How to start your investment journey

I am Ryan and I am currently still schooling. I have read your articles on your blog and I am very inspired by your investment journey. I would like to get advice from you on how to make my first step. I want to create an income source and at the same time, learn and gain experience in investing. As I don’t come from a very well to do family, I always face struggle when it comes to money issues, for instance school fees. I have saved up to about 1k plus dollars and would like to know how can I start learning and make my first move. Please give me advice.Thank you,

I received the email from one of my readers a couple of weeks ago and made some editorial amendments to the original content. It took me quite a while to craft out this article due to my recent massive pay cut in my day job. I was in a really distraught mode and was not quite in the right frame of mind to blog.

Nevertheless, I felt obliged to response to this young man because I can relate to his motivation to invest. Like him, my family struggled with money issues all the time when I was a young boy. So now that I have a better life, I hope to  mentor young Singaporeans and share some good personal finance practices. One of the key reasons for starting this blog is also to make a difference in other lives and guide young Singaporeans on the right path in managing their money.

I started to dabble in stocks when I was 17 years old. In Singapore, before you can start trading, you will need two accounts: a securities account with The Central Depository (Pte) Ltd (CDP) and a trading account with a stockbroking member of SGX.

As I was below 18 years of age, I had to use my elder brother’s account to trade. The first stock I bought was Unisteel, a local company specialized in producing high-end precision fasteners for the hard disk. I bought 2000 shares for $0.50 during the IPO.

So similar to the reader, I started off my investment journey with $1000 as well.In the nineties, the electronic sector was booming and the services provided by Unisteel was very niche and the demand was huge. Indeed, it was a very good stock and the share prices kept rising over the years.

However, I didn’t realize my brother had secretly sold my shares and used the proceeds for himself. So I decided not to invest using his account. It took my brother two years to return my initial capital of $1000 in cash. I lost the dividends and capital gained, not to mention the opportunity loss. This episode provided me the hard lesson that you must have full ownership in your investment portfolio, and not to trust others to invest your monies on your behalf.

Creating multiple income sources
It is good that Ryan has already started to think about how to build wealth by creating multiple income sources but then again, he needs to realize that it takes money to make money. So to develop income-generating assets, you must have the initial capital.

If you are a student, you need to take up part-time jobs, such as giving tuition, to build up the investment capital. I had seen some of my classmates building up impressive savings of $30,000 to $40,000 through part-time jobs, and some even paid off their university loans using their savings.

Secondly, at his age, he should be gaining knowledge on how to invest and avoid the typical financial traps. I had seen so many young Singaporeans (my wife included) buying expensive whole life and investment-linked policies that don’t even provide adequate coverage or suit their needs. Many of them bought these policies before they even started working because they wanted to show support for their friends and family relatives who work as insurance agents. But they soon found themselves struggling to pay the monthly premiums due to the lack of monthly incomes. So the bottom line is: buy term and invest the rest.

Invest in yourself
The best asset in this world is your knowledge, which drives your ability to make the correct investment decisions. But then again, no one is born to be money smart or a clever investor. Even world-class investors like Warren Buffett learn how to be a great investor through reading. Having the basic knowledge will enable you to develop your own investment framework. For me, my individual framework consists of career, property, health, relationships, insurance, assets (gold bullion and stocks), knowledge and cash. Obviously I am not the subject matter expert in each of these topics, so I am always keen to learn and improve myself through reading and taking up courses.

My blog has allowed me to network and build contacts with many businessmen and investors from all walks of life, thereby enriching my thoughts on investing. Therefore to be a successful investor, it is the altitude that counts, not the amount of money that you have made.

Always stay hungry and keep your mind open so that you remain motivated to learn.On a last note, it is important that young Singaporeans have the right mentality before they embark on their wealth building journey, especially those who are about to enter the workforce.

The decisions made in the early stage of our lives will shape our financial destiny and future but young folks can become lost in their pursuit of money. Yes, it is possible to turn $1000 into $1,000,000 but not many people are able to achieve this amazing feat. Some people would suggest leveraging or margin trading but I don’t encourage newbie investors to make this attempt because 9 out of 10 person lost their money big time through this path.