30% of My Monthly Income Goes to Investments, Here’s Why

By March 16, 2021 Articles

30% of My Monthly Income Goes to Investments, Here’s Why

The Potential of $1000

Think about the recent pay cheque or allowance that you’ve received, or for my non-married friends, the total amount of Ang Bao money that you’ve received during New Year.

How much was it? Let’s say that it amounts to $1000, then what do you plan to do with it?

5 years ago, in February 2016, if you invested $1000 in Apple, also known as a blue-chip stock due to its long history of sound financial performance, your $1000 investment would be worth over $4800 in present day. This is equivalent to an average yearly return of 36.85%. Imagine having an extra $4800 on hand, you could’ve been splurging on food,
apparels, games etc.

However, most of us wouldn’t have this extra $4800 and why you ask? The us 5 years ago would’ve just probably took to our family’s advice to save the $1000 in our banks, or perhaps spent it away on other luxuries. In many households, saving is still perceived as a virtue but no put things into perspective, the $1000 from 5 years ago would only be worth a staggering $1051 in present day. This is based on the assumption of a 1% yearly interest from the bank. Naturally, the additional $51 may or may not be substantial to you, but from the example above, we now better understand the potential of $1000.

So, Should I Start Investing?

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case” – Robert Allen

Before one begins his journey to invest, it is of paramount importance for him to answer a few key questions, which I like to call the 5W1Hs of investments.

Why?

Why are we investing? To obtain $XX by Age X? For our savings to hedge against inflation?

What is our purpose?

Who?

Who are we investing for? Ourselves? Our descendants? Our parents?

What/Where?

What are we investing in? Where are these companies situated in? Are we familiar with these assets and are they professionally managed?

When?

When is the best time to invest so as to maximize our returns based on our goals?

How/How much?

How and how much do we invest? Through a personal brokerage account? Through a robo-advisor? How much should I set aside for my investments?
For my aspiring investors out there, I hope that the 5W1H framework gives you a heads-up on some of the many pointers one should consider before investing their hard-earned money.

“An investment in knowledge pays the best interest” – Benjamin Franklin

Learning how to grow one’s money is an essential skill in the 21 st century. Are you ready to kickstart your very first investment?

– Javier Liu (@lkatjavier), Financial Services Consultant