Thanks to your support, I have been on radio for almost 2 years now. Maybe more than that, but I cannot remember! Remember I am Mr. IDK [I don’t know]. Many have read and heard my investing advice below. In addition to it, I’m having a once off talk on Idiot’s Investing. If you would like to attend, see the link at the end of the article or click on events to register!
Investing can be a simple affair.
If your starting point for investment is just $1, life is easy! You can only go up. Realistically, most people start in the middle – about $10,000 to $20,000. But with the overload of financial information in the marketplace, people sometimes prefer to do nothing because they fear to lose their money due to a bad investment decision. Most people just leave their money in the bank, or CPF account earning normal returns. Where’s the best place to put that money? What are the ways to make the most of your money?
Your financial adviser will say that the “best investment” for your money will depend on the risks you’re willing to take. And in today’s unpredictable stock markets, chasing short–term returns is only for people who can afford to lose. The prudent thing to do will be to take a long–term strategy that tries to minimize risks and receive reasonable returns.
START WITH SELECTING A DOZEN FUNDS
Have you been worried about all the unpredictability about the stock market? As long as you have developed a diversified portfolio, you will be able to grow your wealth. The concept of diversification is common to most investors. The main goal in the strategy is to improve your investment performance while reducing the risks. Your first step is to simply select about 12 to 15 funds. The portfolio must be globally diversified with some exposure to the United States which accounts for about 50 per cent of the world’s capitalization. Moreover, make sure you have some sector diversification like technology stocks.
That said, let’s look at an important strategy that includes having more higher risk type of funds in your diversified portfolio. Single country funds like China, India, and Japan will add more depth in your overall diversification strategy.
Diversifying the portfolio also means looking at the fund manager and their fund management style. There is no rule against selecting all the funds from the same fund manager or the asset management company. However, it is important for everyone on the team to have a high level of expertise and share the same investment philosophy or commitment.
LOWER THIS COST OF YOUR INVESTMENT
Before you buy a fund, check out the fee charged and expenses. Understand the initial and ongoing costs involved in the investment. Look for a fund with low or no front–end load. The load is usually included in the first payment made by the investor. This usually translates into an initial higher payment and later in lower payments. The purpose of a load is to cover the administrative expenses and the transaction costs. It is deducted from the investment amount and lowers the size of the investment. In addition, this is sometimes used to discourage asset turnover or frequent trading of the fund which can hurt a fund if it has to hold large cash reserves to meet payouts.
To Find out more, come to my Idiots Investing Talk