Monday, July 21, 2014

How Do You Invest Safely?

Invest safely
Yesterday, read an interesting article in Sunday Times entitled "The $1 million question : How To Invest Safely?" (by Goh Eng Yeow). Of course, who doesn't want to get a slice of higher returns vehicle (in the stock market) and yet can play it safely?
 
In the article, it made reference to Mr Warren Buffett's recent advice to the peer investors : put 10 per cent in short-term government bonds and 90 per cent in a very low-cost S&P 500 index fund.  I re-interpreted that to be :
 
1. Invest for the long term (in years)
2. Diversify (stocks with bonds)
3. Invest regularly e.g. through dollar-cost-averaging investing in ETFs
 
Of course, the old adage "The Higher The Returns ; The Higher The Risks" still stay true most of the time and no one can guarantee 100% "safety" as far as Stocks Investment is concerned. Throughout your investing journey, which principle(s) are you adopting to ensure your "safety"?
 
Cheers!

8 comments:

  1. I think the 10% in bonds is to have a liquid portion that you can capitalise on, whenever there is market opportunities. It's not really to diversify, since 10% wouldn't be much help anyway and 90% in SP500 is as diversified as you can in a single country. Hence pt number 2 should be more like "Don't wait for a war to realise you don't have enough bullets. Have a ready chest of spare bullets in case war happens".

    ReplyDelete
    Replies
    1. Hi LP, you are right, thanks for the correction!

      Delete
  2. Throughout your investing journey, which principle(s) are you adopting to ensure your "safety"?


    Pillow Stocks strategy and sleep on them without more nightmares over market cycles. It is House Money Effect and Other People Money (OPM). Okay lah. Not too bad.

    LOL!

    ReplyDelete
    Replies
    1. Cw8888 : thanks for the insights, first time heard of Pillow Stocks Strategy.. The pillow that I knew is for sleeping one! Hahaha.. Will google it ;-)

      Delete
    2. Walau. You haven't been reading my past blog posts

      :-(

      Delete
    3. CW8888 : Hahaha, no worry, I will do some catch-up of your older posts. But I've been reading all your newer ones (sharp and sweet) ;-)

      Delete
  3. It's not google-able. It's a term by CW8888. I'll not spoil the fun, let you read his entire volume of his blog posts to discover it ;)

    ReplyDelete
    Replies
    1. LP, not true ler, I managed to google the term and all CW8888 posts appear on the first page. But thanks for highlighting this..

      Delete

Like What You See? Subscribe To Us Here...

* indicates required