Investing can help you grow your wealth and hence, achieve your future dreams, such as an early, comfortable retirement, traveling around the world or sending your children for an overseas education.
Investing is not about speculating where emotions (i.e. irrational fear, euphoria) often dictate the decisions. Speculators often buy and sell based on ‘hot tips’ from friends and the news.
Wise investing, on the other hand, should be carried out using a proper framework and adhering to time proven principles.Many people fear investing because of risk and uncertainty. But what they do not know is that the choice of investment instruments can make a big difference and secondly, they are not aware that risks can be reduced through properdiversification and regular rebalancing of the portfolio.
As the saying goes, never put all your eggs in one basket. A diversified investment portfolio works on the same principle. By spreading your investments across different asset classes (bonds, fixed income, equities) and sectors (e.g. manufacturing, financial services, commodities), you are not placing your ‘bets’ on any one particular asset class or sector. This means that the portfolio’s overall exposure to risk and volatility will be reduced.
Before you start to invest, here are some questions you need to ask yourself:
- How much do I have to invest?
- What are my investment objectives?
- What is my investment time horizon?
- What is my risk appetite?
- What is the extent of loss I can accept if the market falls?
- What is the expected rate of return from my investment?
Instruments to grow your wealth with:
- Savings plans
- Unit Trust investments (Cash & CPF): Retail Funds, Private Banking Funds
- Regular Savings Plan (Dollar Cost Averaging)
- Annuities
