With the rise of female empowerment, women in society today are keen on taking charge of their own finances and planning for their own future. If you are planning to take your finances and investment strategies in your hand independently, these tips can assist you to go in the right direction.
1. Educate Yourself
The foremost thing you need to do as soon as you step into the world of investment (or even before stepping in) is to become well versed with different types of investment options available. If you are working with a financial advisor, ask him or her to help you out here. Understanding different options available to you and knowing benefits and limitations or each one will assist you in comparing and selecting the right ones. The most common investment options available in Singapore include stocks or shares, bonds, mutual funds, exchange-traded funds (ETFs), treasury bills, real estate investment trusts (REITs), retirement plans, bank fixed deposits (FDs) and recurring deposits (RDs), and a lot more.
2. Decide Your Goals
Just as in other aspects of your life, setting financial goals is a tried-and-true way to reach those goals. Decide what you need to do to make your future financially secure and enjoyable. Decide what you want to achieve with your money and when you might need it. Identify your most important short-, medium- and long-term financial goals. Estimate how much each of your goals will likely cost. Set up separate savings or investment accounts for each of your major goals. Then, identify the kinds of savings and investing strategies that may be appropriate for meeting your goals.
3. Establish Your Risk Appetite
Before selecting and investing in various investment options available, you need to do one more thing. Figure out how much risk you’re comfortable with. In other words, think about your risk appetite. Risk appetite is the amount of risk an individual is willing to tolerate while investing. People with a high-risk appetite are prepared to take on more risks, provided the return is substantial. Individuals with a low-risk appetite will try to avoid high probability and high impact risks. Understanding your risk appetite will help you stay calm when your investments aren’t performing as hoped so.
4. Diversify Your Portfolio
You never know what can go wrong with a particular investment type. For instance, the values of shares can fluctuate all the time. There’s no guarantee that the values will only rise throughout the period you have invested in them. The basic objective of diversification is to reduce this risk of facing losses. The best way to lower the risk is by diversifying your investments. Based on your needs and how much you are willing to pay, invest in different investment types such as mutual funds, stocks, FDs, and others.
5. Stay Up To Date
Do not invest blindly. This has become especially salient in Singapore where advice and information regarding investing can easily be found online, be it through the news, finance websites and blogs. It is crucial to understand what is happening around you every day to make sure that you make informed decisions. One of the easiest ways to stay up to date is to read the news daily. News found online sometimes provide you with good summaries with opinions and analysis rather than just facts.
6. Think About the Long Run
Don’t invest just for the sake of it or to save on your taxes. Think of an investment as a long-term profit structure. Rather than focusing on the most optimal time to enter a position in the market, focus on starting young and starting early. You should prepare for that time when you will no longer be working and collecting a regular paycheck. Even for professionals in the industry, it is far too difficult to predict the perfect entrance to the market that would earn you the most gains. By starting your investing journey at a younger age, you have a longer horizon, which means a long period for your money to grow.
7. Save Regularly
Many young women might be wary of starting their investing journey due to the lack of knowledge or lack of funds. However, saving a portion of your income each month is something anyone and everyone can start doing. Make it a habit to save and to manage your money wisely. Small savings each day or month compounds to a large sum with time. These savings can also go towards a small investment each month through a Regular Savings Plan (RSP) that can be made with any of the few major banks for as little as S$100 a month. This is one way in which you can start investing even with a small amount of savings and become an independent woman.
8. Don’t Forget Emergency Funds
Just like our mothers saved some money from their daily expenses and hid them in unusual places, you too should save money and be prepared for emergencies. You never know when you may need some extra cash for an unplanned expense. So on the one hand where you make several investments, on the other hand, you must also keep some hard cash in hand to pay off for emergency expenses. You should safeguard your finances by setting up an emergency fund to deal with potential problems that could drain your finances.
The journey may seem tough and confusing in the start. You may even make some mistakes. But eventually, you’ll master the art of investment, and become a pro at managing your finances independently.
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