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Why and How I'm Starting to Invest at 19

Ernest has been spooked by the image of adults working the 9-5 treadmill and is taking the first steps to avoid this.

The Sweet, Sweet Taste of Passive Income

My journey began with the discovery of passive income through an app called Honeygain which literally paid you money for running their application in the background. How did it work? Put simply, by selling some of your internet traffic data to businesses.

However as I soon found out, the payout rate at a measly 1 USD for every 10 GB was not going to make me rich anytime soon.

Still, it gave me my very first taste of what it felt like to go to sleep and wake up with more money than I had the night before without needing to do anything, even if it was only 10-20 cents. To be clear, I was living at home with my parents (and still am at the time of writing) who were paying for our unlimited household internet plan. So even during the day, with no noticeable effect on the internet speed, it had definitely felt like I was getting money for free! From that moment on, I was hooked on the idea of passive income.

After a few months (yes months) of letting the the app run, I finally surpassed the minimum withdrawal amount of $20 and withdrew my first round of cash. However I was not satisfied, and moved on in search of greater riches. In the end, I decided to give the money to my parents as a form of offset for the internet bill.

Inflation and the Chase for Greater Returns

Meanwhile, as an engineering student, I was getting my first glimpse into finance through an introductory course at university. It no doubt gave me a fresh perspective, another mental model in which to view the world. I was fascinated by the concepts of risk and return, began to see opportunity cost everywhere I looked, and started to view time and money more interchangeably. I was also supplementing my education with Youtube videos on economics, so it was only a matter of time before it became clear that my High Interest Savings Account (HISA) was not high enough. Inflation was eating away at my savings faster than it was growing- I was losing money!

I was very much a saver and fairly frugal so the thought of my savings losing their purchasing power needed my attention. I went in search of greater returns and stumbled upon the brave new world of neobanks. Their higher savings rates were made possible by being an online business, in the sense that there are no physical branches and thus the costs associated with them such as rent.

I weighed up my options and decided to go with Up bank. The process was smooth, simple and the same goes for their day-to-day banking. Everything is done in one phone app and the UX certainly beats any of the big four banks for the features I use.

There was one caveat though, and that was the high rate was conditional on making 5 purchases in one month. This may sound weird, but to me, this was almost impossible as I was not a spender and was not going to start make 5 purchases a month just for extra interest. It would defeat the purpose. Although as I will explain later, I stuck with Up bank and managed to turn this around into almost a boon.

Note: Up bank's savings rate has since fallen from the time of my application (as have many other banks due to the current climate). It still remains competitive despite the fall!

I was fairly young, had space to take on more risk, and could expect higher returns.

The Next Step

I knew that although I was getting a competitive savings rate, my finance brain told me it was not enough. I was fairly young, had space to take on more risk, and could expect higher returns.

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My research led me to micro-investing, which is where I took the plunge. Micro-investing is a fairly new concept grounded in the idea that small and irregular investment deposits like spare change can accumulate to form a sizeable amount over time. It was convenient, easy and did not require a large lump sum deposit to begin- perfect for younger people like me.

Long story short, I now have investments in Raiz and Spaceship Voyager, both of which are micro-investing apps that allow you invest in the stock market.

Now comes the clever bit- every month I make at least 5 deposits into Raiz and/or Spaceship Voyager and this qualifies me for the high interest rate at Up bank. Why could this be a boon? Well that's because I have learnt that long term investing is all about making regular, disciplined additions no matter what the market is doing. It has given me another incentive to keep consistency and spend time in the market rather than timing the market.

long term investing is all about making regular, disciplined additions no matter what the market is doing and spending time in the market rather than timing the market

What next?

You could argue that I began my journey of investing even before I deposited my first amount in a micro-investing app. By choosing to learn more about personal finance, I had invested in myself and am already seeing returns.

I recently finished reading the popular personal finance book 'Rich Dad, Poor Dad' by Robert Kiyosaki, and it is now clear to me that financial independence is what I want, made possible by passive income from owning cash-generating assets and businesses.

I started with an obsession with passive income and a thirst for greater savings returns. Thankfully my micro-investing accounts have generated positive returns, in fact at a significantly greater rate than my HISA (6% after just 6 months!). I see this as success in my quest for passive income and higher returns.

However, I am by no means done on my journey of investing. In fact, I am just getting started, as I plan to move up the ladder to more involved financial products such as ETFs. There is so much more to learn, I am excited for the future and glad to have taken the first step. I hope my story inspires many others to start their own journey.

Thanks for reading!

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2020 Ernest Cheong


Ernest Cheong (author) from Melbourne, Australia on December 25, 2020:

Thank-you. Hope you enjoyed reading!

Umesh Chandra Bhatt from Kharghar, Navi Mumbai, India on December 25, 2020:

Very nice. Well presented and share your experiences again in this matter.

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