What should I do with my first $1,000? We ask a financial advisor

Did you know that women outperform men when it comes to investment returns? According to a 10-year study by international financial consultant firm Fidelity, they make 0.4% more on average than their male counterparts.

Still, some women are hesitant to take that first step: They believe that they lack the financial knowledge to dip their toes in the water. When Her World conducted the What Women Want Financial Literacy survey in 2023, the results showed that more than 50% of respondents stated that their financial knowledge was poor to average.

But as the adage goes, Rome was not built in a day. Taking baby steps can sometimes be all the push we need to help us build our financial knowledge and confidence.

In this series, we speak to financial experts and savvy women on how to grow your first $1,000. Here, Wendy Wong, associate director of Finexis Advisory, a Singapore-based financial advisory firm, gives us her recommendations.

Can you suggest an investment strategy for the first $1,000?

I would use the three buckets of investment strategy concepts for my first $1,000, according to my needs and risk profile.

First bucket: I would set aside 25% ($250) for short-term needs, usually between a period of one to five years, to provide for short-term goals like a holiday. The money would usually be in a savings account, which provides negligible returns, eg up to 1% per annum, but is easy to access for convenience.

Second bucket: I would set aside another 25% ($250) for medium-term needs, usually between a time frame of six to 10 years, to provide for bigger purchases like a car, a home, or other bigger financial milestones in life. Instruments like money markets can give returns of about 3 % per annum. So while we accumulate our savings for bigger purchases, there are some returns for this bucket to aid our efforts as well.

Third bucket: I would set 50% ($500) for long- term needs, such as retirement funds, which will take more than 10 years to build. In this bucket, I would look for instruments that can give me at least 7% returns per annum, like equities, to double my investment beyond 10 years. Once my investment doubles, I would find instruments to preserve capital as much as possible. The instrument would also give me at least 5% returns per annum, so that I can use the returns as a passive lifetime income.

Are there specific investment vehicles or platforms that are more suitable for beginners with a limited budget?

There are many investment vehicles or platforms in the market. There are no perfect vehicles or platforms as each has its advantages and disadvantages. As such, the instruments that I choose for each bucket must be able to help me achieve my goals. For bucket one, the instrument is a straightforward savings account. However, instead of a normal savings account with negligible returns, I will put my savings into an account like a DBS Multiplier account, which gives me more interest so my savings will still work harder for me.

To me, the instruments used in buckets two and three do not matter. Whether it is from insurance policies or financial platforms, the time frame here is longer and can weather through the daily changes of the market. The focus is therefore to find instruments that will meet my goals, and be suitable for my risk profile and my needs.