In order to achieve financial goals, we need to plan our "investment strategy".
If you fail to plan, you plan to fail. It's as simple as that. Care to get started?
Step 1: Set aside an amount every month, following your income cycle.
A good rule of a thumb, is that you put aside an amount that you do not worry about losing when you sleep at night. In fact, take this money and put it in another bank account separate from the one you usually use. Or, if you have the luck to have a really trustworthy person, ask him or her to hold the amount in trust for you. My brother passes money to me for safekeeping, and to tell him NO when he wants it. :)
If you really are talking about retirement as a strategy, you can even bank in the amount straight to EPF. Then you won't take it out unless you buy a house, or you're 55. :)
Trust me, this step is the hardest step.
Step 2: What do you want to do?
Usually, the younger a person is, the more risk he or she can take, because markets that go down will eventually go back up. An ultimate goal is important, something that drives you to invest and enforce discipline. For me at the moment, it is my dream car, and i want to get it in 3 years.
That gives me a time frame for me to achieve my goals.
If you're 12 years old, you can also do investments! If you're 50 years old, you can also do investments!
It's just that the objective is different. The objective is IMPORTANT. Take your time. Formulate an objective that is Specific, Measurable, Attainable, Relevant, and Time-bounded (Drucker).
Example for a 12 year old: I want that bicycle Model X costing $Y in 3months time
Example for a 60 year old: I want a invest that provides me with a minimum monthly income of $X every month, with minimum risk of losses.
Step 3: Get in, Get out. Now that you have some savings, place them in an asset that provides you with the right amount of reward / growth, and also, more importantly, the right amount of RISK.
A simple rule is, if you can't sleep at night, you're taking too much risk.
For now, if you have no experience investing, try safer investments like fixed deposits or bond trusts first. To build some experience, use a small amount of your investment into more risky stuff like stocks or unit trusts.
Remember, younger people can take more risks, because they can ride out market shocks. Control emotions like attachment and greed. If you have made enough, get out and enjoy your earnings. don't play with money that you cannot afford to lose.
Hope that helps! more coming soon!
P.S: I know that the advice here is rather general, but most people don't even follow this general advice! If you want more specifics, Comment or email me! thanks
P.P.S: If in doubt, AVOID DEBT.
AL833D
KIS
2012-11-20 22:28