When it comes to investing, many people have varying mindsets that paralyse them. Some think it’s akin to gambling, some think it’s highly complex and only meant for professionals, and then there are those who treat it as get-rich-quick schemes.
Most of us are just ordinary people trying to put our money in places where can safely invest and grow it over the long term. We do not want to leverage on funds that we do not have, nor do we gamble on our money. We can’t tell if the stock market is too high or whether now is the right time to be buying. We don’t want to fall into money traps.
But that doesn’t mean investing needs to be complicating for us.
At this juncture, we think it’s apt to quote the Oracle of Omaha (Warren Buffet in case you’re wondering what’s going on) – Buy It Thinking You Will Hold It Forever. We need to buy high-quality companies that we’re perfectly happy holding on to forever.
This doesn’t seem so easy, how do we find these companies that we can buy and hold forever? Our answer to this question is to quote another Warren Buffet suggestion – Invest Only In Companies That You Know And Trust.
Consider this, you don’t know much about investing, but you do know where you currently buy groceries, and will continue to do so for a long time – at your local Sheng Siong outlet. They seem to be doing quite well, there’s usually a queue during peak hours, there is one in every neighbourhood and the prices are always competitive. Sheng Siong is listed on the stock market. You can invest in it.
Don’t think that’s for you? Maybe you think that Singapore will continue being a finance hub for the long term and serve even more markets with a greater population base? There’s DBS, UOB and OCBC to look out for on the stock market.
Extending this thought even further, you think properties are tangible and finance companies will always need offices. Where better to set up an office than in the CBD. Keppel REIT owns substantial office space in the CBD, and yes, is listed on the stock market.
This is unlike putting your money in unit trusts, endowment plans or gold reinvestment schemes. The difference between investing in stocks and these other instruments are that you actually understand where your money is going into.
The point we’re trying to make is, whether you “know and trust” consumer products, financial institutions, or physical properties, the Singapore stock market is out there with over 700 stocks currently traded on it.
This allows you to invest in what you know and believe in, rather than to present an obscure place where you can put your money without really understanding where it is going to go into. Furthermore, the global stock market consists of almost every product your can think of from F&B mainstays like Diageo and Coca Cola to healthcare giants like Pfizer and Roche and even technology behemoths Microsoft and Google.
Making Sense Of This
We want you to note that we’re not advocating that you go out and buy the stocks we just listed. They’re just examples and that’s why we haven’t bother to go into details about these companies. Neither should you bother to go around searching for stock tips. Rather, focus on what you understand. The companies you see around you, the businesses you frequent often as a customer.
The point about investing in the companies you can see is that it alleviates the fear of investing. You’re no longer investing in an unknown entity. Rather, you’re investing in a business that’s operating in front of you.
Also, as much as you’re in love with the company that you’ve just invested in, seeing the business in front of you will give you a greater perspective of how it’s performing. You may see the Singapore government building many more office in the CBD area and think “ok, maybe Keppel REIT will be affected”, or you may see a big competitor emerge offering daily necessities online for way cheaper prices and think “this will impact the revenue and profits of grocery outlets like Sheng Siong.”
You also get to see the management team of the companies once a year at Annual General Meetings, where other investors will raise questions that the management will answer. Often, companies will also present their highlight reel – showcasing all the good things they’ve done and what they intend to do to give investors a flavor of what’s happening. Seeing the people behind your investment can also give you a good idea of how well the company is being managed.
You get to see the good and the bad. Best of all, you are able to understand what you are investing in because the company is operating all around you.
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Bonds and Fixed Income