This article was written in collaboration with ShareInvestor there Market Forecast 2019. Register using the promo code “dollarsandsense” free ticket. All opinions expressed in the article are the independent views of DollarsAndSense.sg
2018 has been a volatile year for investors in Singapore. Index Straits Times Index (STI), composed of the 30 largest and most liquid listed companies in Singapore, scaled 5 years in the middle of the year before declining to nearly 2 year lows today.
In fact, most of the major stock markets in the world, except in the United States, is trading at a loss 2018. This growing demand is not likely to go away any time soon, especially in the high interest rate environment coupled with the ongoing global geopolitical tensions in the form of a trade war between the United States and China, North Korea and the continued unpredictability, political cover emerging in the Middle East and anything new 2019 may throw.
With all these uncertainties at play, the ordinary investors like us may be extra concern when it comes to making investments in 2019. Here are some things that investors can do to enhance their portfolios in the year 2019.
# 1 knowing your risk appetite
Knowing how much risk you are able to take one of the most important things that you need to do. It’s one thing to think you’re willing to take a risky bet on investment that can give you 10% of the proceeds. It is a completely different thing when you actually 50% on the investment. Ask yourself-Can you sleep easily at night knowing you have lost a large part of your investment portfolio?
This is the kind of person that you may be a good indicator for this type of risks you are likely to be able to accept. Are you someone who loves the most thrilling rides in the amusement park or do you prefer something safer, like watching Netflix at home.
# 2 understand your suitability to take on risky investments
The person who just joined the workforce who are living with their parents can take on high-risk investments from someone much higher up the corporate ladder but is married to a stay at home wife the care of three young children.
This is because the smaller the factor of limited financial obligations outside of my phone bills, and daily expenses. While not ideal, this a person is able to lose a large part of the investment portfolio without having a negative impact on quality of life.
On the other hand, some advise older workers to invest only in highly risky investments. This is because despite earning more than that, it has many financial obligations, pay the Home Mortgage, feeding his family small, with the exception of his children’s education and put money away for his retirement. If this person loses a significant portion of the investment portfolio, it may have a sharp impact on his ability to teach his children or move to a bigger house for his growing family.
Each individual faces their own unique situations in life, you need to understand how much risk you should take on.
# 3 Find the investment strategy that suits you
The two most common investment strategies are passive and active investment.
Investment behavior is the law takes a back seat in your investments. Instead of trying to time the market, beat the market or do a lot of research on individual stocks, your main objective is to simply earn the market return.
The simplest way to start earning market returns is to invest in the overall market. In Singapore, this is a sexually transmitted disease, and there is also indicators of most of the other major markets. You should try to invest in exchange traded funds (ETF) tracking this index or even investing in the largest components of these indicators on a monthly basis to get exposure to the overall market.
Investment activity is simply to choose the stocks you invest in and exactly when you want to make investments. This way, you can choose stocks and timing the market, in hopes of beating what the overall market is in fact delivered.
To achieve this, will require increased investment in knowledge and spend more time in choosing your investments. You can begin by choosing stocks that you think are undervalued or overlooked in the market, hoping that prices will catch up in the medium to long term.
You can also start trading to capture short-term price fluctuations in a particular stock, or even in the entire market. Products such as daily leverage certificates (DLCs) listed on the Singapore Stock Exchange (SGX) allows you to trade the indexes such as Singapore STI or Hong Kong Hang Seng Index (HSI) Hang Seng China Enterprises Index (HSCEI), as well as single stocks such as DBS, Singapore, Keppel Corp and the draft Corp in Singapore and Tencent, Ping An, PetroChina and CNOOC in Hong Kong.
Of course you need to spend more time and have a strategy in place to be able to implement this successfully.
# 4 monitoring your investments
First of all, you should not start on the passive investment strategy only to listen to friends on a hot stock tip or the sale of all your investments as the market turned south. Your investment strategy should be to bring you through good times and bad.
What you should be doing is to monitor how your investments are doing over a period of time. If you are actively investing your money, you must compare the market index to check if you have already beaten the market, or you may be better off as passive investors.
If you are a passive investor, you must also monitor against the index to check if you have already got on the market return. You should also compare to other types of passive investments such as indexes, foreign exchange or even Singapore Savings Bonds (SSB) to see if the additional return you get (if any) is really worth the risk.
Part of monitoring your investments should also ensure investment in the portfolio is sufficiently diverse. This means not putting all your eggs in one basket.
You need to invest in companies in various industries and geographic regions to reduce the risk that a single company or industry or country has the potential to significantly impact on the whole of your investment portfolio.
# 5 to continue the learning journey
That should not be the end of your investment journey: learning new things won’t hurt your ability to become a better investor.
It can start out as a passive investor, mainly due to a lack of confidence in making investment decisions on your own, but after tracking your investments for a year and learn new things along the way, you are more confident to select undervalued stocks or are able to start trading. You can always part a small part of your investment portfolio towards this.
It can also mean an active investor in the Singapore market learns more about foreign markets such as Hong Kong or the United States, begins investment there.
Market outlook 2019 – start thinking about your investments 2019!
For investors who may not know where to start their learning journey or to experienced investors who are looking to get new insights, eNucky is always the value of seminars hosted by well-regarded product.
One of these grants is to ShareInvestor there Market Outlook 2019 , where a team of four esteemed clients from prestigious institutions, including keynote speaker Dr. Yan Chan Chung, will speak about the market outlook in Singapore, Hong Kong, and discuss the trending global issues like the current trade wars between the United States and China using financial leverage to the latest products such as DLC.
The event will be held on 17 November from 9.30 am to 1 pm in the shine of the continent. You can read the full programme, list of speakers here.