Many people would ask, why invest and risk losing money when I could save it all and one day have enough to survive? Common misconceptions by our parents and perhaps friends, would be that investing is akin to gambling and I quote :
“Don’t burn your fingers in stocks!”
“Investing? Same as going to MBS what…”
“ If can make money, everyone also go invest what”
But hey, haters stay hatin’ right? In a conformist and conservative society like Singapore, people say this because they are defensive towards an idea or concept they do not understand and wish to stay in their bubble where they feel safe and protected. Financial literacy and ambition will allow you to break out of this thought and give you the courage to stand up for yourself and tell them : “I want a better future for myself and get out of the rat race! No more sleepless nights over the fear of losing my job!”
With that in mind, let me give you some facts which you can graciously bestow upon the lesser naysayers.
Fact 1: We are losing money everyday
From TradingEconomics.com , we can see that “Singapore averaged(an inflation rate of) 2.65 percent from 1962 until 2017”. However the interest rates of the average saving account in a bank is around 0.01%-0.05%. Due to the prudent culture that majority of our parents were brought up in and lack of financial literacy, they tend to save up for a rainy day by leaving it in a bank account. Allowing their hard earned savings to be eroded by inflation as time passes. To be able to prevent the loss of money due to inflation, we have to take up the responsibility of looking for ways to ensure our savings grow at the same or higher rate than inflation. One of the many ways is to put your money to work in the stock market.
Fact 2: We can be more financially resilient
Passive income is a gift that you can give to yourself for the rest of your life, starting today. When we invest in companies that provides dividends, we are able to gain extra income every quarter/ annually, without actually having to do anything for it! (SAY WHAT? FREE MONEY? SIGN ME UP)
Well, hold on to your panties, by doing your due diligence, you will find good sturdy companies that have consistent dividend payouts, by reinvesting these payouts and injecting further capital for the initial years, you would have been able to generate an income for yourself by making your money work for you!
No, don’t go flipping your boss’ table just yet, it takes time for it to compound until you can provide a sufficient income for you to live off your passive income! A great place to start would be in real estate investment trusts(REITs) ,which I will touch upon in future posts!
Investing is a really a god given catalyst to you achieving the life you envisioned. It may be also catalyst to disaster if one proceeds to do so without the adequate knowledge. Investing IS gambling/ speculating if you do not study and understand what you are doing. Go forth my fellow learners, take this knowledge and achieve great things in your life! A day in your comfort zone is a day not lived.
For Honour And Glory,