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Beginner Investment Advice from Singapore

Imagine that one is turning 55 soon with one million dollars in assets accumulated throughout one’s working career.

But for parents medical bills to pay and children’s education to finance, How is one to retire comfortably if one belongs to such a sandwiched class?

If you are a consistent saver and intend to invest for the long term you do not have to forego your dreams.

So what is an investment?

Investment is about abstaining from present consumption to build a future consumption.

Historically the stock market has been able to deliver positive returns net of inflation over periods of 10 years or more.

On the downside stocks tend to be the most volatile investments.

This means that the value of stocks can drop in the short term.

Sometimes stock prices may even fall for a protracted period.

For instance the 10 year return was negative as recently as late 2010 largely due to the 2008 financial crisis and the early 2000 tech bubble bursting.

Bad timing can easily negate your returns.

But you can reduce the risk by taking a long term approach.

Of course there is no guarantee of producing any sort of positive returns. For example, if one consistently pick stocks that decline in value one can lose money even over the long term.

Some basics before you start investing is that you need to understand how your investment objectives determine the way you invest, how risk and return are related, different investment strategies you can use to manage risk and the constrains of these investment strategies.

As well as the various financial markets, the major types of financial assets you can choose to invest in and how to construct your investment portfolio at all times.

You also need to be clear about your needs, your ability to withstand risks and losses and also how well you understand a product to be suitable for you.

For example, you should have a good grasp of how an investment product works before investing in it.

Practice trading on paper before actually trading with real money.

Record the dates.

Profit and Loss.

The reasons for making those investment decisions, and compare the results with relevant indices.

If you are not familiar with the investment product you should not put your money into it.

I hope to publish more investing knowledge from Singapore soon.

Comment ( 1 )

  1. I heard that Singaporeans are quite rich, smart too? Why would they not be more interested in investing. I think many Asians are very risk averse.

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