Some people felt that investment is not worth the effort because the odds are stacked against them. Picture this: A "dumb" index fund investing in a diversified stock index is able to deliver around 6%pa return in the long term. History has tell us that a passive investment like a index fund is able to beat the long term interest rate that the bank is giving you. Granted, there are years when your investment falls in value, but if one selects the right stocks/bonds, one will still be able to enjoy dividend/coupon payout every year, while waiting patiently for their investments to recover.
The key to increasing your odds in investment is not being a day trader or active trader. Rather, be patient, do your research well, buy undervalued companies and wait for them to realize their true value. Avoid trading in and out of the market as costs of trading will decrease your odds of having a decent return.
Your odds of winning in investment could be increased by learning from your mistakes. Do not hesitate to identify your mistakes along the way and learn from them so that you can be a better investor. When in doubt, do not be afraid to ask and forums on the internet are a good place for one to interact and ask questions. Learn from the right people. Be strong and don't let one setback pull you down.
Now, people might ask - Do luck play a part in investment? Well, luck do sometimes play a part, but in the long term, the skill of a good investor will certainly outperform an average investor. Daily stock prices might be random at best and hard to predict, but in the long term, the intrinsic value of a good company will show and a patient investor will be rewarded with good dividend payouts, bonus shares and share price appreciation.
So, take your first step into the investment world! The odds of being a successful is certainly much higher than striking 4D or Toto. In the next chapter, I will show you how to make use of the various investment instruments available in the market in order to achieve decent returns on your hard earned money. Not all investment products are suitable for every person and one will have to analyze their risk appetite before deciding which one is suitable for them. Remember: There are many good investment products but there are bad ones too! Be discerning and identify which are the better ones.
Any interesting investment ideas? Feel free to email me at chua73@singnet.com.sg and I'll put them up here if I find them interesting :) -Ghim Hock