The secrets of smart investments
The world’s economy is changing and, along with it, the public’s view on investments. With the promise of high returns, an increasing number of Singaporeans are quickly developing a fetish for dividends, opting to invest their money in spades. More are coming to realise that in the long term, investments are the best way to ride out the slips and slides of the bust-boom cycle.
This is especially true for young Singaporeans. Anecdotal evidence collected over the years suggests that the number of young investors is rising, with a great majority starting out with an average of S$10,000 to invest. This trend is further cemented by the host of trading platforms stockbroking houses and major players in the market are developing for this growing segment. With real-time information and trading now carried out in cyberspace, being an investor today is easier than ever.
Beating the market
Although you don’t have to be a financial whiz to make smart investments, there are certain rules that successful investors live by. So here are some takeaways that novice investors can pick up on how to beat the market averages.
It doesn’t matter how small your initial investment is. Just get started. It’s like training for a marathon. You won’t see a whole lot of results initially, but when the big money starts rolling in, you’ll know it’s all worth it. That’s why the earlier you start, the greater your returns.
In Singapore, that means starting the day you turn 18, the legal age at which you can start trading stocks.
Read and learn
There’s a reason why there are so many books on investment tips and techniques by experts –nothing beats being able to learn from someone who has first-hand experience and has come out tops. So sit back, relax and pick up some great investing tips with bestselling books like Benjamin Graham’s The Intelligent Investor, Peter Lynch’s One Up on Wall Street and Robert J. Shiller’s Irrational Exuberance.
Stick it out
Shares fall and rise. It’s all part of the investment game, yet many are adverse to investing because of the times they’ve had their fingers burnt. That’s why they say investing is not for the faint-hearted. To triumph, you have to stick it out when the going gets tough. That way you open yourself to more opportunities, whether in a bull or bear market.
With so many investment opportunities available, there’s no reason why you should stick to only one type of investment. Explore and venture into the various asset classes – stocks, bonds, currencies, commodities, cash – to spread your risk. This way, you’ll be able to ride out the down cycle in one class while reaping the sweet rewards of the up cycle in another.
Don’t be a sheep
One of the worst things you can do when investing is having herd mentality. That’s why you should avoid tailing market behaviour. Instead, sniff out the steady earners and invest in that because that’s where the big money really is. If they’re pricey, just wait till they reach an attractive level.
With a little smarts, some research and these tips, you’re all set to start your investment portfolio.