New Graduates – It’s Never Too Early to Start Saving and Investing

Every year, thousands of people graduate in Singapore and the economy accepts the new workforce with open arms. Flushed with the notion of earning their own money, it is common for these young people to start spending their paychecks on good food and luxury items. However, those with the financial discipline to start saving a portion of their income from the time they start working will find themselves having a more secured financial future.

Here are a few tips to start your savings and investment journey.

Make Savings a Habit

From the first paycheck you receive, you should deposit a portion of your income into your savings account. Build up a reserve fund that can help you tide over six months if you stop working or are unable to work.

Start Investing to Grow your Money

After you have set aside a portion of your income as emergency funds, you should start investing to grow your money.

As a young graduate, you can take a lot more financial risk as you have a long investment time horizon. Thus, you could invest in instruments which have high risk and return ratio, such as equities, debt capital and structured products. If you prefer not to take direct risks, you could choose mutual funds which are index linked and Investment-Linked Policies (ILP). The investments you choose should be based on your risk appetite and knowledge of the financial instruments. Do not rely on hearsay and always do your homework.

Don’t Wait to Pay Off your Study Loan

Most graduates take a loan for their higher studies and if you are one of them, do not wait long to start paying off your loan. The longer you wait, the greater the compound interest of your loan, and it will be a burden on your savings and investment plan.

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