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3 Things You Should Not Buy in your 20s.

3 Things Not to Buy in 20s

1. Unnecessary Insurance like Investment-Linked Policy 

 I read from various investment bloggers about the regret of buying investment-linked insurance when they just started to work or just started NS.

Why?

 It is because there is a hefty handling and administrative fee that insurance companies/agents charge. So even though they show you the projected returns based on your cost (5% projected returns based on $1,200 you put on an annual basis). So they will tell you it is just $100 per month and you can get a 5% projected returns. Sounds enticing?

So people knew there is no free lunch in this world, yet they still bought such a policy.

Because people ought to calculate the annual rate of return about money.

People bought cos it is just $100 per month, and I can earn more money as the return is higher than than bank interest rate.
You may read some blogs which I think it is worth reading:

2. Car. A new car or second-hand car is a no no in your 20s.

It is a liability or it is an opportunity cost of making your money works for you. Assuming you bought a car and you have a loan commitment of paying $1,000 a month. At the end of year 1, it is a total of $12,000 worth of money. If you were to put this into STI ETF (an index of tracking over 30 blue-chip stocks), you would probably get more than $12,000 at the end of year 1. There are 2 types of asset gains – 1) Dividends and 2)Investment Growth. At the end of year 1, you’d probably receive a dividend of $xx and the money you put into etf would worth more than $12,000.

So, why buy a car now when you can make your money work harder for you?

Another way to support the reason not to buy a car is to calculate your monthly transport expenses. Just do a simple comparison of the public transport expense vs car loan. Which one is causing you to sweat more? Car loan I supposed.

3. Branded Goods.

This is always a tempting yet luxury lifestyle experience when we have just started working. A few months or 1 year later, we ought to treat ourselves into luxury goods. For instance, a miu miu wallet that costs $800 is okay to buy since I have been working hard for the past 1 year or even x months.

Few months later, we ought to get tempted by the sales that the branded stores like 20% off also can make people buy more unnecessary bags/items. At the end of shopping spree, I din’t feel like buying anything yet I bought a small sling wallet that costs $500. So I spent about $1,300 worth of my hard-earned money. This is considered the low-end of luxury spending as people always spend about $2,000 for a bag or even higher.

At the back of my mind when I started investment, I had this thought that I would not have spend such money on the branded items. I regretted. Why? It is simply an opportunity cost again. Though I have to admit that I would tend to splurge on such items, I regretted this way of spending because I would have buy 1,000 units of REIT (maybe Frasers Centrepoint since I bought the items at there) worth at a discounted unit of $1.50. It’d cost me $1,500 + $25 brokerage fee.

This is a real example, so I forked out another $1,575 to buy this DISCOUNTED stock and within a few months, I am sitting on a paper gains of 20%. In another word, it means my this stock worth $1,890 or it means I have already gained $315 just within a few months. WAH, it is even more WORTH IT TO BUY THE BAGS NOW since I earned some money by putting my money into good use?

What are your thoughts? Do you buy the bags or do you want to use the $315 to earn more money?