Make your money work harder

Make your money work harder

Should you invest in safe but slow-growing unit trusts? Or something riskier with better returns? Cheryl Ong lays out your options.

6 ways to be a savvy investor

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    Market conditions are unpredictable so a company that has done well in the past may not do well in the future.

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    Nicholas says: “You should at least read the company’s quarterly or half-yearly reports to keep abreast of its current business situation.” This takes time, but it’s basic research that every investor should do.

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    Ordinary investors won’t have access to some markets and those operating in different time zones may be hard to monitor.

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    To determine your investment portfolio ratio, deduct your age from 100. For example, if you’re 30, you should invest 70 per cent of your money in equities and 30 per cent in bonds.

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    “The younger you are, the more time you have to invest, so you can afford to take more risks,” suggests Vikrant Pandey, associate director at UOB Kay Hian Research. The numbers will change as you age, to reflect your falling risk appetite.

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    Anne elaborates: “Markets in Europe are not fully opened up, so you can’t just go online to purchase their stocks; you also won’t have the ground experience to react in a timely manner to market fluctuations.”

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    Your investment portfolio must take into account changing lifestyle needs, says Andrew Chow, head of research at UOB Kay Hian Research.

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    “If you’re planning to buy a house in three years, you can’t afford to lose your capital. Even if you’ve always been an aggressive investor, you may need to switch to more stable investment instruments, like bonds, to balance out your investment risk.”

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    “You’re in the right time zone and place to respond quickly to market conditions,” says Andrew. You won’t have to worry about currency movements either.

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    Before you invest in a company, Nicholas advises that you check the Investor Alert List – a watch list issued by the Monetary Authority of Singapore (MAS) – to notify investors of companies that are not regulated or licensed by the MAS.

Before You Invest…

Anne Tay, senior manager of financial services at Manulife (Singapore), suggests you run through this "TOLERANCE" guide first.

Time horizon If you have family commitments or are older, you have a shorter investment period and may need to invest in safer funds; if you're younger, you may be able to distribute more of your funds to investments with a greater risk, but with potentially higher returns.

Objectives

What are your aims? Think about major life events, like buying a car, a house or saving up for your retirement.

Liquidity ratio

Do you have emergency funds set aside (ie, six months' worth of living expenses?) This should not be used for investment purposes.

Expenses

Are there any costs involved? Some financial planners or fund houses charge annual service and management fees. For example, you pay transaction-based brokerage fees if you trade in equities and exchange-traded funds.

Risk

Do you know your risk appetite (conservative or aggressive) and risk muscle (can you sustain potential losses)?

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