Saturday, 4 October 2014

What is the right age to begin investing & Should you sacrifice your education to get rich?

Today, I came across a fellow senior investment blogger who has been on the scene since 2011 with more than 300,000+++ views!

His latest blogpost,

Starting investment when you are too young - Is it a good thing?


After reading it, I strongly agreed with his blogpost. What IS the right age to begin investing? There is no right age. Some begin in their 20s, some begin in their 50s. It's up to you when you begin. It's not when you begin, but more of HOW you begin.

Anyway, I will thus refer to him as 3Fs from here on out for easy clarification.

We often hear that starting your investment when you are at a young age is a good thing as it allows more time for compounding to take effect. But this is on the premise that everything else remains constant and time is only the variable factor that is considered.

Investing at a young age has often been emphasised by various finance sites.

Example: 

I would like to point out that time is constantly dictated to be one of the benefits of investing when you're young because of compounding.

However, that should not be taken for granted. 

I've come across stories of many young readers recently who wanted to start their investment journey as early as possible, some are as young as 15 while another at the tender age of 18. The intern in our department is another one whom I've come across. We had lunch today and I get to find out more things about him and his "dreams". He is currently at his 2nd year at Ngee Ann Polytechnic, 18 years of age and has started investing in the stock market. When I asked him how he gets his capital, he told me that he dislikes studying and would prefer to go outside and earn side income, save and then invest, all of these at the expense of his studies.

This shocked me. While investing in the stock market at the age of 18 should be applauded, doing so at the expense of his studies is something I will encourage all readers to never do.

Firstly, I have to be brutally honest. The stock market isn't your parent. It's not a place you can simply enter without prior knowledge. This means, investing without knowledge of what's going on is suicidal.

Here I'm assuming, that since he dislikes studying, it would be probable that he invests mainly on whims and on a moment's fancy. I may be wrong.

I would be more curious on how EXACTLY does he invest, in what and how does he go about doing it? Does he have a procedure? A trading account? Or investing via the banks? Anyway, that's just me, I'm habitually curious.

First, a lot of the knowledge and skills that you can learn in school are under-estimated by students. The fact remains that school and libraries are the two places where you can find a lot of information and resources where you can pick up valuable skills. At the young age of 18 or 15, I question whether the young investor has the necessary knowledge in investing.

Second, size is key in investing. At the early stage, most people would use their savings earned from their active income to build up their investment portfolio. So the amount that is earned from one's daily job played a key role in determining the size of your investment over time. The thing is by sacrificing his studies and probably therefore his diplomas/degrees, he would probably not get a job that pays a decent amount that is sustainable. We know that Talent is underrated while paper degrees are overrated, but that's the fact you experience in today's society. You can be the most productive and capable person in the company but if you lose out in terms of degrees and qualifications, you would still be bypass in the promotion list to a management position = FACT IN LIFE, GET THIS STRAIGHT.

Reading the above, I have to completely agree. Information like accounting, which is taught in secondary schools and certain courses in polytechnics is so important. I regret not having more interest in that subject in the past as I do now, would have probably scored a B/C at least.

Not just knowledge on accounting, having a strong foundation in English is also crucial. Why? Because most books are written in English. Without a good understanding and command of the language, you will not understand many things. You will lose out.

I also would like to re-emphasise this sentence: " You can be the most productive and capable person in the company but if you lose out in terms of degrees and qualifications, you would still be bypass in the promotion list to a management position = FACT IN LIFE, GET THIS STRAIGHT."


Sadly, true. Welcome to Singapore. Investing in yourself has been mentioned by me before.

"Invest in yourself. Your career is the engine of your wealth." - Paul Clitheroe



Investing should never be mistaken as a way to avoid studying and get rich. It should never be taken as a path when you simply can't be bothered to pursue your education but want to get rich.

I fear that young teens view it as a way to "Get-Rich-Fast" scheme. That is why MLMs work so well.


People want to get rich fast, but they don't want to work hard for it. Therefore they fall prey to pyramid schemes, MLM companies and then make those that thought of the scheme rich instead.

The chances of that happening is 1 in 100,000 at least.

"Believe me, unless you're a seasoned professional, blindly placing hot-shot stock trades like Jim Cramer on Mad Money is the fastest way to lose all of your hard-earned cash. If it were that easy to make moneyby buying and selling stocks right away, nearly everyone would be rich!"


I've received a small amount of emails from readers who ask how to begin, where to start, what account should they open etc.

As far as I can, I usually provide them with the answers. However, occasionally I also encourage them to search for the answers on their own.

Learning is part of the journey. As you progress on in life, you'll realise answers don't come as easily as it used to. You got to work for it. Sure, you'll fail and fall on your knees a couple of times. But you'll get up, and you'll persevere. Because you know it'll be worth it in the long run.


Signing Off,
Teenage Investor

4 comments:

  1. I remember starting out on my investment journey by reading investment books borrowed from the library.

    Would agree that giving up studies just because you made some money in the market is suicidal. You'd never know whether it is pure luck or skill, until you've proven to be consistently profitable year after year.

    And that takes a decade.

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    1. Hi SSI,
      I agree as well that in most cases, every journey begins with first obtaining as much information as possible.

      In the short run, money made is a possible chance of beginner's luck etc. In the long run however, education will be crucial to choices made in the future

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  2. Hi TI

    Thanks for this post.

    I think being a young investor yourself, you represent a much better view of the voices amongst other young investors.

    You represented a view of what I was trying to say and it amplifies when it comes from young person like yourself.

    The bottomline is invest as early as possible (whether or not you make money at the beginning is fine as your fees are probably small for you to learn). But don't do it at the expense of your own studies, career, families and so on. Careers are the pillar of your life, at least at the first part of your journey so ignoring it will bring about greater consequences to playing catch up later in your life. Compounding is not just a function of time, but also size ;)

    *Would you like to do an exchange of blog-link? Your posts and thoughts are very mature for your age. I think the community will benefit from your posts ;)

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    Replies
    1. Hi B,
      Personally, I agree that many young teens just want to get rich quick, and then either flaunt their wealth etc. Only a small number invest at a young age because they think of things like wedding, future and retirement in an uncertain future.

      Studies should always come first, followed by having a decent amount of funds stashed away in savings / emergency funds before even planning to invest.

      Your intern may run the risk of losing his investments and then have no spare cash to fall back on. That's a scary thought.

      Thank you for your kind words! I have linked you already :)

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