5 Things Newbie Singaporean Investors Should Know
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Are you disappointed with the interest earnings you are getting from your savings account?
If you have some spare cash and are thinking about starting your investment journey, we at GET.comwill walk you through the 5 main things you should consider before taking the plunge.
1. Do You Have The Right Mindset?
Many of us have been taught from a young age to save money, so we religiously save a portion of our income each month for rainy days.
However, with the low interest offered on savings accounts in Singapore, it's hard for us to hold on to the value of our money, given that the returns are typically lower than the inflation rate.
Starting an investment journey requires an understanding of the risks involved in investments. If you want better returns, it has to come with a higher risk.
If you think that “losing” money will make a big emotional impact on you, then investing may not be for you.
2. Risk Tolerance
One of the first things you need to understand about yourself is your risk appetite. This will impact the type of investment vehicle you choose.
Lower risk profiles would typically choose fixed income instruments or bonds which are usually principal-guaranteed.
They work in similar ways to a fixed deposit, in the sense that selling your investments before the maturity date will impact the returns you earn.
This amount should be money that you will not need for a while so that there will not be any need for sudden withdrawal.
If you are one of those who are willing to take a bit of risk, you will have more instruments to choose from.
Again, you need to decide what threshold you can tolerate so that you do not sell your investments once you see some losses taking shape.
You might also want to think about managing your wealth in a portfolio perspective – allocating a different percentage of your wealth in various asset classes with different risk.
This can ensure that you do not put all your eggs in one basket and lose everything if one instrument does badly.
3. Trading Is Not Investing
Related to point 2, investing builds on a long term horizon of at least 5 years. This means you will need to be able to let the prices of your chosen investment asset move up and down without any panic to cut losses or take profit.
Studies have shown that the longer you hold onto your investments, the lower the likelihood of losing money.
Those who are looking to making a quick windfall are considered speculators rather than investors, and they usually have a bigger risk appetite.
4. Types Of Investment Instruments
After determining your risk appetite, you can then have a better idea of what investment instrument is suitable for you.
This is a general guide:
Low risk profiles – cash investments such as deposit accounts
Medium-low risk profiles - government bonds, corporate bonds, funds with principal-guaranteed returns
Medium-high risk profiles – stocks, exchange-traded funds, property
Here you can find out how much money you need in order to start investing.
5. Tracking And Review
There's no point in investing if you don't track and review your investment annually. The market cycle changes and different environments can impact your investments.
It's wise to have an annual review to check whether your investments are fulfiling your investment objectives, and check if you need to switch to other instruments that have better potential returns.
Remember to take into consideration the costs of your investment as well, such as any management fees you'll need to pay to fund managers or trading costs.
Costs can eat into your investment returns so it is important to take them into consideration.
Lastly, remember that it is more important to allocate your assets proportionately to your needs rather than spend too much time picking the “right” investment instruments.
A well-balanced portfolio will be able to tolerate market volatility for any one of your instruments, so that you will still achieve protection for your assets.
This article was originally on the GET.com blog at: 5 Things Newbie Singaporean Investors Should Know.
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Zero Risk Real Estate Investment Strategy : http://coachlikes.com/Real Estate10k In 60 Days Or Less - Zero Risk Investment Strategy.pdf
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bump
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it is important to know how much is your budget to invest.
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thanks for sharing
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Nice post
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CNMC Gold Mining Ltd: Is this Catalist company worth investing into, given:
(1) The uptrend in the gold price?
(2) The excess cash over debt (net cash position)?
Thoughts?
In SGD mil 2013 2014 Trailing 12 months 2015
Revenue 23.1 46.2 51.4
Gross profit 16.3 34.8 40.2
EBITDA 10.3 26.0 30.3
PAT 3.7 17.0 14.7
Capex 7.2 6.9 6.3
EBITDA - Capex 3.1 19.1 24.0
As at 11 February (In SGD mil)
Market capitalisation 85.3
Cash & STI 25.5
Debt (0.2)
Minority interest (6.1)
Enterprise value 66.1
Based on current market capitalisation
T12M EV/EBITDA 2.2
T12M P/E 5.8
T12M P/BV 2.0
