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The stock market has always been of great interest to me. Even as a child, I was helping my mom to look at stock prices on the teletext daily. After turning 21, I opened a brokerage account and started buying stocks.
As a student then, I didn’t have that much money. This means I could only buy 1 or 2 different stocks since we needed to buy them in lots of 1,000 shares back then. For example, a stock like Singtel trading at $3.00 per share then would cost at least $3,000 per transaction. If we wanted to invest in bank stocks like OCBC, we would need at least $8,000 to $9,000 to buy 1,000 shares for each transaction.
Back then, there weren’t any robo-advisory platforms we could use. This could be one reason why many older investors (above 40) tend to hold individual stocks in their portfolio today, and need to diversify their investments appropriately. Younger investors (30 and below) tend to hold a larger proportion of their investments in robo-advisory portfolios and may choose 1 or 2 platforms they are familiar with to invest through.
But is it an investment bias that each generation has? Do older investors know more about stocks, making it easier for them to invest in stocks while younger investors who are less familiar with stocks would choose to park their money with robo-advisors instead?
In my opinion, it’s investing habits that actually keep people investing in the same way that they are used to.
If you lack investment experience and find it hard to start investing, it’s important that you start building your investment knowledge first. At the same time, you should also work on developing good investment habits as well
Here are 3 simple tricks that you can use to develop investing habits for yourself.
#1 Start A Separate Account For Your Investment Monies
One of the simplest tricks to develop an investment habit is to have a designated account for your investment monies.
By separating your investment monies from savings that you need for day-to-day transactions, it prevents you from accidentally spending money that you have set aside for investing. It also inculcates a habit of always setting aside an amount for investments, whether you invest during that month or not.
For example, if your take-home salary is $3,000 and you want to set aside 20% of your salary ($600) for investing, transfer it immediately to your investment savings account once you receive your salary each month. If you are afraid that you may forget, consider setting a recurring transfer each month to your designated investment account.
Alternatively, you can get your company to GIRO your salary to your designated investment account and to transfer the money set aside for spending out of your investment account each month.
Even if you don’t invest the money immediately, the fact that it’s sitting in your designated investment account will serve as a reminder that you need to invest the money.
The OCBC 360 is one such account that you can utilise for investment purposes. The account also provides decent interest rates, which allows you to earn bonus interest for performing transactions like crediting your salary, or buying an investment or insurance product. You can also choose to credit your dividend and coupon payments directly into this “designated” investment account.
#2 Explore Convenient Investment Options Offered By The Bank
One of the advantages of designating a savings account for your investment with a bank like OCBC is that you can easily start investing through platforms offered by the bank. You don’t have to complete separate forms, open a separate brokerage account with another broker or transfer funds over before you can invest. This makes it easy for you to start and keep investing with minimal disruption.
For example, one way that I developed a habit for investing was through the OCBC Blue Chip Investment Plan (BCIP). The BCIP allows investors to invest in blue-chip stocks or selected ETFs on the Singapore Exchange (SGX) from as little as S$100 a month. This was perfect for someone like me who did not have any investing experience and could only afford to invest a few hundred dollars each month. Also, as a new investor, it’s better (in my opinion) to adopt a dollar-cost averaging approach to investing, where you invest a small sum each month, rather than make a large one-off lump sum investment.
If you are already an OCBC savings or current account holder, you can start investing via mobile through the OCBC Mobile Banking app (download from Google Play or the App Store). This way, it becomes easier to make investing a regular habit – just like replying to texts or surfing the internet on your way to work.
Screenshot from OCBC Bank app
Besides the BCIP, there are other investment products would-be investors may consider, such as Unit Trusts or OCBC RoboInvest – a digital advisor that uses an intelligent algorithm to help you invest from as low as US$100, with a wide selection of portfolios to choose from based on your risk appetite, needs and preferences. You don’t need much to get started. You can invest in unit trusts and RoboInvest from as little as $100 (US$100 for RoboInvest) through the mobile app.
For example, if you want to invest in local stocks or ETFs through the BCIP, you can choose 1) what to invest in and 2) how much you wish to invest each month through the app on your mobile phone. Funds will automatically be deducted from your OCBC savings or current account each month to make the investments. You can change your investments or stop investing at any point in time.
#3 Track The Progression Of Your Goals Closely
Most of the investments we make are for the long-term. We may be investing towards our retirement, child’s education or other goals such as a home upgrade of a new car. As such, it’s important to constantly keep track of our progress.
Tracking our progress doesn’t just allow us to make early adjustments if we are going off-track but also serves as valuable motivation, validation and encouragement if we are doing well – just like the mile markers you see while running a marathon. Managing your money is easy with the Money Insights feature on the OCBC Mobile Banking App, which gives you a view of your spending and also helps you set budgets.
Separately, you can utilise the OCBC Life Goals planner, a tool that allows you to set your goals and to work towards it. OCBC Life Goals help identify financial gaps that you may not have noticed while planning for your retirement or children’s education. It also offers you solutions to help close these gaps.
Tracking your goals and monitoring your progress is important because it gives us an indication of how well we are doing, and what else we can work on to improve our results.
If we want to get fit and to live a healthy life, we need to develop the habit of eating healthily and to find the time to exercise regularly.
Similarly, we need to develop the right investing habits in our younger days to make investing part and parcel of our daily lives. By setting up an account to keep the savings for our investments, downloading the right apps to make investing easily accessible for us each month and to track our goals regularly, we can set ourselves up to be successful in our investment journey.