Do you have to be older or wealthier to start investing? Here’s the short answer — you don’t.

It doesn’t matter how young you are, where you are in your career or how much income you have, most types of investments are within reach.

But why not just save your money in a bank? It is the safest option considering you’ll know exactly how much interest you’ll earn, and you won’t lose anything. While that may be true, inflation can impact the money you have in your bank account.

Simply put, inflation is the decline in real purchasing power over time. 20 years ago, you could buy a cup of coffee for $0.50 at a kopitiam or coffee shop but today, you would probably be paying double. This is how inflation works. Now apply this to your grocery bill or property. Can you now see how your personal savings could be impacted by inflation?

This is why investing can help you protect against inflation and expand your wealth.

But before you start investing, here are two main things to bear in mind – figure out how much risk you’re willing to take and avoid investing in something you don’t understand.

To help you get started, here’s a list of popular investments to consider:

Stocks

When you buy a stock, you are owning shares in a company. Your stock becomes more valuable if the company grows and performs well over time, and you could earn a profit if you decide to sell them.

Some stocks pay dividends, which are regular cash payments. Companies that pay dividends are often considered stable and profitable. But most stocks do not pay dividends.

However, stocks are volatile, meaning their daily value can fluctuate widely up and down. External events like the Delta variant or the outcome of an election, create uncertainty that cause volatility. As such, this is better suited to investors who are willing to take on more risk.

Bonds (or fixed income securities)

When you buy a bond, you are essentially lending money to a company or government for a set amount of time, anywhere from one to 30 years. At the end of that period, you will receive interest on the loan and the full amount you bought the bond for.

Corporate bonds generally offer higher yields (or the returns you get) than government bonds but you have to be willing to take on more risk. There is always the chance of the company could going bankrupt. When that happens, you will stop receiving interest payments and may not receive the full amount you put in.

Mutual funds

Instead of buying stocks or bonds, you can invest in a mutual fund, which pools money from many investors. A mutual fund invests in stocks, bonds or other assets, and is seen as an inexpensive way to diversify a portfolio. A professional fund manager oversees the buying and selling decisions, with the goal of earning a return for the investors. Some funds focus on a specific segment, like technology or Emerging Markets, and only invest in companies that fall into that criteria.

Mutual funds are a convenient way to gain exposure to the stock market and are considered a good way to invest for retirement or for the long-term. Most funds are diversified and your risk is spread across a variety of companies or sectors.

Exchange traded funds (ETFs)

An ETF tracks an index, stock, commodity or other asset, and can be bought or sold the same way as a regular stock. The most common ETF in Singapore copies the performance of the Straits Times Index. Similarly, a commodity ETF gives investors exposure to a single type of commodity or a basket of commodities.

ETFs are an easy and inexpensive way to start investing, but they do not generate sizeable returns.

Cryptocurrencies

From bitcoin to ethereum, this alternative investment concept has become popular in recent years. Essentially, crypto is a digital asset that can be used to buy goods and services but it is secured by cryptography, which makes it impossible to fake.

Bitcoin is the world’s first and most popular cryptocurrency but investing in this experimental investment is not for the faint-hearted. Prices in the virtual currency traded at a record high of US$65,000 in April, only to more than halve its value in June after China said it would crack down on digital currencies.

Real Estate

Property is generally viewed as a top investment as it’s a tangible asset with flexibility. Once you’ve purchased a property, you can sell it, subdivide or rent it. It is a dependable source of income.

In addition, real estate investments generally appreciate higher than the inflation rate and therefore, it can contribute to the preservation and growth of wealth.

While price fluctuations happen in the real estate market, having a good property and tenancy agreement means you don’t have to pay too close attention to the ups and downs of the cycle.

If you’d like to find out more about property investments, sign up for GEX Academy’s SkillsFuture Credit-Eligible “1-Day Effective Property Investment” Course. Learn from experts on how to make informed decisions on your investment choices.

GEX Academy is an Approved Training Provider (TP) accredited by SkillsFuture Singapore under the Singapore Workforce Skills Qualifications (WSQ) Skills Framework and an Approved and Accredited Teaching & Examination Centre for IPMA | UEN Reg. No.: 201529371H.