Don’t know how to go about getting your finances in order? You can start by first identifying your financial goals.
“Then prioritise these goals, whether they be going on a trip, pursuing higher studies or buying your dream car. It is also important to set up an emergency fund with three to six months of income to prepare for any unexpected expenses and emergencies,” says Cassandra Wee, Head of Insurance at SingSaver.
If you want to grow your nest egg but are new to it, she suggests first automating your savings plan.
“Setting up an automated savings plan with a standing instruction to ensure that a fixed amount of money gets invested each month will make it easy to achieve.”
And once you’ve got that sorted, you can try your hand at creating your investment portfolio.
“Investing is a great way to make your money work harder for you. For instance, if you can save about S$2,000 every month for 30 years, that’s S$720,000 in accumulated savings. If you keep your savings in a bank account and assume a healthy compound interest rate of 1.5% p.a., that amount could potentially grow to around S$909,730 at the end of 30 years.”
She adds that with investing, it’s a good idea to take a multi-asset approach with adequate diversification as this allows returns to be protected even when the markets are volatile. And that once your emergency fund is well stocked, you can start looking at Exchange Traded Funds (ETFs) and blue-chip stocks.
However, Cassandra cautions that you should avoid investing in what you don’t understand.
“It is important to keep your risk appetite in mind while investing. Risks can be measured by volatility – the larger the swings in an asset’s price, the greater is its volatility. For short-term financial goals like buying a house in 5 years, choosing a higher-risk investment product will mean that you will see greater volatility and potentially lower returns. For long-term financial goals such as your retirement portfolio, where the investment horizon is 10 to 30 years, you can afford to take on more risk.”‘
Three women tell us about how they manage their budgets and their mindsets towards money.