Monday, 2 November 2009

The Modern Saver: a Trader, Speculator and Investor Simultaneously!

The modern individual consumes Colgate soap, Unilever shampoo, Ikea furniture, Toyota cars and investment products from their local bank. Ironically, many consumers spend more time selecting their shampoo than selecting their financial services provider.

The new economy has given savers umpteen products through which to lose their wealth. Twenty years ago savers left their money in bank accounts. Mutual funds, stocks and bonds were the preserve of the sophisticated and wealthy investor.
Retirement planning was not necessary. Children were expected to do their filial duty and take care of their parents. Employers made the relevant pension arrangements for their employees in return for serving the same organization their entire working life.
Times have changed.
Singaporeans are among the wealthiest people on the planet, at least on paper. They also have innumerable products available to absorb their savings. Many banks want a share of their wallet and are packaging ever more sophisticated products to entice savers.
One can grow wealth by investing in stocks, but only through patience and common sense. Millionaires are not created overnight by the stock exchange. Do not believe those who tell you otherwise. They will one day lose their fortune, declare bankruptcy or remain in debt for the rest of their life (all due to greed ).
There is no such thing as a 'get rich quick' scheme only the 'Sunshine Empire' type options!
Cash should be treated like any other valuable possession. That will minimize the chances of succumbing to greed. No analyst is a sage and none can tell you with any certainty where any market will be in 6-12 or even 3 years hence.
That is, unless you believe in fortune tellers.  
Consider the performance of the New York Stock Exchange last week. Up 2% on Thursday and down 2% on Friday – did the economy really change that much in one day? No, but new information became available. Information which no person could have predicted with accuracy and certainly none could have determined how millions of global investors will react upon receiving the new information.
Buy your investments with uncertainty in mind. Uncertainty, positive and negative, is the only certainty. Prepare a disciplined financial plan and stick with it. That is the best we can do. Speculate or 'play' only with money that you are prepared to lose. Keep the rest of your savings safe.
Suppress the trader and speculator within you will achieve better results as an investor.

The global financial system came close to collapse during the current economic crisis

As for trusting financial professionals, do so at your own peril. If finance professionals were graded on the overall health of the global financial system most will surely have failed!

1 comment:

  1. Thank you for sharing such valuable and helpful information, tips and knowledge. This gives me more insights on this. I would love to see more updates from you.

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