Financial tips on growing your wealth: How to save and invest wisely in Singapore

Financial tips on growing your wealth: How to save and invest wisely in Singapore

Make it count

Text: Janice Sim

It's the last day of our city's circuit breaker and by now, you should find a surplus of savings accumulated over these few months. With grandious holidays, gym memberships, and social activities left on hold, there would be that silver lining of excess dough lying around in your account. Depending on how indulgent you have been in our online purchases, you might instead, end up with a sliver. Nevertheless, it's a time of reflection as we come to terms with how reckless our previous spending habits — pre-COVID-19 — have been.

Executive director of Investment Strategy at OCBC Bank, Mr. Vasu Menon says, "It's a good wake-up call to relook your finances so that you can cut back on excesses and save more." Below, he shares how anyone can maximise their savings — whether it be adopting a foolproof saving method or embarking on your first small investment.

Set aside at least 10% of your salary into a separate savings account

This is for emergency needs and make sure not to touch it. Lock away the ATM card to that account if you need to, just to make it inconvenient to access the savings. Always have at least 6 to 12 months' worth of salary in your emergency fund to tide you through unforeseen circumstances like a job loss.

Make sacrifices to save money

No one's budget is infinite. Cut back on expensive drinks and food, and seek to reduce expenses by finding cheaper and alternative ways to have fun and a social life.

Start itemising your monthly expenses

Be as detailed as possible, and, better still, group them so that you know what the major expense groups are. Be sure to also include expenses that you incur annually like income tax, insurance premiums, property tax and road tax, by dividing these expenses by twelve to translate them into monthly expenses. Once you have done this, it is easier for you to see which are the areas you can possibly dial back on.

Don't be afraid of investing

Once you have enough savings set aside for emergencies and crises, think about investing the remaining savings to grow your funds, especially since leaving your money in a bank at current low interest rates makes little sense.

You don't need to be rich to start investing. Today, OCBC has all the tools to let you invest easily and at your own convenience, and you don't need a big amount. One way is to invest in unit trusts through a regular savings plans, or by buying blue-chip stocks through the OCBC Blue Chip Investment Plan. Both these options can be executed online with as little as $100 through OCBC's internet banking platform. There's also OCBC Roboinvest, a robo-investment platform that automatically rebalances your portfolio periodically, is another easy way to invest in different asset classes across 6 markets with as little as $1500.

A little goes a long way

Instead of timing the markets, a regular investment plan makes more sense given the current market volatility and uncertainties so that you can enjoy the benefits of dollar cost averaging. The time you spend in markets by staying invested, buying gradually and being patient, usually yields better results in the long term than trading frequently and trying to bottom-fish your investments.

It pays to be disciplined and to stay invested. For example, a monthly investment of $100 today compounded over 10 years at an average rate of 5% per annum, can grow to more than $15,000.

The bottom line is, take stock of your finances if you have not done so yet

Save as much as you can, set aside an emergency fund and invest your remaining savings to grow your funds. All this will put you in good stead in time to come because you will need money for your life goals like getting married, buying a home, starting a family, planning for your children's education and preparing for your own golden years. Do not be complacent about these milestones in life and do not leave it until it is too late. Start early so that you and your family can enjoy a happier future together.

For more budgeting tips, click here.