“Is diversification really the key to a good investment?”

The following is my answer to a Quora question: “Is diversification really the key to a good investment?” The primary purpose of diversification is to mitigate exposure to any one section of the economy and spread the risk.  It is about risk management, and not growth.  It is not the key to good investment.  It is a hedgeContinue reading ““Is diversification really the key to a good investment?””

Understanding Consumer Staples and Consumer Discretionary in Investment

If you are investing in unit trusts (or mutual funds) or Investment-linked Policies (ILP), you would notice the terms “Consumer Staples” and “Consumer Discretionary” under Sector allocations when reading the fund factsheet. What are Consumer Staples? Consumer staples are essential products that include typical products such as foods & beverage, household goods, and hygiene products;Continue reading “Understanding Consumer Staples and Consumer Discretionary in Investment”

Some pointers to avoid being pushed or mis-sold an insurance product… (part 1)

It seems I have become a magnet for people enquiring on being pushed or mid-sold insurance products, occasionally getting such enquiries. So I thought perhaps I should write some pointers for customers out there: 1. Savings plans may not be for you Savings plans, though seemingly safe, may not be for you. “But savings isContinue reading “Some pointers to avoid being pushed or mis-sold an insurance product… (part 1)”

What is a hedge feature in a fund?

When investing in unit trusts or investment-linked policies (ILP), you would find in the list of fund choices fund names with the term “SGD-H” or “Hedged SGD”. What does this mean? A hedge is an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsettingContinue reading “What is a hedge feature in a fund?”

“Do high yield bonds have a high default rate during a recession?”

The following is my answer to a Quora question: “Do high yield bonds have a high default rate during a recession?” Yes. These bonds have a lower credit rating, meaning they are not investment grade bonds. These bonds are not rated corporate papers, or sovereign bonds. Their underlying issuer either has a weak financial position,Continue reading ““Do high yield bonds have a high default rate during a recession?””

“What are the factors to consider before you invest, especially in long-term investments?”

Key takeaways: Know your risk tolerance How much liquidity do you need? When do you need it? How adventurous are you in terms of asset classes? (Risk profile and preference) What kind of returns would you like to aim for? The following is my answer to a Quora question: “What are the factors to considerContinue reading ““What are the factors to consider before you invest, especially in long-term investments?””

“I still need growth on my investment for retirement. Should I avoid bonds?”

The following is my answer to a Quora question: “I still need growth on my investments for retirement. Should I avoid bonds?” That really depends. As you age, and seek growth, you may give greater weightage to equity instead of debt instruments in your portfolio. This should have the involvement of your financial planner toContinue reading ““I still need growth on my investment for retirement. Should I avoid bonds?””

Understanding Whole life insurance

When buying personal life insurance, you’d be introduced to Term life insurance, Whole life insurance, Endowment/savings plans, as well as Investment-linked policies. Each product type has its purpose, advantages and disadvantages. So what is Whole life insurance? Whole life insurance provides coverage for the life of the insured. In addition to paying a death benefit,Continue reading “Understanding Whole life insurance”

Investing in a volatile market

There is quite a bit of literature that the market is inherently volatile, punctuated by moments of seeming predictability. However, when viewed from a macro perspective spanning years, the market actually has predictable broad trends. That does not mean this volatility is inherently bad. In fact, these periods of volatility should be viewed as opportunities.Continue reading “Investing in a volatile market”

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