Seedly Co-founder’s Advice to New Investors — Get Started

It doesn’t matter if you’re a 22-year old millennial working in your first job or a working professional in your late-30s — anyone can be a “new” investor. Of course, the prospect of investing your hard-earned money in stocks, equities and other asset classes can be scary, but that’s OK. It’s natural to be wary of something you haven’t tried before.
 
However, just like other things you were scared to do the first time  — such as riding a bike or driving a car — investing gets a lot less scary once you try it. To help coach you through the fear of getting started with your first investment is Kenneth Lou, co-founder of Seedly, Singapore’s homegrown personal finance management application. 

Question: What is your investment philosophy?  
Kenneth:  Before you even begin to invest your money, you need to understand these financial components first:

• Income: You have to understand how much you’re earning on a monthly basis — just remember to net off your CPF contributions.
• Debt: You have to know how much you’re spending on your debt repayments like your mortgage, student loans, etc.
• Spending: You have to know how much you’re spending monthly on non-debt item such as dining, transportation, utilities, services and insurance. For insurance, you need to know how much in premiums you’re paying to insure your key assets such as your home, car and even your health. 
• Savings: You have to know how much you’re saving up on a monthly basis.
• Emergency Fund: You need to have at least 6 months’ worth of income saved up to deal with unexpected emergencies.

Once you have evaluated these key financial components and you know how much you’re really spending and saving every month — then comes investing. Remember, you don’t have to invest a lot. It’s perfectly alright to start small in your first investment.
 
My philosophy on investing is to take a structured approach by having 70% of my investment in bonds and 30% in equities.  Furthermore, I also undertake a long-term approach, typically with a time-horizon of 10 years or more for my investments. Recently, I’ve also begun to invest heavily in exchange-traded funds (ETFs).
 

Question: Can you tell us about Seedly?
Kenneth: My co-founder and I started Seedly when we realised that a person’s spending habits could be better controlled through a convenient mobile app. This makes a lot of sense as the younger generation faces the same financial challenges as their parents’ generation, but they are also mobile and very tech savvy. With Seedly, users can track their expenses from multiple banks from one place, which makes it easier for them to plan their budgets. 
 

Question: How did being in a fintech startup help shape your investment philosophy?
Kenneth: Startups are generally very risky in the sense that you have to invest a lot of time and effort to build up a company — which is a lot like investing. We don’t have a pile of capital sitting around that is ready to be invested. Each dollar is hard earned, and we try to make the most of our cash by picking and choosing investments that have the most potential for long-term returns.  


Question: What events motivated you to start investing?
Kenneth: One personal experience that taught me the importance of investing was the impact of compound interest on my mother’s investment returns. She has regularly invested over the last 20 years and seeing her returns firsthand taught me how important it is.
 
We write a lot of personal finance articles on Seedly, and one of the key things we try to educate our readers about is the importance of compound interest. In fact, we try to encourage everyone at Seedly to invest early to reap the long-term benefits of compound interest.
 
On another note, I’ve realised that some young people think that CPF is an investment vehicle. This is not entirely wrong, but I think that if you want to take control of your own investment performance, there are other avenues to take. For example, your Ordinary Account (OA) provides 2% per annum (p.a.) returns and your Special Account (SA) 4% p.a. — but the Straits Times Index (STI) ETF for example, can generate returns of 6%-7% p.a. That’s a big difference.
 
 
Question: What was your first investment and why?
Kenneth: My first investment was in the STI ETF after I graduated.  The stock itself, an ETF, is comprised of the 30 companies in Singapore with the largest market capitalization, which makes a lot of sense for a beginner investor.
 
I liked it because it had a very low barrier to entry and I could start with a low minimum of SGD $100 a month through a regular savings investment account with a local bank.
 
 
Question: What is the biggest investment failure you have experienced and what did you learn?
Kenneth: I’m still a relatively new investor. However, I think the biggest investment mistake I’ve made is not investing enough. I realise now that I was too cautious — I waited for opportunities to appear and I actually ended up missing them instead.
 
One good example is my STI ETF investment. I was only contributing the minimum, but looking back at my financial situation, I realise now that I could have invested more and reaped greater benefits of investing early. I think that a lot of people, especially those that are still in their early 20s, don’t realize that time is on their side because investing is a long-term game. Short-term returns will not be great, but in the long-term, returns will be a lot better based on statistics and history.
 
Also, providers like Income and the banks are making financial products, like Investment-Linked plans, much easier to access with good self-service information. This makes it easier for today’s Singaporeans to learn more and ask questions.

 
Question: What advice can you give Singaporeans as they prepare for their investment journeys?
Kenneth: The best advice I can give any new investor is this — Get started! The moment you start buying your first investment and you start receiving letters about the company and stock performance, you’ll start to get insight into how the whole system works. Once you start seeing returns, it’ll give you more incentive to really get into investing.
 
It’s a good idea to join groups on social media or forums as a way to learn more and grow as an investor. At Seedly, we run a very active online Facebook community where beginners can share their experiences and encourage each other. It’s an interesting dynamic where younger members encourage others to get started and older users advise the younger generation based on their experiences.
 

Question:  What role do you think savings plans and investment-linked plans (ILPs) could play in an investment portfolio?
Kenneth:  Savings plans and investment-linked plans (ILPs) are suitable for people who don’t have the time and energy to manage their investments on a daily basis. They can help to provide reasonable growth and insurance component(s) to provide you with coverage in the event of unforeseen circumstances. Do note that they may sometimes come with fees, depending on the company offering them.
 
The fundamental thing about these products is this — you need to have a good financial adviser who has your interests at heart.

---

 
Chat online with our advisers on how these plans can fit into your investment portfolio today at Income’s Adviser Connect.