You will decide a monthly investing amount that fits after the earlier layers are funded.
Ask people why they have not started investing and two answers come up more than any other. Some are waiting for the right moment, when prices look cheap. Others have no idea how much they can afford, so they put in a lump sum when they feel flush and nothing for months afterwards.
This exercise settles both. You will check that the layers underneath are ready, work out how much of your surplus can go to long-term investing, and write down an amount, a goal and a start date. It takes about twenty-five minutes, with your spending plan from lesson 2.2 and your notes from modules 3, 4 and 6 to hand.
Investing sits above the buffer, protection and debt layers, and each of them should be in place or clearly under way before money goes in. Go through four checks and write yes, under way or no beside each.
Emergency fund: is it at target, or is a monthly transfer running with a completion month from lesson 3.4? Hospital cover: do you have it, from lesson 4.1, and does it carry on if you leave your job? Other protection: have you mapped your cover, as in lesson 4.4, and is the gap at the top of your list being dealt with? Expensive debt: is every card balance and personal loan cleared, or on the repayment order from lesson 6.1?
A no is not a reason to give up on investing. It tells you where the money goes first. Someone carrying a card balance at a high rate gets a better and safer return from clearing it than from any investment, as lesson 6.1 showed.
Start from the saving amount in your spending plan. Take off what is still committed to the layers below: emergency fund transfers, the cost of closing an insurance gap, extra debt repayments. What remains is the surplus you can direct to goals.
Then split it by time, using the sorting from lesson 6.2. Money for goals more than ten years away can go to long-term investing. Money for goals a few years away, such as a wedding or a down payment, stays in cash.
One more test. A fixed monthly amount should come from income you can count on. If part of your surplus is irregular, such as freelance work or a bonus, leave it out of the fixed amount and decide separately what to do with it when it arrives.
Choose a fixed sum to invest every month, on a fixed date, and keep it going whatever prices do. This is often called dollar-cost averaging. Its main advantage is that it removes the timing question altogether. Nobody can reliably tell you when prices are low, and people who wait for the right moment often wait for years.
A fixed sum also buys more units when prices are low and fewer when they are high. Here is a made-up example. You invest S$350 a month in a fund whose unit price is S$10 in the first month, S$8 in the second and S$12.50 in the third. You buy 35 units, then 43.75, then 28, which is 106.75 units for S$1,050. Your average cost is S$1,050 divided by 106.75, about S$9.84 a unit, below the S$10.17 average of the three prices. That is a feature of the arithmetic, not a promise of profit, and the fund can still fall.
Write one line: the monthly amount, the goal it is for, the date of the first investment, and the date you checked the layers. Set the investing transfer to run just after payday, alongside the transfers you set up in lesson 2.4.
Darren, from the earlier lessons, works through the steps with the figures used so far, all made up for the example.
His checks: the emergency fund is under way, at S$500 a month towards S$13,150, due to finish in July 2028. His hospital cover is in place and his insurance map is done, with the one gap on it booked in with an adviser. His only debt is his study loan, which costs little. Every answer is yes or under way.
His saving amount is S$500 a month. Until July 2028, all of it goes to the emergency fund, so today his surplus for investing is zero. From August 2028 the whole S$500 is free.
He splits it by time. He wants a fund for a flat in about six years, which stays in cash, and he puts S$150 a month towards it. The other S$350 goes to long-term investing for retirement, which is more than thirty years away. That is 70% of his surplus, because S$350 divided by S$500 is 0.7.
His tutoring income is irregular, so it is not part of the S$350. Until the emergency fund is full, it goes there. If it averages S$300 a month, the fund could fill in November 2027 instead, and he would move his start date forward to December.
His line reads: S$350 a month, for retirement, first investment on 1 August 2028, layers checked on today's date. He sets a reminder for July 2028 to change the transfer.
He has not chosen what to buy, and this course will not choose it for him. Before the start date he will work through Build and run an ETF portfolio, the first course in the investing track, and check any provider on the MAS directory, as in lesson 6.3.
Your version is finished when the four checks are marked, the share of your surplus is decided, and your line is written with a real date in it. Get your spending plan out and start with the first check.
Write your monthly investing amount, the goal it is for and the date you will start, with a check that earlier layers are in place.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).