The Millennial’s Guide to Investments in Singapore

The Millennial’s Guide to Investments in Singapore

Millennials tend to have a very different take on money matters. Unlike Generation X, they opt for aggressive, high-risk investments, spend extensively, and more flexible in their financial decisions. Many people from Gen X have a slightly negative outlook towards the way millennials function. This comes as no surprise as the generation of Baby Boomers too had a similar perspective towards Gen X. As each generation progresses, the older generation will always find fault with the new ways of thinking. But these reservations towards accepting different ideologies should not hinder our capacity to progress. This is why the main focus of our article today is to understand the millennial’s guide to investing and what everyone can learn from it.

For all you skeptics and pessimists, here is a millennial’s guide to investments in Singapore:

Understanding the millennials’ money habits

Gender Diversity

According to a report by PricewaterhouseCoopers, globally women make less than men and save less for retirement. But in Singapore, 69% of women earn equal or more than men versus 66% for the global average. This shows that along with career goals, Singapore women allot significant importance to competitive wages and incentives. Millennials are highly educated and are less likely to compromise on their financial well-being. This holds true especially for women in Singapore who tend to prioritize money when seeking jobs. When it comes to gender diversity, workplaces in Singapore are always highly rated. In an article published in the Singapore Times, “the labour force participation rate (LFPR) for women was 60.4 percent, according to the latest labour force survey released by the Ministry of Manpower.”

Tech addicts

Another trend specific to millennials is their dependence on technology for anything and everything. Don’t be surprised to find a millennial buying 100 shares of a particular company on their iPhone while having lunch. For millennials, technology is their lifeline. They read all their investment market information online and make major investments on the go. Owing to this, all financial institutions have a strong digital presence to cater to the investing millennials.

Conservative and aggressive investing style

Most millennials are quite conservative when it comes to investments. The reason for this could be their over-dependence on mortgages, the recent economic downturn, and dabbling with fewer jobs. This group of millennials believes in allocating their funds in a savings account as opposed to other lucrative investment options. But having said that, there are also aggressive investors in the group. The risk takers canafford to adopt a more aggressive investment approach as he has time to recoup losses in the future.

Actionable steps for millennials

Consider Stocks over Bonds

No doubt, stocks are more volatile in nature as compared to bonds, but the former tend to have higher returns in the long-run. Let’s understand this better with the help of an example, in the 10-year period between 2008 and 2018, the S&P 500 index returned 8.11% per annum. This is almost double the aggregate US bond index return of just 4.62% over the same period. So, stocks always outperform bonds within a given period. Although stocks are a high-risk investment option, millennials have the benefit of time. Even if they make short-term losses, they have the time to make up for it and grow their wealth.

While you plan to invest in stocks, do your research on growth stocks as well as income stocks. Growth stocks involve higher risk and have greater volatility than income stocks. But growth stocks usually offer greater long-term returns due to their higher growth potential.

Use Multi-tasking Retirement planning Approach

As per an HSBC report, 64% of Singapore millennials believe that they feel the need to support themselves financially much longer. This calls for a comprehensive approach towards retirement planning. To begin with, start saving for your retirement early on. Prolonging this step or completely excluding it in your financial planning in the early years of your career is one of the biggest mistakes you can make.

Estimate your retirement expenses and break them down into various categories. Post-retirement, you might require funds for your living expenses, healthcare, and other recreational expenses depending on your needs. You can opt for the CPF system to provide an easy and systematic framework for setting aside a percentage of income for retirement. The CPF life cover is annuity scheme that can help you with a monthly payout to Singaporeans once they are out of work. There are many other retirement plans such as the AXA Happy retire and Aviva My retirement plus that can help you set aside a decent amount for your retirement.

Millennials should make the best use of the technological advancements, their high qualifications, and well-paying jobs to have a strong investment profile. We hope this millennial’s guide to investing was insightful enough to motivate you to make better investment decisions.


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