Should I put short term money into the stock market?

I recently saw an article from Seedly and I think it really relates a lot to millennials as we are now at a phase in life where we might be getting married, in the process of having a child and even maybe the downpayment of our property. This phase means that we require quite a large sum of money at the side to ensure we can make payments on time, so then should we invest the money especially now when everyone is investing and it seems like a bull market.

Having a sum of money on the side

My friend has a BTO coming up soon in about 5 years and so he has to get ready for a wedding as he hopes to have it before they move into their new place. Having a wedding is not cheap in Singapore and even at the cheapest venue, you would still need a sum of money for food, photographer and booking of the venue.

He has been a saver and has a sum set aside for it however as he witness many news on how people who invested from the start of the year till now has profited and maybe even grew their portfolio by 20% or even doubled it, he wondered if he should use the sum he has to invest. He asked my other friend and me about it.

To invest or keep it safe

My friend who really advocates investing at a young age thinks that we should invest as we can take on more risks. He did recommend to my friend to invest the sum of money into VOO (S&P 500) as it has grown at a rapid pace and he believes that it will continue to grow.

On my end, as I know that his wedding will be taking place in the next few years, I told him not to invest it as he wouldn't know whether on the year he has to cash out, will the stock market be higher than when he placed his money in. I feel that there is too much uncertainty for him. We concluded that he would need to think about it and because currently he has a relatively stable job which means he can still set aside money to either start investing or to invest a small sum and save as he goes along.

Depends on risk tolerance and earning power

A lot of my friends are very interested in earning profits from the stock market but at the same time afraid as well. I would think that is also definitely what I thought of when I was young. You have to really understand what you are investing into and along the way learn from your mistakes. You also have to handle the stress of maybe missing out huge gains (example dogecoin?) if your risk tolerance is not as high as others and you prefer a "safer" route for example investing into index funds. I would think there is no correct method and most importantly in investing, you have to have a strong emotion control to prevent yourself from selling at the slightly drop or profit.

Different permutations for managing his money

He can according to his risk tolerance choose to have his money split between the stock market and into the different safer account that Seedly mentioned in their article. In my opinion, if the amount he has saved is substantial, he should split it and invest a portion into the stock market as the earlier he starts, the better it would be due to the longer time horizon and then while earning his monthly income, he can further split it up to build back his funds and also allocate a small portion to his investments.

It is so interesting hearing how different people would manage a sum of money they have. And what ultimately matters is that you can sleep in the night without worrying if the money will disappear overnight. A peace of mind matters a lot especially when the sum is meant for something that you have been planning for. How would you go about managing a sum of money that you have been saving up? Do let me know in the comments below and as usual, do subscribe and like my videos for more content!

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