Earning + saving + investing form the trifecta towards wealth creation.
As we build our nest egg, it becomes increasingly important to invest your money wisely in order to build wealth.
What are the most important pillars of investing?
This article is written by a Financial Horse Contributor.
1. Asset Allocation
Asset allocation forms the base of all wealth planning.
How you allocate your assets determines your trajectory towards your financial goals.
How you diversify will depend also on your risk tolerance and investing time horizon.
Spread your investments across different asset classes (stocks, bonds, real estate, cash, etc.) in order to achieve your targeted return.
2. Long-Term Perspective
Having a long-term mindset helps you build wealth.
This is because the magic of compounding requires time.
Investments can also be compounded by reinvesting earnings e.g. opt in for automatic reinvestment of dividends.
A long-term perspective also helps you make better decisions through market fluctuations.
If you have a long-term strategy, you will be able to avoid making impulsive decisions based on short-term market movements.
In any form of investing, while you can make short term gains, it is important to understand that ultimately building wealth is a long-term endeavor and requires patience and discipline.
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3. Cost Management
There are 1,001 investment options these days.
No longer are investments reserved for the few and wealthy, it is easier than ever to invest.
Take advantage of all the low cost vehicles these days, and eliminate the middle man if it suits your investing personality.
Understand what you are paying for. Are you able to minimize investment costs? e.g. management fees, transaction fees, and taxes (take note of witholding tax as a Singapore investor)
Consider low-cost investment vehicles such as index funds or exchange-traded funds (ETFs) as part of your portfolio.
Utilize tax-advantaged accounts (e.g., CPFIS) to optimize your returns towards retirement goals.
4. Regular Monitoring and Adjustments
Depending on your personality and lifestyle, you may choose to be a more active or passive investor.
If you know yourself well enough, you can set up your portfolio that aligns with the time/energy you know you can afford to spend monitoring your investments.
Nevertheless, some level of effort is required to ensure your investments are aligned with your goals.
Most importantly, you need to reasses your goals and expectations as this may change depending on your life stages.
Generally, it is also good to stay on top of market trends and economic conditions.
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Be prepared to adjust your portfolio in response to significant life events (e.g., retirement, major expenses) or shifts in financial goals.
5. Disciplined Execution
Achieving financial stability comes down to disciplined execution.
How to stay the course?
First, you need to set clear financial goals. If you don’t even know what you’re working towards, how would you remain on track?
Setting realistic goals with a timeline will help keep you accountable.
The second is to set up your investment strategy and keep at it.
Decide your asset allocation, and investing goals, risk appetite and time horizon.
An easy way to reduce decision fatigue is to automate.
As much as possible, automate your finances so you are setting yourself up for success.
Set up automatic transfers to your investment accounts, and/or adopt a fixed form of DCA as part of your investing strategy.
Finally, instead of relying on motivation, know that discipline comes from habits.
Make your financial goals a priority by setting up the right habits – automate savings/investing – so you will succeed.
Year-to-date, SGX share price rose 15%. The bullish form of SGX share price is in stark contrast to many of the counter’s Strait Times Index (STI) peers that has been in sluggish forms since the Fed raised interest rates aggressively in 2022. Amid the lackluster forms of many major stocks listed in SGX, there were also a dearth of listings in the Singapore bourse, prompting the authorities to launch a strategic review in a bid to restore SGX to greatness. Then again, its not as if SGX really care. Why do I say so?
Apparently, CEO Loh Boon Chye’s multi-asset strategy has paid off handsomely in recent years despite the continuing decline of its equities (cash) business. Net profit for FY2023 and FY2024 crossed $503 million and $525.9 million. The performances were certainly impressive for SGX as net profit during the pandemic era averaged about $450 million. Furthermore, SGX recorded only 7 listings in FY2024 and 8 listings in FY2023, with trading and clearing revenue slowing to $168 million in FY2024 vis-à-vis $230 million in FY2021. With such robust business performances, there is no reason for SGX share price not to be bullish.
Regards,
Gerald
https://sgwealthbuilder.com