Wednesday 8th Feb 2012 03:10 PM
Welcome to Qotion.com!
Qotion.com is a website for you to browse and discuss financial products. Currently, we are undergoing further development, and hope to serve you when we relaunch the site with new features.
Wed, 01/13/2010 - 18:21
Cast Your Vote:
As everyone knows, the way to wealth is reducing expenses and increasing revenue. Just as it is important to regulate and track your expenses, it is equally important to plan your investments and track their performances. Most of us probably have a portfolio of investments. The question is, are we planning and tracking them? With that in mind, do you think most singaporeans actively manage their portfolio of investments? Share your views with us below!
No. I guess I represent the majority. I know I should but I can't find time. Actually we need to actively manage our portfolio of investments, at least quarterly if not weekly or monthly. But it's really hard work. Need to do lots of research and reading up and also need to attend courses, and all these take away too much time. I have many excuses and I know I am not doing justice to my investments! I am dragging this task for too long....
Actually, there are classes of investment products, such as mutual funds, unit trusts, bonds and, in some cases, property, that do not require active management within a matter of weeks or even months. You do your research, commit to something for a year or 2, and review their performance. These are deemed to be mid-to-long term investments.
Risk tracking is actually more of an art than a science to the average investor.
For instance, we are used to hearing the adage of "diversifying to reduce risk". However, there is one type of risk that cannot be reduced. Worse yet, it may actually get riskier with certain diversified portfolios.
Certain financial calculation methods teach the use of a beta co-efficient as one of the gauges of the riskiness of an investment product that cannot be eliminated by simplying diversifying and buying similar
products in the industry. This is known as systematic risk, or market risk.
http://en.wikipedia.org/wiki/Beta_%28finance%29
The thing is, the beta for one product can be related to another. E.g. If you buy real estate stocks, then you buy stocks for cement, steel firms, or companies related to construction, there is actually a systematic risk even though you are technically buying stocks in different types of firms and industries. The overall beta of a portfolio, when it is calculated, gives an indication of how much systematic risk this portfolio contains.
... Like I said, for the average investor, this is probably too confusing or time-consuming to track. What I suggest is a healthy dose of common sense. Before you buy a product, ask yourself: Will a substantial amount of my investments get into trouble if this industry fails? If the answer is yes, you probably need to look for other industries to focus on.