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My name is Winnie A. and I am now 27 years old. This is my story of how I worked to accumulate $ 100K in four years.
Like most wide-eyed recent graduates, I took a job with reasonable pay and expectations, regardless of how my starting salary would affect my lifestyle or my subsequent salary.
However, a few months in the workforce, I began to realize that the salary from my job did not perfectly match the lifestyle I wanted to lead.
This is how I started looking for additional streams of income and started investing in 2016. It took me four years to reach the coveted $ 100,000, a few months before my 27th birthday.
By choosing to invest instead of other means of earning money
There is 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 investment journey with a mandate to increase my income with dividends.
Frankly, I don’t think I’m talented at crafting, nor do I have skills that can be monetized. I enjoy reading, so I read a lot about investing.
I felt investing would be a more realistic and feasible way to increase my income compared to encountering secondary hustle and bustle that would still require me to trade my time for money.
Starting with the left foot
Before having an investment plan, I contributed a small part of my salary to a regular savings plan (RSP) through the bank where I had credited my salary. However, this was primarily a way to qualify for a higher interest rate for my savings account and was not intended for investment purposes per se.
As soon as I started investing seriously, I ended the RSP because the fees were pretty substantial and they ate my earnings. With that said, RSPs are especially helpful for those with a small capital outlay, as you can start investing as low as $ 100.
However, I must emphasize that it is important to consider recurring fees and to compare available financial products before making investment decisions.
Buying my first share
The first stock I bought through a broker was Parkway Life REIT in 2017. I was afraid to shell out a large amount as I was dipping my feet into the investing world and was questioning myself.
After all, it was my first official investment and the biggest purchase of my life at the time. I ended up making a low four figure purchase.
Three years later, my fears for the first time proved unfounded. I’m still holding on to the Parkway Life REIT and as of today I have a 59% return including any dividends received.
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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 salary.
Luckily for me, the Singapore stock market is a very forgiving playing field for beginning investors and is packed with REITs that serve my investment strategies.
Subsequently, I gained more confidence and increased my exposure to growth stocks in foreign markets through a DIY ETF investment and automatic advisory platform.
Dedicate almost 40 percent of my salary to investments
To make up for lost time, I invested heavily and nearly 40 percent of my take-home pay went to various investments. To date, I have injected a high five-figure amount into my portfolio, which is currently valued in the low six-figure range.
I managed to achieve a 4.3% dividend yield in 2019, which is not particularly remarkable, but is a sure personal milestone. Sadly, many companies have announced dividend cuts this year, so my projected return for 2020 is lower than the year before.
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Reach my first $ 100,000 in 2020
It took me about four years of saving and investing after joining the workforce full time to achieve my first $ 100,000, just a few months before I turned 27. I didn’t have as much financial intelligence when I started working and I had nothing concrete. . financial goals.
Within a few months of adulthood, I began to recognize that I needed to actively manage and monitor my financial health to maintain my current lifestyle, while still being able to pay for future major life events.
There was a part of my salary that I could save and expenses that I could reduce before compromising my happiness. Through a combination of thoughtful investing and conscious saving, I was able to accumulate the coveted $ 100,000 in early 2020.
Truth be told, this amount was just an arbitrary number that I worked on because I observed a lot of financial bloggers talking about reaching $ 100,000 before age 30. So I have decided to use it as a starting point.
However, everyone has different situations and financial goals, and we shouldn’t be so obsessed with reaching this $ 100,000 before age 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 works 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 aware of what we are investing in and not act on hearsay, which I observed is quite common in the world of retail investors.
For me, what works so far is a combination of robo-advisors and DIY investing. The robo-adviser ensures that I remain disciplined and entitled to the market with minimal fees, while the DIY part complements my portfolio where the robo-adviser platform cannot, such as for dividends or themed investments. I am using Autowealth for automated investing and mostly FSMOne for DIY.
ALSO READ: Saving $ 100k Before Age 30 … Is It Possible?
Tips for Newbies to Start Investing
Tip 1: know yourself
Before someone starts investing, I think it’s important to understand our investment psyche and goals and adjust our expectations accordingly. It will guide how we manage our investment portfolio.
As much as the investment must be mechanical and unemotional, this is often not the case, as money matters are very personal and no one likes to lose their hard-earned money. By being honest with ourselves and aware of our own behavior, we could make better investment decisions.
Tip 2: Educate yourself
I am a firm believer that knowledge is power, and I believe that it is crucial for anyone looking to invest to build a knowledge base before starting. I understand that it can be overwhelming with the sheer amount of information available online, so just start somewhere and continue from there.
It really isn’t that difficult; it just takes time and effort, as with anything else we pursue in life.
Unfortunately, although there was a lot of information available, I was not able to discuss it with my colleagues as they either had no vested rights (which is common for women my age, I realized) or depended on financial advisers.
It was not an easy process for me either, as I had no financial background. Everything I know is self-taught and it was up to me to distinguish the good advice from the bad.
Tip 3: do it yourself
We can only really learn 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 minimize and cushion the mistakes that are destined 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 when investing? Eliminate noise.
As human beings, it is easy for us to be influenced by what we hear. There is nothing wrong with seeking their opinions, but ultimately, we must do our own due diligence and exercise our own discretion.
The harsh truth is that people care more about themselves than their money (despite what some investment gurus may tout). Only we are responsible for our money, so stop making noise and stick with your investment plan.
Once again, remember that the investment is personal and unique to us. So do what you think is best for you, because no one else can do it for you!
This article was first published in SingSaver.com.sg. All content is displayed for general information purposes only and does not constitute professional financial advice.
