Youngsters today are well-aware of the need to be financially savvy. Social media and the multitude of information available on the Internet have made it possible for youngsters to kickstart their financial journey earlier than their parents and grandparents did.  

Especially now that youngsters are in the midst of financial instability brought about by the COVID 19 pandemic, they are pressed more than ever to take care of their finances. With the digitalisation of many investment platforms, youngsters have easy access to investing now. 

As much as investment comes with its own risks, it is one of the excellent ways to ensure financial security in the long run. Starting young, youngsters will have the added advantage of the effects of compounding. 

Why start young?

When it comes to investment, the younger you start, the greater your rewards will be. You need to start early if you like to see more money at the end of your investment term. Through compound interest, you can see that the small amount of money you invest today will dramatically increase in decades to come if you make the right moves and have a reliable investment strategy. 

The advantage of your youth also gives you the liberty of committing to risks. Generally, you have much lesser commitments at a young age and can afford a riskier investment appetite. 

Start by creating a CDP account 

In order for you to invest, you will first need a platform. In Singapore, you can start by creating a Central Depository (CDP) account. This is a platform for your to begin your investment journey. 

CDP is operated by the Singapore Exchange (SGX) which will act as a safe for your shares. Since the Monetary Authority of Singapore (MAS) regulates the activities conducted by SGX, you have full security to your personal information and money invested. 

There are 2 simple ways that you can use to open a CDP account. First, you can do it yourself by applying through the website. Following your website application, you need to prepare the necessary documents and mail them to the headquarters.

Another approach is by requesting your broker to create the account for you. A broker is usually an agent under the brokerage firm with which you intend to invest with. In Singapore, there are plenty of brokerage firms that you can apply for investment. Therefore, you may use their services to smoothen your process. 

Do your homework

The more you spend your time doing your homework on investment, the better you get. Even if you go through a brokerage firm, it is always best to make your own valuation. 

Your research can be on the tips given by experts from all around the world and technical knowledge about investing. Understanding the fundamentals will help you build a strong foundation and make highly sensible decisions when you invest.  

Besides that, you can also seek help from technology. Robo advisors are the latest sensation in the investment world, especially among youngsters. You can rely on mathematical algorithms for investment. If you are still new and would like a simpler platform to test the ground, Robo advisor platforms will be a good stepping stone for you. 

Practice good money management

Having the best advice and high-tech suggestions will not change the way you spend. Only you are capable of adapting to healthy financial habits. So, it all comes down to whether or not you are aware of good money management skills. 

To begin with, you will need to have goals. Short and long-term financial goals will shape the way you use money. Having a firm direction will lead you towards responsibility in managing money. 

It is also wise to free yourself from debts before you start investing. You should also build an emergency fund of at least 6 months of living expenses.  

Low-risk bonds are easy targets

As beginners, a safe bet would be low-risk bonds. Here are several safe options that you can choose from. 

• Government bonds 

With the Singapore Savings Bonds (SSBs), you can be assured of your money. The guaranteed security by the government will build your confidence as a new investor. It is less risky and flexible in terms of withdrawal. As the risks are low, you will notice that your money growth is also small. 

• Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) is a platform that you can use to invest in companies in Singapore. Here is a place for you to expose yourself to slightly higher risks. You have the choice of investing in 30 Singapore companies. This is also a great place to diversify your investment portfolio. 

Normalise investing at a young age

Equip yourself with the right knowledge, make the right investment moves, start small and learn from your mistakes. Investing from a young age will give you the benefit of compounding in the long run and make financial freedom a reality.