A Step Into Investing
Published: Wednesday, January 29, 2020
When I was still an undergraduate doing Economics and Finance at the age of around 20 plus, I dabbled in the stock market and lost quite a sum of money. Now that I am older, I am thinking of entering investing again. But this time with a different approach.
My first foray into investments was day trading. Only did I know, at that time, day trading was considered risky. Worse, I used leverage of up to 100 times. This magnified my trade sizes considerably. Within months, I lost my entire capital sum for investments.
If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.
With a quote from Warren Buffet above, I shall be investing for the long term, holding my portfolio for 10 to 30 years.
Having learnt some basics on investing, another methodology I want to adhere to is diversification. Diversification, lowers risk.
I do not have much cash but my CPF is sitting idly.
For those of you that don’t know, the CPF in Singapore is a mandatory social security savings scheme funded by contributions from employers and employees. The CPF is a key pillar of Singapore’s social security system, and serves to meet our retirement, housing and healthcare needs.
My thinking: Why not try investing again if the long-run rate of return on stocks is higher than what CPF gives. Taking a look around, Managed Funds seemed the best option for me. Balanced funds to be exact.
A balanced fund is a mutual fund that contains a stock component, a bond component and sometimes a money market component in a single portfolio. Generally, these funds stick to a relatively fixed mix of stocks and bonds. Their holdings are balanced between equity and debt with their objective between growth and income. Hence, their name “balanced.”
Lucky for me, my broker fundsupermart.com, provides a stock/fund screener. I will be allocating S$10,000 of my CPF into Eastspring Investments Unit Trusts – Asian Balanced SGD.