Here's the secret sauce to investing, according to these finance bloggers in Singapore.
Oh, investments. Sounds like a truly terrifying concept if you don't exactly know much about it.
But as co-founders of finance blog The Fifth Person, Rusmin Ang and Victor Chng, put it, "Investing is the key to beating inflation. As a saver your money gets eaten away by inflation, but as an investor your wealth grows with inflation and allows you to generate multiple streams of passive income and retire comfortably."[caption id="attachment_738" align="aligncenter" width="624"] Rusmin Ang and Victor Chng of Fifth Person[/caption]
And they're right too. The inflation in Singapore is around 3% to 4% each year. Your fixed deposit account only gives you about 1% of interest annually. So your money is basically sitting in the bank decreasing in value. Invest your money to get back on par with inflation.
According to the people whose livelihoods are to blog about investing, the most important rule to remember is: always understand what you're buying.
Always understand what you're buying.
"Never invest in something you don’t completely understand. If you don’t understand an investment instrument because it is too complicated, you shouldn’t be investing in it," said Timothy Ho of DollarsAndSense.sg.
And if you don't understand it, hit the books (and internet). That's what Rusmin and Victor personally do before they pick a stock to invest in.
"We focus primarily on fundamental analysis because we believe that behind every outstanding stock is an outstanding business that generates sustainable long-term growth and profit. A “hot” stock may double in price in a short amount of time but if that jump isn’t back by logic and solid fundamentals, it will come crashing down all too soon."
"So our primary tip for investing is to learn and understand how businesses work and how to invest. If you know what makes a business successful, you’ll know which stocks will rise in value over time."
Part-time investor and owner of InvestOpenly.com, Richard Ng, agrees.
"Know what you buy and buy only what you know. Being a follower of fundamental analysis, I will try to understand as much as I can about the current health of the company."
It's important to note that you have to save money before you can invest.
"Saving comes before investing, so make sure you save sufficient money for your emergency fund before plunging into investing," Richard advised.