Tuesday, April 29, 2014

Invest in yourself first before investing in stocks

I'm not in favor of young people getting into investments in general. It's so prevalent now that it's almost fashionable to say that you're into stocks when you're at a young age. What business do people who are still studying have in the stock market? None, in my opinion. They should focus on what they should be doing, which is studying. To me, there's a time for everything. I'm quite sure I'll get flamed for this post, haha! This is not what most people would like to hear. What?! It's bull market now and you ask me not to invest?!

For most people, the bulk of the capital to even begin investing comes from paid work. If you don't even have a proper salary yet, you shouldn't even begin investing. Focus on getting a proper salary first. If your salary isn't high, then invest in yourself and get yourself to the next banding of pay scale. If your salary is low, no matter how much you scrimp and save, you're always on the 1st gear and can't really accelerate your path towards financial freedom. Saving 100% of $10 is not going to beat saving 10% of $1000, so your limiting factor to reaching financial freedom is not your investment power but your salary. You'll find that spending time and effort to increase your base salary will work more wonders and than relying on investments,unless you're exceptional. But everyone thinks they are exceptional and not average... I think it's much easier to increase your salary by $100 per month than to increase your passive income by $100 per month.

After you raised your base salary to as high as it can get, then look towards saving a greater part of your salary. This first tranche of money is going to work hard to bring in future streams of money, so make sure that you can save. If you can't save a significant portion of your salary, then maybe you should concentrate on improving yours savings percentage first before you think about investments. Get the basics right and build up the base for your investments to work. Also work on reducing your expenses. Increasing your savings is really just one simple equation : increase your income and/or reduce your expenses. By increasing both your income and reducing your expenses, you will be able to save exponentially.

Once you've done all this and set aside some money for emergency funds, bought some insurance and budget aside some cash for near future spending like marriage, housing and renovation, then we can start to talk about investing. In summary, before you start investing, maybe you should invest in yourself and work hard to see if you can increase your salary first. That is more likely to be safer and surer than any investment you make in the stock market.


CreateWealth8888 said...

Totally agreed!

My two working children don't even have brokerage account; but their father is blogging on investing every week.

How come?

Some may know why


la papillion said...

Hi bro8888,

Haha, I think you already know you're not going to reach the top most level of the salary range in your company, so bo bian, have to enter both feets into the stock market, right? :)

B said...

The problem with teenagers is that if they dont put these money into investment in stocks (which they are going to lose anyway if they enter during the peak), they are going to spend on gadgets or mcdonalds anyway. So its money gone either way. Unless we are talking about a sensible person who plans and keeps his money in deposits until.he is generally ready, but most people enter when they are not ready. Its learning on the go sometimes for some people ;)

CreateWealth8888 said...

Young ones may need to understand more on Human Asset and Financial Assets.

Young ones should attempt to generate high return on their Human Asset and be among the few fellows on their way to $X,XXX,XXX annual earned income.

Becoming millionaire every year all over again.

BTW, in investing Account size really matters. How to enlarge account size? The answer is obvious. Right?

la papillion said...

Hi B,

If you ask me, the worst thing that can happen to these group of people that you're talking about is that they put money into the stock market and they start earning money there.

If they ever start to treat the stock market like an ATM machine to make easy money, the long term harm is worse off than the short term 'harm' of spending it.

In my opinion, without the proper mindset and maturity, any gains in the stock market or otherwise will be lost anyway.

Anyway, my post is really about concentrating on one's career first. Unless there's no hope in it, then you look at investment. This is quite the contrary to the message that we should invest as young as possible in order to gain from compounding.

la papillion said...

Hi bro8888,

Agree with you. Either you make your first drop of money through paid work or through inheritance. Even if you make it big through property, you also need the first drop of money through your job.

Singapore Man of Leisure said...


I like the way you spell out "investing to escape" with full frontal nudity.

I more coy. I only use soft porn ;)

My stand on youth?

Try out as many things as possible and make as many mistakes as possible. Have fun! Dirty your clothes. Come back with bruises and with a silly grin.

Crash got sound one.

Youth, your strength is not knowing what cannot be done ;)

la papillion said...


Not knowing what cannot be done is indeed the strength of the youth :) When we're older and more experienced, we lose that curiosity and ability to tank..necessary cost as our responsibilities grow. More to lose, they said :)

I recognise that this is one useless blog article. Nobody in their youth is going to listen to some old bird telling them not to do the things they are doing now, haha

Singapore Man of Leisure said...


It's not useless.

It affirmation we have crossed over to the worry about consequences phase of our lives.

We have become like our parents :(

I do my best to delay this process by not acting my age. But who am I kidding!?

Psst. Some girls do prefer older men. So it's not too bad... There is life after 40!

Woo hoo! (Just don't let the wife know)

la papillion said...


Haha, okay, you win :) I guess you're right - we're more and more like our parents. It's the job of the younger generations to overtake us and eventually become us again.

Matt said...


Many want to start investing ASAP because they want to retire early. Sometimes, I also don't know what to say when I read young ones in their twenties talk about retiring at 40. Most are still living with their parents, not having to pay rent and getting free food and have maids at their beck and call.

The reality hits when we start working for a living and it is even worse when we start contemplating buying an apartment to live independently.

Want to retire young? Hit the road first by paying for all your own expenses and perhaps start giving your parents some pocket money, whether they need it or not. Do that for a few years and feel comfortable doing it before even thinking of retiring.

la papillion said...

Hi Matt,

I'm also ambivalent about young people all wanting to retire by age 40. It's good that they have an end point in mind, but is it realistic to sacrifice life from now till age 40, so that they can have a life after that? I'm not sure...

It's almost fashionable to say such things, making me wonder if it's all a hype.

Createwealth8888 said...

Blame the financial and investment bloggers for start it?


Azrael said...

I think saving+investing (after being educated) must start when you get your first paycheck onwards. And while doing it, try to push your salary as high as possible, while maintaining or increasing savings rate.

Will get much further I feel, pity I started late.