Question from a reader:
I’m a newbie who have recently opened up an account with a trading company and now, I’m not quite sure where to begin.
I’ve heard from my broker, my friends and family to invest in some low risks stocks to start the ball rolling but I feel like taking a more diversified approach. Probably have a basket of low to high risks stocks. What sector do you think I should concentrate on? i’ve heard so many opinions but don’t know who to trust. They say banks are the sure way to go but bank stocks have been falling so rapidly. i was wondering if you can share with me what you think is the ideal basket or combination of sectors I should consider investing in.
Thanks so much!
When you say high risk stocks, are you refering to stocks with high volatility, or are you refering to stocks with “risky” fundamentals?
Personally, I would avoid stocks with high gearing and weak cashflow at the present moment. I will also stay clear of financials.
Also, when you do invest in a stock, you need to have a strong conviction of why you are investing rather than just depending on the opinion of others (myself included).
Things change rapidly. A person could be correct in telling you that stock A is good at a certain point in time. But if it becomes “bad”, will that person still be around to tell you when to bail out? That is why it is important to form your own opinion, and monitor closely the stocks that you finally do decide to invest in.
If you find this difficult, you might be better off investing via collective investment schemes. The ETF market is growing and we now have close to 30 ETFs listed on SGX. You might want to have a look at those.