Young investors, time is on your side

 Young investors, time is on your side

SINGAPORE - Learning to invest wisely is tough. For a young investor, the investing world may seem like a mind-boggling maze, which is why many shy away from it.

But it pays to start investing early as time is your ally. The young can afford to take bigger risks than those with family responsibilities or who are getting closer to retirement.

Another compelling reason to learn about investing right now is the low interest rates being paid on bank deposits. Rates of below 1 per cent are far outstripped by inflation - and mean your money is losing value.

Yet, for many young people, it may seem like too much trouble to think about now. Wait to accumulate enough savings, you may say. But as you earn more, your spending increases, along with your responsibilities.

Taking the first step is the hardest part. Just remember that it will get easier. To get started, here are some things to consider:

Don't invest all your savings

You may be young with nary a care in the world. Nevertheless, you should set aside a fund for emergencies as you never know when you may need it. Take care of your current needs before you invest for the future, and make sure you first have adequate health insurance.

And then, only invest the amount that you can afford to lose, without losing too much sleep over it. This means you have to understand your financial goals, know your investment horizon and how much risk you can take.

"This is because some investments may be illiquid (cannot be sold easily or exchanged for cash), and volatile," says Mr Abel Lim, executive director of personal financial services at UOB.

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