Picture this.
You’re giving your all at work: bringing home a hard-earned salary and dutifully setting aside some in your bank. A holiday would be nice, but you feel a guilty pang knowing that you should be saving towards your financial goals, like retirement. You settle for coffee, but as you’re about to pay, you realise that the cost of latte has gone up by almost a dollar. Stopping for a quick grocery run, the bill comes up to over $100. You double check the receipt to see if you’ve been overcharged, and then you remember the coffee — it all adds up.
If any of this feels painfully familiar, take this as the sign you’ve been waiting for. You need a new way to grow your money, but are too afraid to take the leap. The whisperings probably sound familiar, either from that financially savvy friend, or well-meaning aunty, or YouTube ads that you try to skip: Invest.
Let’s rethink the scenario above and get into the details of why you should start investing.
1. Give your Purchasing Power a push
With the current economic climate, inflation has been rising at a hair-raising rate. Singapore’s core inflation hit 4.4 per cent in June 2022, surpassing the 4.0 per cent handle since 2008. Basically, what this means is that you are getting less bang for your buck, and unless your salary is increasing proportionally, it’s going to be a tighter and tighter stretch as the years go on.
Through careful research and a long-term game plan, investing can help you grow your wealth at your own pace, generating potential returns that may beat inflation and allow you to protect your lifestyle and achieve your retirement goals. 2. Catapult with Compound Interest
You know how the movie Inception is about a dream within a dream? Well, compound interest is the interest you earn on interest — which means you gain interest on both your initial input, plus the gains from that input.
Based on this, you can see how your wealth can snowball with your investments. Imagine the extra hours you’d have to work to earn that amount of money, when you could do this while sipping coffee on a beanbag.
3. Don’t Bank on it all
Remember that piggy bank/milo tin can you had as a kid? While stowing money away in a Savings Account (with a bank) might intuitively feel like the best way to safeguard your savings for the future, you might have to think of the opportunity cost of stashing it there.
More often than not, the performance of your savings is reliant on how well the account’s interest rate measures up to inflation. On top of that, most financial institutions offer security in exchange for low interest rates. It’s always good to leave some in there for a rainy day, but don’t be afraid to soak up the sunny interest rates by investing the rest of it!
4. Reach your financial goals
With the power of compound interest on your side to fend off inflation, investing could be your best bet to reach your financial goals at the right time.
Be it housing, a car, college fund or retirement, it’s good to set specific goals, work out how much you need, and then pick an investment tool that can take you there in your desired timeframe.
5. Diversify your income
In times of an unstable economy, job security is one of the foremost worries that jump to mind. As such, it might be a good idea to have multiple streams of income in case one of the streams gets cut short unexpectedly.
Having a diverse investment portfolio could help tide you through a difficult time by making you more financially resilient.
Investing for the first time can be mind boggling. Feel free to reach out to me via phone call or whatsapp: 96891153 and we can work out a way for you to start.
Comments