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What are the basics you need to get right before embarking on an investment course?

Christopher Ng
Christopher Ng

An investment course is not a panacea to the problems of the modern age. It cannot resolve your financial issues especially if these issues have been festering over the years. However, with ample preparation, an investment program can make a big difference in your life, such as developing an alternative source of income that can complement your day job.

Here, I present a checklist of sorts to help you decide if you are ready to embark on an investment course (or even think about investing).  

1. Make sure you do not have unsecured debts you can’t repay

Truth is, I was hesitant to talk about debt. After all, we’re likely to have some form of debt. For example it is almost impossible for most people to buy a house without a mortgage loan.

Alas, not all debts are equal.

Housing loans are generally fine if you do not over leverage because the interest rate tends to be lower than any other types of loans. However, credit card debts are a no-no on the other hand. The interest can easily hit 24% p.a. and it will be difficult for most to out-invest the interest.

Hence, you should always clear any unsecured debts that are incurring high interest before you even think about going for an investment course.

2. Take action from the best personal finance book

Beginners can draw inspiration from the book The Richest Man in Babylon by George Clason.

Anyone can take simple steps to clean up your finances in such as a way to maximise the returns from attending a sound investment program.

Nobody talks about the fundamentals of personal finance better than George Clason. Here are three lessons out of the seven that he covers in the book: 

i) Start thy purse to fattening

The first lesson in this book encourages the reader to start fattening his purse.

The fundamental truth is that it is impossible to leverage the learning and strategies from an investment program without having some saving of your own. $0 compounded at 12% per year for 20 years will remain $0.

The best practice is to save about 20% of your monthly income into two buckets, such as:

  • 10% into a bucket for particular wants in your life, which can be as cheap as a virtual skin in League of Legends or as expensive as an LV handbag.
  • 10% into a bucket for life emergencies, which can be for instances when you get retrenched and would need to dig into savings to sustain yourself.

At this stage, the best practice is to read up on bank accounts that provide a higher interest, such as the DBS Multiplier account to contain these savings.

Of course, if you do have a lot of wants in your life, it isn’t easy to convert your savings into investments.

To have a more sustainable system, you need to adopt the second lesson, which comes next.

ii) Control thy expenditures

Once you can save your money into a bank account at a reasonable fixed deposit rate, the next step would be to control your expenses and to keep it low. You will need to know where your money goes to, so you may wish to find a good budgeting app on your mobile phone.

Reducing expenses can be done in three steps:

  • Major life decisions can result in huge savings. If you choose to live with your parents after marriage, you can save thousands every month. Deciding to forego a car can add $2,000 to your savings every month.
  • Recurring expenses should be next. Eliminating a vice such as smoking can add hundreds of dollars into your pocket. Removing a subscription you no longer need can do the same thing.
  • Finally, eliminating small expenses can add dollars to your savings each day, resulting in huge savings in the long run. Downgrading from bubble tea to kopitiam Teh Peng can add three to four dollars.

Controlling your expenses will generate the ammunition you will need to exploit your investment training.

The third lesson describes how to supercharge your savings even further.

iii) Increase thy ability to earn

The last lesson in the book is also best sorted out before attending an investment course.

Unless you have a 7-digit portfolio, most investments would not be able to match the ability of a regular job to pay your bills.

The best approach over the medium term would be to combine a day job with an investment portfolio, so having good career management skills can be an advantageous pre-requisite towards benefiting from a good investment programme.

Having one job should be a logical pre-requisite, but the pandemic is creating a lot of uncertainty in our daily lives. Coupling this with a shorter half-life of career skills, you may wish to think about strengthening your job security by reading up on skills that would propel your career further or develop a second career or a side hustle after office hours.

The Richest Man in Babylon is a classic that has remained in the reading list of the Early Retirement Masterclass since its inception.

It remains the best investment you can make to stock up your library of personal finance books.

Calibrate your expectations

Attending an investment course won’t make you a successful investor immediately. It is meant to fast track your understanding, set your investment worldview correctly and give you actionable steps to begin your investment journey.

You can tap into the trainer’s years of investing experience instead of having to spend a lot of time to figure it out by yourself.

That said, this means you will still need to do the work after attending a course. You’ll need to do analysis, make decisions on what to buy and sell and to monitor your portfolio. The continuous guidance from the trainer is only effective if you put in your effort to become a better investor overtime.

Are you ready for an investment course?

Some people would remark that an investment course is useless because you can learn everything online.

I would say the investment course is not worthwhile if you have the ability, perseverance and time to figure things out by yourself. Otherwise, if you have been putting off investing for years or have gotten more confused as you read, getting help via an investment course would point you in the right direction and boost in your investment journey.

That said, it isn’t a silver bullet for your financial issues. Basic personal finance management like clearing your debts, saving more, spending less and increasing your income are what you’ll have to set in place first.

Lastly, having the right expectation of what an investment course can help you with is important too. More often than not, you will need to put in the effort, after the course, to make your investments work. Otherwise, you should be willing to pay fees to others who can help manage your investments on behalf.

Christopher Ng
Christopher Ng
    Juris Doctor(Cum Laude) Bachelor in Engineering from NUS (1st Class Honours) Masters in Applied Finance also from NUS. CAIA, FRM qualifications and passed all three CFA examinations. I have recently completed my Juris Doctor and have been called to the Singapore Bar. For the past 15 years I was an IT manager and I have worked in multinationals, financial exchanges, trade unions and even a government agency. I started my career as an AS/400 administrator and moved on to manage IT projects and operations. Through my personal savings and investments, I earned my financial independence at age 39 after my investment income started to exceed my monthly take home pay. One of my first acts upon retirement is to go back to Law School to reinvent myself as a legal professional. I am likely to be in the practice of corporate litigation. My three books on Personal Finance explain the processes by which I attained my financial independence. Growing your Tree of Prosperity was a local Straits Times bestseller in 2005. I was featured in Me and My Money sections in the Sunday Times twice. I also play the role of a husband and a father.
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