Real stories about money from real people. Money Confessions, a SingSaver series, will excite you, inspire you, and leave you wishing to get financially woke.
My name is Winnie A. and I’m 27 years old now. This is my story of how I worked towards accumulating $100K in four years.
Like most wide-eyed fresh graduates, I accepted a job with reasonable pay and expectations, with little regard for how my initial pay would affect my lifestyle or my subsequent salary. However, a few months into the workforce, I started to realise that the salary from my job wasn’t a perfect match for the lifestyle I wished to lead.
This is how I began to look out for additional streams of income and started investing in 2016. It took me four years to achieve that coveted $100,000 – a few months before I turned 27.
On choosing investing over other means of making money
There’s an indisputable truth in making your money work for you while you sleep. I decided to do just that. Dividend investing seemed like an attractive concept, so I began my investing journey with the mandate of increasing my income with dividends.
Quite frankly, I don’t think I am talented at crafts, nor do I have skills that can be monetised. I do enjoy reading, and so I read up extensively on how to invest. I felt that investing would be a more realistic and achievable way for me to increase my income compared to finding side hustles that would still require me to exchange my time for money.
Starting on the wrong foot
Before I had an investment plan, I contributed a small portion of my paycheck to a regular savings plan (RSP) through the bank where I had credited my salary. However, this was, primarily, a way for me to meet the requirements of getting a higher interest rate for my savings account and not meant for investment purposes per se.
As soon as I began investing seriously, I terminated the RSP because the fees were rather substantial and ate into my returns. That being said, RSPs are especially useful for those with a small capital outlay as you can start investing from as low as $100. However, I have to emphasise that it is important to be mindful of recurring fees and compare available financial products before making any investment decisions.
Buying my first stock
The first stock I bought through a brokerage was Parkway Life REIT in 2017. I was afraid to shell out a huge amount since I was just dipping my toes into the world of investing and was second-guessing myself. It was my first official investment, after all, and the largest ever purchase of my life at that time. I ended up making a low four-figure purchase.
Three years later, my first-timer fears proved to be unfounded. I am still holding onto Parkway Life REIT and, as of today, sitting on a 59% return including dividends received.
Other stocks I bought
I added local dividend-paying stocks to my portfolio as my investment objective was to have an additional source of income to supplement my paycheck. Lucky for me, the Singapore stock market is a very forgiving playground for beginner investors, and is replete with REITs that serve my investment strategies. Subsequently, I gained more confidence and increased my exposure to growth stocks in overseas markets through a robo-advisory platform and DIY ETF investing.
Put away almost 40% of my paycheck into investments
To make up for lost time, I invested heavily with almost 40% of my take-home salary going into various investments. To date, I have pumped in a high five-figure amount to my portfolio, which is currently valued in the low six-figure range.
I managed to achieve a dividend yield of 4.3% in 2019, which is not particularly remarkable, but a personal milestone for sure. Sadly, many companies have announced dividend cuts this year, so my projected yield for 2020 is lower than the previous year.
Achieving my first $100,000 in 2020
It took me about four years of saving and investing after I joined the workforce full-time to achieve my first $100,000, just a few months ahead of turning 27. I was not so financially savvy when I first started working and did not have any concrete financial goals.
It was only a few months into adulting that I began to recognise I needed to actively manage and monitor my financial health in order to sustain my current lifestyle, while being able to pay off future big-ticket life events.
There was only so much of my paycheck I could save and expenses that I could cut down before compromising on my happiness. Through a combination of thoughtful investing and mindful saving, I managed to accumulate that coveted $100,000 at the beginning of 2020.
Truthfully, this amount was just an arbitrary number that I worked towards because I observed many financial bloggers talking about getting to $100,000 before 30 years old. Thus, I’ve decided to use it as a starting point. However, everyone has different financial situations and goals, and we should not be so hung up on reaching this $100,000 before 30 just because someone else we’ve never met said we should.
Choose an investment method that suits you
I don’t think there is a single method that would work for everyone as we all have our own personal life goals, which ultimately affect our investment appetites and strategies. Regardless of that, I think it is more important to be informed of what we are investing in and not act based on hearsay, which I observed is rather common in the world of retail investors.
For myself, what works so far is a combination of robo-advisors and DIY investing. The robo-advisor ensures that I remain disciplined and vested in the market at minimal fees, while the DIY portion supplements my portfolio where the robo-advisory platform is not able to – such as for dividend or thematic investing. I am using Autowealth for automated investing and mainly FSMOne for DIY.
Tips for newbies to start investing
Tip 1: Understand yourself
Before anyone starts investing, I think it’s important to understand our investing psyche and goals and adjust our expectations accordingly. It will guide how we manage our investment portfolio.
As much as investing should be mechanical and unemotional, this is often not the case, as money matters are highly personal and nobody likes to lose their hard-earned money. By being honest with ourselves and cognisant of our own behaviours, we would be able make better investing decisions.
Tip 2: Educate yourself
I am a strong believer of knowledge being power, and I think it is crucial for anyone wanting to invest to build up a knowledge base before starting. I understand that it can be overwhelming with the wealth of information available online, so just start somewhere and take it from there. It is really not that difficult; it just requires time and effort, as with anything else we pursue in life.
Sadly, while there was plenty of information out there, I wasn’t quite able to discuss them with my peers as they were either not vested (common among women my age, I notice) or they relied on financial advisors.
It wasn’t an easy process for me too, as I had no background in finance. Everything I know is self-taught and it was up to me to discern good advice from the bad.
Tip 3: Do it yourself
We can only truly learn how to invest when we have some skin in the game. So, get in there to gain more confidence and learn from the school of life. We can always start small and comfortable to minimise and cushion mistakes that are bound to happen. But it is only with this experience in the market that we can become better investors and better managers of our wealth.
Lastly, what to avoid in investing? Cut out the noise.
As humans, it is easy for us to be influenced by what we hear. There is nothing wrong with seeking their opinions, but ultimately we should do our own due diligence and exercise our own discretion.
The hard truth is people care more about themselves than your money (despite what some investment gurus may tout). We only have ourselves to hold responsible for our money, so cut out the noise and stick to your investment plan.
Once again, remember that investing is personal and unique to ourselves. So, do what you deem is in your best interest because no one else can do it for you!
As told to Kendra Tan
Like all new things, take small and easy steps for your investment journey. For a start, check out our comprehensive guide to robo-advisors and learn how these automated services with affordable advisory fees can get you started on your investment journey from as low as $50.
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