“I don’t have money to invest”

There are folks who are afraid of making an investment loss, and then there are folks who are not able to get started. The reason?

“I don’t have money to invest”

For this, I thought I would direct them to the 13 Foolish Steps to Financial Freedom that may have some suggestions to help out. Here’s some highlights of the steps you can consider taking if you find yourself in such a predicament.


First, get control of your money:

“To start, make a list of your regular bills and how much they cost you each month.  This should give you a good idea of your main areas of expenditure.

Start trimming your outgoings by reducing one major bill each month, prioritising the bills you pay on a regular basis.  Most people can save hundreds of dollars, if not more, just by making a couple of switches.”

There are a few more examples in the link above, but the general idea is to work hard, spend little, and invest the rest. Having observed folks from all walks of life start with a few hundred dollars and slowly build their wealth, I am optimistic that it can be done.

With some savings in your back pocket, you may move on to the next stage.

Beat debt, and separate your money into buckets

Before putting your money to work, think about paying off your debts first – in particular, credit card debt. Compounding can be a lot of fun, but it’s not fun when it’s working against you:

“Credit cards are a major culprit here. While it’s useful for borrowing money, if your card has a high interest rate and you can’t afford to pay off much each month, then the credit card company is getting the benefit of compound returns – and who wants that?”

After that, building a cash cushion is in order. No, not stuffing cash into a cushion. But putting aside money for any emergency which may arise. The cash which you have for emergencies and for investing should be separate.

To be sure, the idea of investing is not about using money which you might need in the next five years or more. Think carefully about major expenses that may occur (like a wedding, in which case, congrats!). The last thing you want to do is to prematurely sell your investments for emergencies which you did not expect:

“Things happen – things that require money to fix, such as a job loss, leaking toilet, or a really bad hair colouring job just before Chinese New Year. If you don’t have the money on hand, you might find yourself using your credit card or worse, borrowing money from the aunty you only see once a year during Chinese New Year.

Your emergency fund needs to be readily accessible in a simple savings account. Don’t expect to make a killing on this investment.”

Smaller lots sizes

You may have heard that there are smaller lot sizes right now for the retail investor; on 19 January this year, the stock exchange operator Singapore Exchange reduced the board lot size in Singapore from 1,000 shares to 100.

This will help to lower the financial hurdle for investing in shares, especially when it comes to the larger, established companies in the Singapore stock exchange.

The smaller lot sizes are also applicable for exchange-traded funds like the SPDR STI ETF (SGX: ES3). The ETF tracks Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI). As the index is made up of 30 different shares, the purchase of a single lot of the SPDR STI ETF would give you exposure to those 30 companies.

Give yourself a pat on the back when you get to the end (and, I hope you do). Fool on!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.