Young Investors: Risks, Rewards, and Rising Concerns

BENEDICT KOK digs deep into the topic of investments among today’s youth, uncovering the potential risks, rewards, and ways youths can protect themselves on their investment journey.



Benedict Kok

Hype Issue #57

Published on
August 7, 2023

Image of a graph showing market trends. Photo by Benedict Kok.

The term “investments” has found its place as a topic of interest and discussion amongst youths today as online brokerage platforms put the power of investing in the hands of individuals. 

This growing interest comes amidst the rise in financial literacy among Singapore youths and the observable increase in advertising of brokerage platforms over the last decade.

Driven by accessible information and convenient brokerage applications, youths as young as 18 are stepping into the stock market, considering it a vital part of financial planning. According to the Next-Gen Investor Survey conducted by Franklin Templeton, half of the 502 respondents believed that investing is an important part of good financial planning. 

Alternative investments like Non-Fungible Tokens (NFTs) and cryptocurrencies have also gained attention, but they bring heightened risks, as seen in the FTX collapse in 2022 and generally volatile crypto market, sparking concern. Joseph Lee, 20, belongs to the group of young people interested in investing, but who have not yet taken the plunge. He shared with me some of the motivations and concerns that youths like himself face when it comes to investments.

“Someone once told me that it’s not about timing the market, but about time in the market,” Joseph said, believing that there is a need to start investing at an early age. 

He expressed the belief that maximising time spent in the market with low-risk stocks can aid in the growth of his future retirement nest.

“But I’m afraid of losing money in the stock market,” Joseph said. He added, “I’m also not sure how much money I should invest now because I’m not sure how much money I need to save in the bank to meet my future expenses.” 

He shared that venturing into the stock market is daunting as he is unfamiliar with how it works and what stocks to invest in.

Some of the popular online brokerage apps in Singapore, such as moomoo and IBKR. Photo by Benedict Kok.

While some approach investments prudently, others view the stock market as a “get-rich-quick”  opportunity, disregarding potential consequences. There is an increasing number of youths who are recklessly stepping into the stock market despite the risks and volatility. According to a poll conducted by the Straits Times, 70 per cent of respondents indicated that they invested for quick money to cover their expenses.

“Investing is a long-term endeavour that requires patience, discipline, and a well-thought-out strategy,” Ms Rou Xuan Wong, a financial planner at Great Eastern, said. Overly-optimistic and reckless investment habits have the potential to jeopardise one’s financial situation, especially if it involves a sizable amount of one’s assets. Hence, youths need to invest smartly and carefully with the risks in mind, and also be prepared to accept losses.

Ms Wong shared that the increasing number of youth investors reflects a growing awareness of financial planning among youths today. However, she added that it is paramount for young investors to do their due diligence before investing in anything.

“With the abundance of financial literacy content online, it’s crucial for young investors to sieve out accurate information and approach investing with a well-rounded understanding of the fundamentals, risks involved, and the importance of diversification,” Ms Wong said. 

She emphasised that though some youths liken investing to gambling or speculation, sound investing involves research and strategy.

Information provided by Ms Rou Xuan Wong, infographic design by Charlize Kon.

Though investing can be risky, Ms Wong shared that there are several ways youths can protect themselves from financial trouble. 

“Establish an emergency fund that covers at least 3-6 months of living expenses before kickstarting your investment. This ensures you have a safety net in case of unexpected financial challenges and prevents you from cashing out your investments during a market downturn,” she said. 

Ms Wong also advises individuals to consider seeking professional guidance from a trusted financial planner to develop an investment strategy suited to their individual goals, risk tolerance, and other personal circumstances.

“Reddit stock tips and friends are often not thorough investment research,” Ms Wong added. 

Everyone can invest, regardless of their age or wealth. However, it’s crucial to understand that the rewards of investing come with risks as well. There’s no easy money in this world, so it would be wise to be prudent.