Keen to start investing but unsure where to begin? Goal-based investing can provide a handy guide in achieving your financial goals.
The uncertain economic outlook has led nine in 10 young adults in Singapore to alter their savings and investment habits, according to a 2023 survey by Etiqa Insurance.
As a result, it is no surprise that most young adults lean towards saving up for essential life goals such as buying property. For example, a Today survey showed that eight in 10 young adults want to own a private home.
At the same time, saving up for retirement is also a prime target.
However, the reality is that as prices of goods and services continue to increase due to inflation, many young Singaporeans will find it challenging to meet their financial goals.
How do investors try to achieve these goals?
Traditional investment methods focus on generating the highest monetary returns, known as the wealth maximisation approach. A result of this could be chasing returns by constantly switching portfolios to where the biggest yields are.
Another method is age-based investing, where one determines the ideal asset allocation depending on age.
The principle behind this is the younger you are, the higher your risk tolerance. A common rule of thumb for this method – which may need reviewing with today’s higher life expectancy – is to deduct a person’s age from 100 to determine what percentage of assets one should allocate to equities.
For example, a 30-year-old would allocate 70 per cent of investments to riskier, potentially higher-yielding equity funds, and the remaining 30 per cent to more guaranteed returns like bonds.
Goal-based investment
Most investors have a preferred investing strategy. But not everyone knows what suits them.
Adopting a strategy that does not fit you is akin to embarking on a journey without a final destination in mind. Over time, it can be overwhelming and take a heavy toll on you.
Therefore, goal-based investment, with a structured and systematic methodology, can help new investors in achieving their individual financial goals, be it saving up for a house, a car, retirement, or their child’s education.
For instance, saving for retirement may vary depending on individual needs. Goal-based investment takes this concern into account by looking at one’s projected retirement age and monthly expenses before generating an investment goal amount and recommended monthly investment.
Customers in Singapore can tap on this new approach with Maybank’s new online investment service, Maybank Goal-Based Investment. It helps customers set and track their finances according to four key goals: Education, Retirement, Generate Income, and Grow Wealth.
Another key feature is the low barrier to entry, especially beneficial for those just starting on their investment journey: Customers can begin investing with a minimum sum of just S$200. Till 30 June 2024, there will be zero per cent sales charge on the first S$2,000 invested via Goal-Based Investment.*
Whether you are a student or a young adult who just joined the workforce, almost anyone can start their investment journey with just S$200.
the bottom line:
Saving up for a new car, a private property or your retirement? Whatever your targets are, goal-based investment offers a disciplined and accessible method of investing for almost everyone.
*Terms & Conditions apply.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
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