You will write a short investing goal with an amount, a time horizon and the largest fall you could sit through.
Nadia had been saying "I want to start investing" for two years. When a friend asked what for, she said "the future". When the friend asked how much, she said "whatever's left over". Neither answer could help her choose a fund, decide how much risk to take, or stay calm in a fall.
In about 20 minutes this exercise turns a vague intention into one page with four things on it: what the money is for, when you might need it, how much goes in, and how big a fall you could watch without selling. Nadia's figures are made-up examples; use your own.
Write one line saying what this money is for. It doesn't need to be grand. "Long-term wealth" is a fine answer, and so is "retirement on top of CPF". What matters is that you've written something, because a named purpose is harder to raid for a holiday than an unnamed pile.
If you have more than one long-term goal, pick the one this first ETF serves. You can add others later.
Nadia writes: "Long-term wealth, probably to top up retirement. Not for the renovation or anything else with a date."
Write the earliest year you could realistically need to take money out, which may be sooner than the year you'd like. That year is how long you have to wait out a fall, so it sets how much risk the money can carry.
If the earliest year is within a few years, go back to lesson 2.1, Money you need soon does not belong in shares. This money may not belong in an ETF yet.
Nadia is 28. She doesn't plan to touch the money before her late forties, and she can't think of anything that would force her to. She writes 2046, twenty years away.
Write the amount you'll put in at the start and the amount you'll add each month. Both come from work you've already done. The starting amount is your long-term pot from lesson 2.1. The monthly amount is the figure you tested in lesson 2.2, Buffer and expensive debt first, then investing.
Nadia writes S$5,000 to start, and S$500 a month from her salary. She already saves that much without strain, and her budget has room even in a heavy month.
Before moving on, multiply your monthly amount by sixty. That's what you'd have put in after five years, before any growth or loss. For Nadia it's S$30,000, which with her S$5,000 start makes S$35,000. You'll need this figure in the next step and again in module 7.
This is the step that makes the page useful. Write the largest drop, in dollars, that you could watch on your screen without selling.
Write it in dollars. A 30% fall sounds manageable in a lesson, while seeing S$10,000 vanish from your own account is something else entirely. Work from the balance you'll have in a few years, not the one you start with, because the falls that test you usually come once the balance is large enough to notice.
A useful starting point is a third of that future balance, since broad share markets have fallen by that much and more in the past. For Nadia, a third of S$35,000 is about S$11,700. She looks at the number for a while and decides it's a little more than she could stomach. She writes S$10,000.
If your number is much lower than a third of your future balance, that's worth knowing early. It tells you that your first fund may need to take less risk, or that you'll need firmer rules for a fall. Module 5 uses this number when you choose your fund, and lesson 7.5 uses it again when you write your rules.
Nadia's page reads:
"Purpose: long-term wealth, probably to top up retirement. Earliest year I'd need it: 2046. Starting amount: S$5,000. Monthly amount: S$500 from salary. In five years I'll have put in about S$35,000. The largest fall I could watch without selling: S$10,000."
That's it. Six lines, all specific. Notice what isn't there: no target return, no prediction about markets, no fund name. Those come later, and they'll be easier because this page exists.
Keep the page where you'll find it again: a note on your phone, or a printed sheet in a drawer. Lesson 5.1, Start from the goal, not from the fund, picks it up again, and in a fall you'll want it within reach. Your figures from lessons 2.1 and 2.2 are all you need to write your own.
Write your investing goal on one page with purpose, horizon, starting amount, monthly amount and the fall you could sit through.
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