You Don't Have To Be Rich Or Possess a Fortune To Start Investing

In your daily lives, you may be dealing with paying off your bills and managing your bills each month. By the end of every month, you might find yourself in need of your salary to maintain your day-to-day living expenditure.

Thus, the thought of setting aside money each month to take a position may be a distant afterthought. However, it is also a common misconception that you need to be rich or have a lot of savings before you can start investing.

This isn't true, particularly with the diverse options available when it comes to investing today.

Start With Saving First

The first goal you need to work at is spending less than you earn each month. By doing this, you will create a saving buffer to take care of emergency expenses.

Soon, you'll realise that just saving alone will not be enough. In order to grow your savings at a rate that's faster than the inflation rate, you have to invest.

Once you build a big enough emergency fund, you can start considering investing your excess savings.

How To start Investing With Just A Little Money?

Again, you don't have to have a lot of money to start investing. By regularly contributing a small sum of money towards investing every month, you can start building a tidy nest egg for yourself.

This strategy is commonly termed as Dollar Cost Averaging (DCA). By embarking on a DCA investment strategy, you benefit from:

#1 Starting With A Small Amount

While having a large amount of savings to plough into the markets may be an ideal scenario, the reality is that does not everyone starts off rich or having a fortune to invest.

Even if you had a large lump sum of money to invest, doing so via a DCA strategy can help you sleep better at night. By investing at regular intervals, you are limiting the risk of investing in the wrong time, simply due to bad luck.

The DCA strategy works best when you regularly put investments, it doesn't matter how small, into the market to assist you to achieve the best possible outcome within the long-term. By putting away a smaller sum every month, you may also find it easier and fewer of a pinch to divert the total amount from your monthly salary.

#2 Avoiding Market Timing

Markets could be notoriously hard to predict. Being a relatively new investor, you should think that you cannot make savvier investment decisions than investment professionals. There's also countless research findings that demonstrate even the experts fail in being able to time the markets accurately.

Utilising a DCA strategy encourages you to invest a fixed amount of money every month, regardless of whether markets go up or down.

The result will be that you bought more investment units when prices are low, and less investment units when prices are higher. This effectively permitted you to invest at the “average” price, and enable you to earn the market return.

#3 Taking A Disciplined Approach

By investing each month, whether the markets were on a bull or bear charge, you substitute emotions for consistency. This helps you take a more disciplined approach towards investing.

Cons Of Dollar Cost Averaging

Every strategy has its own pros and cons. Looking at the positives, you may think that applying the DCA strategy is a sure-win strategy. While it increases your chances, especially on the long time horizon, you have to observe that every investment carries some form of risk.

One disadvantage of the DCA strategy is that if you are able to identify the right investments or investment themes, getting into as early as possible with as much of your money as possible can help you achieve better outcomes.

If you have a large sum of money, your spending power may diminish when you apply the DCA strategy of making only periodic investments into the market, and keeping the majority of your funds outside of any investments.

Just as with every other financial decision, you need to assess your financial situation and make the very best decision for yourself.

Where To Start Investing Your Money Via Dollar Cost Averaging?

One way you can start employing the DCA strategy is by investing in a Regular Shares Savings (RSS) plan. An RSS plan enables you to make small monthly contributions into eligible stocks and exchange-traded funds (ETFs) on the Singapore Exchange (SGX) or other global markets.

You can also seek to invest with a platform provider, commonly termed robo-advisors. These digital financial advisers assist you to allocate your funds to broadly diversified investments in Singapore as well as in global markets.

Another option is to create your money work for you by ploughing it into a savings plan, such as AIA Smart Wealth Builder. You can tailor your premium payment amount in addition to how long you intend to continue paying the premium – single premium, Five years, 10 years, 15 years or Two decades.

While you are applying a form of DCA into the policy in the long-term, you also enjoy 100% capital guarantee in the 15th year no matter how the market performs.

The policy also gives you the flexibility to withdraw money along the way, especially when key milestones occur for example paying for your child's tertiary education in addition to when you hit retirement.

Going a step further, you can also utilise this policy to leave behind a legacy for your loved ones, letting them continue to compound its returns despite you pass on.

Take Care Of Your Health As You Take Care Of Your Wealth

Accumulating a amount of money is an important consideration. However, you shouldn't neglect your health in the quest for money.

Similar to putting away small sums of money each month to strengthen your nest egg in the long term. Having healthy habits and making positive lifestyle changes over the long-term will ensure you stay in the pink of health in years to come.

AIA Vitality, our comprehensive wellness programme, encourages you to definitely make healthier decisions if you take a personalised approach to assist you to focus on your individual health journey.

To assist you to understand yourself better, there are various health assessments you can decide to try gauge your fitness, nutrition, sleep, mental well-being and Vitality age. To help keep you on track, there are numerous rewards, including discounts for insurance premiums, entertainment and travel activities, gym membership, fitness devices, and health insurance and nutritional screenings.

When you think about it, your health is your true wealth – with it, you can choose to continue trying to build your nest egg to achieve a far more comfortable retirement.