Investments

[daddy2007]

Just to offer my 2 cents of view. Not comprehensive though



Depending on who you speak to, you will be introduced to different types of investment vehicle

If you approached financial advisors from insurance companies, they will probably sell you endownment policy or ILP (to invest in Unit Trust)

If you approached those "independent" financial advisors, they will be selling their platform and get you to invest in Unit Trusts. Their charging model will be either through a annual "consultation" fee or wrap fee whereby they will deduct certain amouont (typically 1%) off your investment portfolio

If you want to take charge of your investment, you can do it DIY via some traditional investment vehicles. There are pros & cons in using all these vehicles

1. You can invest in Unit Trusts which can be purchased from those online platform such as Fundsupermart or DollarDex.

2. You can invest in broad market indexes. Currently there are ETFs offered from the various Stock Exchanges

3. You can invest in shares say in local market. Either investing in those blue chip companies (e.g SPH, DBS, SIA etc) or those SME shares. Real Estate Investment Trust (REIT) is also getting popular whereby you get to own offices, commercial buildings or shopping malls and get regular divdends as income


There are several things to consider

Do you prefer Passive or Active Investment/Management

Are you prepare to hold your investment (a.k.a investing) or if you likes to trade (buy/sell) frequently (when you think you have the time, talent or an edge over other people)

If investing in shares, what stategy you want to adopt? Go for fundamentals to study the company balance sheets or go for technical analysis whereby using indicators to determine when to buy/sell shares

You have to also decide if you want to invest for capital appreciation or to get passive income

There is also this school of thought of how to construct one’s portfolio (a.k.a Modern Portfolio Theory) whereby one will allocate certain portion of bonds and certain portion on equities

But before you start investing, it is good to know your risk profile. Whether you are conservative (those cannot stand losing capital), moderate (willing to take some losses) or aggressive (willing to take higher risk for higher gain). Basically it is about risk-adjusted returns

Don’t be surprised that you think you belongs to certain profile and when the crunch time comes (e.g massive market selloff), you cannot tolerate it

Basically investing is about Risk Management. Based on one’s risk profile, how to protect one’s capital and how/when to cut lost

Don’t invest to beat the markets, get rich, or earn the highest possible return. Invest to meet our goals, whether it’s buying a home, putting the kid through tertiary education, or paying for our own retirement

It is very important to know your investment costs and keep them low

[UncleLim]

ppnqq:

What can people invest in if they have between $10,000 to $40,000? Appreciate suggestions for those under $10,000 and those within $40,000.


:thankyou:

Hi ppnqq,

Frankly I cannot think of where to invest $10k. If I were you, I will still leave it in the bank as emergency money.

$40k can be downpayment for a small industrial property costing around $200k maybe ?

If you are thinking about the stock market and other retail financial products, I am sure there are lots out there. Just make sure you know the risks and read the fine prints (and there are lots of fine prints !! ).

On the other hand, the surest way to lose the money... lend it to a friend or relative to start a business that you do not understand. :moneyflies: :moneyflies:

[ppnqq]

Thank you Uncle Lim for your advises and suggestions.


Yes, I also feel that $10k is almost impossible but not sure with $40k especially when it is not intended on papers investments such as stocks but more on like what you had suggested, property, but that amount is way too low to buy one as investment too?

[UncleLim]

ppnqq:

Thank you Uncle Lim for your advises and suggestions.


Yes, I also feel that $10k is almost impossible but not sure with $40k especially when it is not intended on papers investments such as stocks but more on like what you had suggested, property, but that amount is way too low to buy one as investment too?

Hi ppnqq and others who have some extra cash. Do keep some ready for use or \"liquid\" in case of small emergencies such as a car accident or hospitalisation.

Many families are caught wrong footed without cash thinking that they have insurance cover. But sometimes some cash is still necessary upfront before insurance companies act. Otherwise you end up taking up some kind of overdraft or credit line with unreasonably high interests. Or you might end up eating humble pie borrowing from relatives and friends. :roll:

$40k can only be a downpayment. A mortgage is still needed for the rest of the buying price. Many small industrial properties have short leases from 30-60 years. Most yield an income which you can offset your mortgage payments with. Industrial properties (depending on location) are often used for non-industrial businesses including accounting, wholesale and engineering setups.

Otherwise, do what many people do to protect themselves from inflation - buy gold. I posted something about easy ways to invest in gold in another thread a few weeks ago. I have been buying gold for more than 5 years. And I have just bought some more today!

[MadScientist]

ppnqq:

What can people invest in if they have between $10,000 to $40,000? Appreciate suggestions for those under $10,000 and those within $40,000.


:thankyou:

What kind of money is this for you?

Emergency money?

Money for a purpose?

Speculative money?

If E-money, take Uncle Lim's advice... Keep in bank.

If money for a purpose, then no investment.

If speculative money... Then remember, it is considered spent when you buy any instrument. Have an idea when to get out, when make money, or when losing.

Like Uncle Lim, think about Gold, not just now, but soon enough.
Or better yet, wait a while, once this bust is done, you got plenty to choose... A good area to look into may be soft commodities... Agriculture and agribusinesses. Food cost rises with inflation. Globally, sure inflate, or super inflate. US set us on the road to there, and Europe will make sure we go the course.

If like me, you think contrarian, then are a class of ETF/ETNs that are known as Armageddon funds.

Oh yeah, pace yourself.

[ppnqq]

Thank you Mad Scientist for your advises.


It is not me, I am asking on a friend’s behalf because he was asking what kind of investment is possible with that kind of amount.

I thought property is good because he is still able to get some ‘monthly income’ by renting the unit/property out but with this amount, it is impossible and we do not find it safe and stable with those paper investments and so here I am, checking out with for him. Smile.

[MadScientist]

Double post

[MadScientist]

ppnqq:

Thank you Mad Scientist for your advises.


It is not me, I am asking on a friend's behalf because he was asking what kind of investment is possible with that kind of amount.

I thought property is good because he is still able to get some 'monthly income' by renting the unit/property out but with this amount, it is impossible and we do not find it safe and stable with those paper investments and so here I am, checking out with for him. Smile.

You are most welcomed!

Safe and stable... Hard to come by with the global economy ridden with debt. Gone are the days where just deposition in a fund can easily guarantee a return of at least beating inflation. Now, we already have some difficulty keeping up with real inflation (as opposed to headline inflation).

I fully understand the angst and shortfall of good sources for these things, that is why I am under training to resolve some of these issues for those who would appreciate my advice.

These days, a passive investor is not a good thing to be... One has to be active and nimble, or get someone else to do it for them. Even most banks still have not grasped this idea and are happily selling instruments, but not managing risks for their clients well enough nor looking for the upcoming trends.

All the best!

[ccgoh]

Hi madscientist,


Are you in the finance line? I would also like to go for some training to understand what to do with my money. Now buying more insurance also, it is also a form of savings but I know the returns are minimal. Do you need to know a lot about the markets to do investments?

[daddy2007]

ccgoh:

Do you need to know a lot about the markets to do investments?

Not necessary

If you ask 10 experts (e.g those economists, analysts etc), you will have 11 answers