How To Mix Up Your Financial Portfolio (2018 Update)

Posted by admin
on April 16, 2018

How To Mix Up Your Financial Portfolio 

KEYWORD PHRASES: Building an investment portfolio from scratch. 

It’s one thing to have an investment portfolio and another to have a thoroughly diversified one. For those of you who are building an investment portfolio from scratch, it is crucial that you have a good mix of various types of investments. A profile comprising of only stocks and bonds in Singapore or only real estate may not be a wise way of handling your finances.  

All investors, invest with the sole aim of growing their wealth and the biggest deterrent in their path is risk. Anyone who wishes to invest has to either reduce the risk involved in the investment or increase their own risk tolerance. Either ways, risk is a factor that can make or break your financial endeavours. Having the right mix of investments helps in reducing the risk involved. When you allocate your assets in just one type of investment, you face the risk of losing all your capital if that investment fails. For example, you might assume that Google stocks will never go down but you can never know that for sure.  

 

Financial portfolio
Financial portfolio

 

 

 

 

 

Having said that, there are some profound investors who don’t agree with this strategy. Warren Buffett, a billionaire investor said that ‘diversification is protection against ignorance.’ According to him if you know the ins-and-outs of the one company or sector you have invested in, then you don’t need to diversify your assets. But the average Singaporean investor seldom works towards acquiring that amount of knowledge to be extremely sure of their investments. Hence, diversification works for beginners, skeptics and workaholic investors.  

What are your investment options? 

Stocks and Bonds 

Stocks or shares are a part of the ownership of a company. It represents a claim on the company’s assets and earnings. This option is viable for people who don’t mind taking moderate to high levels of risk to earn high returns.  

Real Estate Investment Trusts 

Real Estate Investment Trusts (REITS) are a great way for people to get into the property game. In Singapore property investments are rampant as it is a good way to earn passive income. The risk investors have to bear while investing in property is the rising interest rates.  

Exchange Traded funds 

ETF is another investment option that is traded in the stock market. So when you buy an ETF, you are buying into a basket of weighted shares. One example of this is the Strait Times, which is a collection of 30 stocks in Singapore.  

Cryptocurrencies 

These cryptocurrencies are increasingly being used for trading purposes. It’s volatile nature makes it ideal for investors to earn or lose large sums of money. Bitcoin, ethereum and litecoins are the three main types of cryptocurrencies in the market.  

Savings Account 

This is one of the most conventional ways of investing. If you are building an investment portfolio from scratch then you certainly need to begin by opening a savings account in a bank that has high interest rates.  

Insurance  

If you opt for an investment linked insurance policy, then you have both life insurance and investment components. Your premiums are used to pay for units in investment –linked fund(s) of your choice. 

 

Factors to consider while allocating assets 

Age 

Some financial experts consider age to be a crucial factor in determining your asset allocation. According to a report published in Life Hacker, a common rule of thumb is that: 110 – your age = the percentage you should be investing in stocks. The whole idea of considering age is to make your financial profile less volatile as you grow older.  

Risk tolerance 

This is one of the biggest factors that all investors consider while allocating funds for various investment options. Your ability to lose a particular sum of money can determine the amount of risk you will take with your investment choices. In order to be a successful investor, you have to master the art of risk management. 

Investment goals 

Your investment goals depend on when you plan to retire, the number of people dependent on you, and the profession you are in.  

Achieving the right balance 

To begin with, you can either consult a financial advisor or take an online quiz to understand your risk tolerance. Once you have understood your financial standing, risk capacity and your long and short term financial goals, then you can actively work towards diversifying your asset allocation.  

Everyone’s financial situation is different but there are a few generic tips that can help you achieve the right balance. One of them is to invest in index funds. Index funds are representative of the stocks of the entire market.  

Other strategies that help in diversification are buy-and-hold and dollar-cost-averaging. Buy-and-hold refers to buying stocks and holding them for a long period of time. It is a passive-income strategy that most Singaporeans use for their investment profile. Dollar-cost-averaging technique of buying a fixed dollar amount of a particular investment on a regular schedule, irrespective of the share price. 

The bottom line is that with the right balance of investment options and the correct knowledge of managing them can help you fetch long-term results. It’s up to you as to how to you balance your assets to achieve the best possible results. Let us know how you managed to mix up your financial profile while building an investment portfolio from scratch. 

 


Quick Credit Pte Ltd

Quick Credit Pte Ltd is the best money lender you will be able to find in Singapore. Anything cash related, we will be able to help you. Our well train loan consultants will be able to come up with a good loan package to help you clear off all your outstanding bills or debts. In doing so, you will help you keep better track of all your expenses and money. We have been a licensed money lender since 2002.

We have the skills, knowledge and people to assist you through the entire loan process while providing you with excellent advice.

In addition, we have one of the highest positive moneylender reviews among money lenders in Singapore. Furthermore, Quick Credit is also one of the few moneylender open on Sunday!

Interested in knowing more about how you can get a loan from us? You can drop us an email at enquiry@quickcredit.com.sg. Our manager will get back to you as soon as possible. Or you can drop us a message here and our manager will get back to you soon.

Alternatively you can call us at +65 6899 6188. Or visit our office at 2 Jurong East Street 21 #04-01A/B IMM Building Singapore 609601. The nearest MRT station to us will be Jurong East Station.

Continue Reading...

How Do You Review Your Investment Portfolio (2018 Update)

Posted by admin
on April 10, 2018

How Do You Review Your Investment Portfolio (2018 Update)

KEYWORD PHRASES: How to do investor profiling, types of investor profile

Once you have created your investment profile, the next task is to make the most of it. And to do that you need to review your investments from time to time. A lot of traders fail to check their profile as and when required and as a result end up making knee-jerk decisions while investing. Your financial profile needs to be reviewed at least twice a year so that you can rebalance your investments, curtail your losses and develop a successful strategy for managing risks.

investment portfolio
investment portfolio

While going through your profile, you need to focus on quality or quantity. The trick is to not make hasty decisions based on quarterly results as it can have a negative impact on your overall returns. Also, always checking your profile may do you more harm than good. Most people tend to hate losing money as opposed to making it. If you constantly keep going over your investment profile, your decisions could be based on your aversion to making losses. Though this conservative approach may prevent your losses but it will also hinder your growth prospects. So, the best way to go about reviewing your financial profile is by using the following parameters to review your investment profile, and the tips mentioned below:

Parameters to review your investment portfolio

Investment goals

Every investor has a set of financial goals that they plan to achieve through their investments. From being able to retire early or growing your wealth by x percent over a period of time, people have all sorts of financial goals. While reviewing your investment profile, you need to see if your investments are showing progress. You could even set milestones for your goal and see to it that everytime you review your profile you are moving closer to your investment goal.

Risk to reward ratio

Risk is the uncertainty of getting the returns you expected at the time of making the investment.The risk/reward ratio is data that investors use to estimate the expected returns and the amount of risk involved. It is calculated mathematically and is used to measure trading individual stocks. While you keep track of the risk to reward ratio, you need to balance you risk-return trade-off. We all know that risk and return are directly proportional. High risk options like equities tend to give higher returns whereas investing in cash, deposits, and liquid investments have virtually no risk but provide low returns. Investing in bonds, debentures, mutual funds have some risk and provide moderate returns. While checking your investment portfolio, you need to be mindful about the risk and return trade-off for your investments.

Asset allocation

Asset allocation is dividing your investments in different asset classes like stocks, real estate, equities, bonds etc. It differs based on your capacity to handle market related fluctuations and is in a way a reflection of your personality. You may have done this while building your investment profile but over a period of time the proportion of funds allocated to each investment option may vary. Make sure your investment goals align with your current asset allocation.

Diversification

Diversification is the prime goal of the conservative investor. The rationale behind diversification is that when you spread your investments across various asset classes and industry sectors, you drastically reduce the risk of making losses. So if one particular asset class or company fails to perform well at the stock market, you have other investments that can balance out your losses. Reviewing your portfolio regularly will prevent you from investing in just one asset class or company.

Tips for reviewing your investment profile

Schedule periodic portfolio checks

As mentioned above reviewing your portfolio very frequently can have a negative impact on your investment returns. And not reviewing for prolonged periods of time can also work against your investment strategy. Ideally, you should review your investment portfolio 3-4 times a year. However if you are opting for individual stocks, then you need to check your portfolio more frequently.

Evaluate the performance of your investments

This goes without saying, when you review your investment portfolio at a macro level, you need to identify the investments that are fetching you higher returns and those that are causing you losses. Based on this evaluation you can take a call as to where else you need to invest and get rid of the stocks that have consistently been underperforming. If need be, you can even consult with a financial advisor to make the necessary changes in your profile.

Rebalance your assets

Financial experts suggest that you should rebalance your assets at least once or twice a year. Rebalancing is the process of realigning your asset allocation to match your desired mix of investments. It involves buying and selling of assets based on the overall performance of your investments.

What is your investment strategy and how do you review your investment portfolio. Let us know in the comments section below.

 


Quick Credit Pte Ltd

Quick Credit Pte Ltd is the best money lender you will be able to find in Singapore. Anything cash related, we will be able to help you. Our well train loan consultants will be able to come up with a good loan package to help you clear off all your outstanding bills or debts. In doing so, you will help you keep better track of all your expenses and money. We have been a licensed money lender since 2002.

We have the skills, knowledge and people to assist you through the entire loan process while providing you with excellent advice.

In addition, we have one of the highest positive moneylender reviews among money lenders in Singapore. Furthermore, Quick Credit is also one of the few moneylender open on Sunday!

Interested in knowing more about how you can get a loan from us? You can drop us an email at enquiry@quickcredit.com.sg. Our manager will get back to you as soon as possible. Or you can drop us a message here and our manager will get back to you soon.

Alternatively you can call us at +65 6899 6188. Or visit our office at 2 Jurong East Street 21 #04-01A/B IMM Building Singapore 609601. The nearest MRT station to us will be Jurong East Station.

Continue Reading...