“Which one is better: a monthly contribution to income protection, or investing the same money every month?”

The following is my answer to a Quora question: “Which one is better: a monthly contribution to income protection, or investing the same money every month?” That depends entirely on your intent, and your need. In the beginning, you need some sort of liability protection, and coverage for loss of income. Pure investment does notContinue reading ““Which one is better: a monthly contribution to income protection, or investing the same money every month?””

“What is better: a stock or a mutual fund?”

The following is my answer to a Quora question: “What is better: a stock or mutual fund?” When you buy stock, each stock is the purchase of shares in individual companies. The advantage is that gains are more easily realised. In effect, a gain in share price may give you a potential profit may timesContinue reading ““What is better: a stock or a mutual 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 advantages of investing in a money market mutual fund over a savings account?”

The following is my answer to a Quora question: “What are the advantages of investing in a money market mutual fund over a savings account?” A savings account has a low risk, and that corresponds to a lower return. A money market fund is also low risk, but it is still of a higher riskContinue reading ““What are the advantages of investing in a money market mutual fund over a savings account?””

“Where or how should I invest $500 monthly, at low-risk?”

The following is my answer to a Quora question: “Where or how should I invest $500 monthly, at low-risk?” Even at low risk, you cannot go for the safest since the base objective is to still to have a higher return over the investment period than the rate of inflation. If you cannot match theContinue reading ““Where or how should I invest $500 monthly, at low-risk?””

“What is the secret to not losing money in the stock market?”

The following is my answer to a Quora question: “What is the secret to not losing money in the stock market?” The secret to not losing money in the market is to not invest. However, money that is not invested anywhere still loses purchasing power over time due to the effects of inflation. Losses areContinue reading ““What is the secret to not losing money in the stock market?””

“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?””

“What are sukuk bonds? How do they work, and how are they Islamic?”

The following is my answer to a Quora question: “What are sukuk bonds? How do they work, and how are they Islamic?” Sukuk is not, despite its name, a bond. A bond is a fixed-income security, a debt instrument for the sole purpose of raising capital. They are a loan agreement, between the bond issuer,Continue reading ““What are sukuk bonds? How do they work, and how are they Islamic?””

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”

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?”

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