world such as Warren Buffet, the best strategies all revolve around a long-term, diversified investing strategy.
Read more
- Should I Invest A Small Sum Regularly Or A Big Sum At One Go
- How to 6X an Investment Portfolio: Lessons From How Temasek Invests
- Here’s What I Learnt From Seedly’s Personal Finance Festival 2023
Before you make your first investment, you will need to read up on the various investment strategies, asset classes and how to access your risk appetite. Take your time to learn about these as it is important to lay a strong investing foundation, just like how you would tackle a subject in school! Here are some articles we have written to help you get started:
Investment Strategies
Asset Classes
Risk Appetite
Ask If You Need Advice From More Experienced Folk
If you ask me, I adopted the buy-and-hold strategy and invested in Exchange Traded Funds (ETFs). This is a mid-to-high risk/growth way to compound your investments as you are still young. However, I’m not a certified financial advisor and I don’t know your specific situation so it is best to ask for advice from multiple sources. One great way is to do so via our Seedly Community! Over the years, we have had students come asking for advice such as in this forum post:
Set Up Your CDP account
If your strategy includes investing in Singapore or government bonds, you’ll need something called a Central Depository (Pte) Limited (CDP) account.
Local brokerages will require CDP account linkage if you want to buy assets under your name. Here’s a quick guide on how to open one:
Bonus tip: if you’re a student, consider opening these useful accounts too as you may miss out on benefits when you are older!
Choose Your Investing Platform & Assets
Once you have everything in order, it’s time to choose the best investing platform that has access to your preferred assets!
To make things easier, I’ve come up with a table that includes your risk level and some of the platforms/assets you are likely to consider using. Click on the links in the table to read more about them!
| Risk Profile | Barrier to Invest | Assets to Consider | Platforms With Access to These Assets |
|---|---|---|---|
| Low-risk | As low as $1 | Insurance Savings Plans Cash Management Accounts High-Interest Savings Accounts | Respective Platforms |
| Low-risk | $500 to $1000+ | Government Bonds (T-Bills, SSBs) Fixed Deposits | Bank accounts |
| Medium Risk | As low as $1 | ETFs via Roboadvisors, Regular Savings Plans | Bank accounts Roboadvisors |
| Medium Risk | Depending on ETF price | ETFs | Online Brokerages |
| High Risk | Depending on stock price | Stocks | Online Brokerages |
As you can see, you can start investing from as little as $1, while others require more money to start an initial investment. For the latter, it’s a good idea to build a warchest, a separate account from your transactions account where you can set aside money for investment. This can be a high-interest savings account or a cash management account.
The table also does not show alternative investments such as cryptocurrency. For these alternative assets, you’ll need a deeper understanding before investing in them.
But no matter the amount, the important thing when it comes to investing is to always understand what exactly you are investing in by doing your research! As you invest, you will also learn from your experiences. Thus, it’s generally a good idea to start small and learn from there.
Once you have successfully invested, trust the process and go back to investing in yourself!
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