All of us have dreams and aspirations but are often shackled by our financial constraints and commitments, thus preventing us from accomplishing them. Be it owning the dream car, travelling around the world or early retirement, we have to either save up or increase our income until we are able to afford it.
Investing is one way we can utilise to aid us to realise our dreams quicker by allowing us to gain income in addition to our working income. To be efficient in making decisions on our investment choices, we need to set goals to achieve them. It is important to know the amount of money required and set a reasonable deadline to achieve the goals.
After identifying your goals, you will have to attach an amount to each respective goal to know how much you will need. The amounts can be just a good estimate and not the exact amount, unless the specific goal has a long term fixed amount. For reference sake, here are some of the common goals and estimated amounts:
1) Getting Married
The union of a man and woman is a cause for celebration, but the cost of celebration may turn out to be too much a burden for some. In order to have a grand and memorable wedding, some couples turn to bank loans to finance the wedding expenses only to struggle with the repayment afterwards. Main things to take into consideration include engagement rings and wedding bands, bridal packages, wedding banquets and honeymoon.
Average Cost: $54,000
2) Owning a house
The next big ticket purchase after marriage is buying a place to call your own. More than often, couples will need to take a loan to purchase a house and make monthly repayments over a long period of time.
Average cost: $450,000 (based on the assumption of a typical 4-room HDB flat)
3) Owning a car
Most of us would like to own a car as it is convenient and minimizes travelling time. However, the cost of owning one usually puts a heavy strain on the finances for the majority. Similar to owning a house, a loan is usually required to finance the car.
Average Cost: $100,000
The ultimate goal for most of us is to retire as early as possible and spend our remaining days doing activities that we love. However, we will require a huge amount if we want to sustain our current lifestyle during retirement.
Average Cost: $500,000 (based on the assumption of minimum expenditure on necessities and entertainment)
As seen from the examples above, we will need at least a total of $1,004,000 in our lifetime. For most of us with average incomes, it will be challenging to achieve all of these goals.
Investing is a good or only way for us to supplement our income and ease our financial woes. However, it only works if you are able to make sound investment decisions. Investing recklessly will only increase your financial burden; therefore education is important to prevent you from making foolhardy decisions.
To get started on learning how to invest, here is a course by SGX Academy which will be useful for your investment journey.