How To Start Investing In Singapore

As Kemmy Nola once said: “The beginning is always the hardest”. So, do not immediately quit on your dreams of becoming an investor. Consider these tips:

BUILD YOUR SAVINGS

Maintaining a robust savings pod is the initial step that you have to take before plunging into the world of investments. Your savings account will act as a cushion to help you handle unforeseen market shifts (e.g., fall of the Lehman Brothers). You do not want to lose all your retirement fund just because of a wrong investment move! Moreover, you cannot afford to risk your primary source of income due to your poor decisions as a newbie investor.

Commit to setting aside at least three to six months’ worth of your salary.

DO YOUR RESEARCH

The best way to fish in an unfamiliar territory is to widen your knowledge about it. Know the basics in investing by visiting your the nearby public library to borrow appropriate books. A few examples of the books you may find are “The Resilient Investor”, “Trading Options for Dummies”, and “7 Simple Strategies of Highly Effective Traders”.

You will realize that there are different types of investments to suit one’s preferences (i.e., preferences include risk tolerance). Read more about these and the firms that offer them. Do your homework beforehand to know where your money will go.

Image Credits: pixabay.com

Image Credits: pixabay.com

ATTEND INFORMATIVE SEMINARS

Attending informative seminars will help you to absorb the theories and experiences of the experts who are way ahead of you in this field. Not many Singaporeans are aware that the Singapore Exchange (SGX) hosts several investment seminars. While some seminars cost over a thousand dollars, there are a number of free lessons available to the public. A good example is the upcoming talk entitled “Make Trading Your Source of Income”. For inquiries and reservation, please go to sgxacademy.com.

Another no-cost seminar that you can attend is Terence Tan’s “Get Rich Slowly, The Income Investing Way”. Terence Tan is the creator of the first Income Investing Programme in Asia-Pacific. This 2-hour workshop gives you a glimpse into the mind of some investors such as the renowned Warren Edward Buffett, to uncover the principles of income investing, and to determine the right stocks in 15 minutes or less. Furthermore, he will introduce you to his own methodology called Income Mastery Programme (IMP). Reserve a slot for the March 21st talk by visiting eventbrite.sg.

CHOOSE A BROKERAGE 

A brokerage is a financial institution, which is authorized to trade securities for sellers and buyers. A budding investor has an array of options when choosing a firm to work with. Here are some of the local firms:

a. DBS Vickers Securities
b. Citibank Brokerage
c. OCBC Securities

These firms will help you to set up your first trading account. A trading account allows you to purchase shares from the companies in the stock market. Worry not about the account maintenance fees as they are generally non-existent.

Image Credits: pixabay.com

Image Credits: pixabay.com

Sources: 1 & 2

[DISCLAIMER: THIS ARTICLE DOES NOT TAKE PART IN ANY OFFER OR RECOMMENDATION, OR HAVE ANY REGARD TO THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR NEEDS OF ANY SPECIFIC PERSON OR FIRM. BEFORE COMMITTING TO AN INVESTMENT, PLEASE SEEK ADVICE FROM A FINANCIAL OR OTHER PROFESSIONAL ADVISER.]

Read More...

8 Books Young Investors Should Read

8 Books Young Investors Should Read

Every young people should invest their money. That’s the best advice i heard since i was in college. When you are young and in your twenties, the most valuable asset is not money – but time.

When you are young, you not only have the time horizon to ride out market fluctuations, there are plenty of time for the effect of compounding to work in your favour. Investors who start young will have the flexibility to take on risk and recover from any missteps.

Many young investors procrastinate because they think that investment is confusing and trying to comprehend investment jargons is akin to reading the entire encyclopaedia. That’s a common mistake to make by not starting at all.

My favourite way of learning to pick up investment is to start reading books. Books are a good way to increase your knowledge of a particular topic as they were written by people who have had vast amount of experience in the field.

We picked 8 investment books to read for beginners. Unless you have a knack of picking winning lottery numbers or you were born with skills of a perfect investor, make sure you read a couple of these books before you start to ride the bull and bear roller coaster.

In no particular order:

1. The Intelligent Investor by Benjamin Graham 

Ever since it was first published in 1949, it has sold more than a million copies worldwide. If you do not know who Benjamin Graham is, you better know who Warren Buffett is – the second richest man in the world. Benjamin Graham is the mentor of Warren Buffett, so it is no doubt that this book is acclaimed as the “bible to investing”. In his book, Graham tries to explain behavioural investing and to develop an intrinsic valuation of a stocks. Despite being a heavy read, i highly recommend reading this before entering the stock market.

2. The Little Book of Common Sense Investing by John C. Bogle

John Bogle is the founder and retired CEO of Vanguard Group which is one of the largest mutual fund provider in the U.S. He is also the person who created the first index mutual fund available to individual investor.

His philosophy of investing in index fund is clearly explained in his books where the stock market is a zero-sum game. For every stock that beats the market, there is a stock that doesn’t beat the market. That is to say for an average investor, half of the stocks picked would beat the market and half will not beat the market. What is left, is the investment less off fees – a net loss. His focus on costs minimisation and low-cost investing is his manifesto to success.

3. A Random Walk Down Wall Street by Burton G. Malkiel

Malkiel explains both technical and fundamental analysis in this book where he thrashes out technical analysis as a “a run of luck or misfortune of the ordinary gambler”.  The market is full of randomness and trying to impose any sense of order is spurious at best. He also talks about the bubbles throughout history: Tulipomania, Wall Street Crash of 1929 and the South Sea bubble and addresses market efficiency in his book.

4. Irrational Exuberance by Robert J. Shiller

As per book title, irrational exuberance purports the notion of human emotions as illogical herd mentality. His analysis was spot on and warned about the dot-com bubble before it crashes. He also challenged the efficient-market hypothesis where investors value a stock base on expectation of future dividend discounted to present value. His take? Market volatility was greater than what could be explained by any rational view of investors – taking reference to the performance of the U.S stock market since 1920s. A good read albeit being lengthy and verbose.

5. Why Stocks Go Up (and Down) by William Pike

This should be read before reading any other investment books. You will understand why as this book is packed with many investment fundamentals such as financial statement analysis, stock price valuation and more. Terms such as price/earning ratio, diluted earnings, enterprise value/EBITDA are succinctly explained in his book. Have a go at this first to build up a strong investment basics before loading yourself up with capital market maxims.

6. Bull: A History of the Boom and Bust, 1982-2004 by Maggie Mahar

We know that past prices is not an indicator of future performance – a common mistake every investors make. What’s a better lesson than learning and picking up from a mistake? Mara began by examining the history of the Dow since 1982 which hovered below 1000 before it peaked around 11,000 in 1999. It came to an end when it crashes in 2000. She teaches many valuable lesson in her book and noted that euphoria is self-blinding – a regular feature of every bull market. It is easier to pick trend rather than timing them.

7. One Up On Wall Street: How To Use What You Already Know To Make Money In The Market by Peter Lynch

Peter Lynch is touted as a legendary mutual-fund manager and in his book he advocates two rules which he stands strongly by: “Invest in what you understand” and “Invest in companies you like”. Average investors can beat any professionals and achieve financial success. He also offer guidance on investing for the long-term and how it can reward you. His style is witty and entertaining and offers a good read for anyone who wants to invest on their own.

8. Buffett: “The Making of an American Capitalist” by Roger Lowenstein

Nothing is better than learning more about the most successful investor Warren Buffett. Roger Lowenstein’s prose in his biography of Buffett is well-crafted. Besides knowing deep into Buffett and his family, this book shares insights on Buffett’s investment strategy and how he avoided the dot-com bubble. There were many “how-tos” and noted Buffett’s long-term strategy of focusing on undervalued stocks and holding them to their worth. A rather lengthy read but it pays to know how this man has amassed a fortune from investing where many would envy.

Note that the list is not exhaustive and neither of these books are money-making recipe. They form a bedrock to your future investment journey and there could be no better time to pick up these valuable knowledge when you are still young and intellectually competent.

 

Read More...