Anything Goes

Investing is like going to school . You have to start with something, no matter how small like going to elementary school. Then you grow more sophisticated and the investment grows with you. Here are some key points to remember.

1. Don’t wait until you’re rich before you start investing.

“Some people say, I will do wealth management when I have a large amount of money. If I don’t have the money, what’s the point? But the thing is, if you don’t start investing when you are accumulating wealth, you don’t understand the markets. And when you have finally the money to and you don’t have the investment experience, then its more difficult to do it.

Wealth management is not privilege of rich people. It’s for everyone who wishes to invest for the protection of their family, grow wealth for their children’s education or retirement.

2. Know and understand what asset classes are available

In this regime of low interest rates, people who were used to LOI ( living on interest) will have to look for ways to make money work harder. It’s no longer advisable to keep all your wealth in simple banks deposits. For people not keen on going going to entrepreneurship there are a lot of options – buying real estate pre-need products  (like educational or pension plan), government or corporate bonds or listed stocks or investing in pooled instruments like mutual funds and unit investment trust funds (UITFS) or unit linked insurance products with investment components.

3. Don’t Put all your eggs in one basket.

It’s a cliche but its still true. A good investor diversifies his exposure to ride out market cycles. And before thinking of withdrawing all your money in the bank, bear in mind that it’s also important to keep cash in hand for short term liquidity requirements. Otherwise, if you invested the money meant to pay the mortgage and the gamble didn’t work , you’ll simply add to the country’s poverty rate.

Real estate is usually a good investment for the long term, especiallt if you acquire the property at the beginning of a boom cycle.

4. Look for safety and liquidity, not just yield.

A lot of people become victim’s of pyramiding scam’s because yield is all they about. There is no such thing as a low-risk, high yielding investment. The higher the risk, the higher the yield and vice versa.

5. Set your risk appetite and time horizon for spending.

A good fund manager will have a list of suitability questions for you to answer before offering any of their products. Some bank’s over -marketed UITFs without thoroughly explaining the risks to clients so when net values fell, there was a widespread panic among retail investors.  There are different instruments suitable for different investor types- whether investing for short or long term investors  – willing to take higher risk in exchange for higher gains or wishing to stay conservative. The aggressive investor will put in more chips in stocks  while conservative will put more in bonds.