As a Mediocre What Can You Invest in?
Updated: Jan 25, 2020
The Mediocre Investor will be focusing on accumulating the war chest (savings) to invest in investment assets such as stocks and mutual funds which are more relevant and accessible. But first, we must gain an understanding of what are stocks and mutual funds that everyone is talking about...
In short, you are buying a percentage of ownership of a publicly-traded company on the stock market. There are a large number of companies you can trade on and a wide range of stock markets from different countries. For now, we will focus on Singapore and US markets.
Firstly, we must understand these three different types of stocks (Blue-chip stocks, Growth stocks, and Dividend stocks) which will be further explained in simple terms below:
These are large-sized companies that have been operating for a long time in their industry, with a historical record of stable performances.
Singapore: DBS Group Holdings Ltd (SGX: D05), Singtel (SGX: Z77)
US: Apple (Nasdaq: APPL), Microsoft (Nasdaq: MSFT)
Generally, buying these stocks will ensure a more stable return on your investment with lesser risk involved due to its stability.
Small to mid-sized companies that display a higher growth rate than the average market growth rate which are also more volatile in terms of their performance.
Singapore: MM2 Asia Ltd (SGX: 1B0), Yangzijiang (SGX: BS6)
US: Tesla (Nasdaq: TSLA)
Generally, buying these stocks will ensure a higher return on your investment with more risk involved due to its volatility.
Companies with a consistent fix dividend payout historical record.
Singapore: CapitaLand (SGX: C31), Ascendas Reit (SGX: A17U)
US: Intel Corp. (Nasdaq: INTC)
Generally, buying these stocks is to reap the dividend benefits (money paid out by the company for holding their stocks) to compensate for the capital invested over time.
*Do take note that a company can be classified in one or more of these categories. For example, Intel Corp (Nasdaq: INTC) can be classified as a blue-chip dividend stock.
For beginners, the random combination of alphabets and numbers beside the company name is the stock market: stock ticker. In short, the market where your stock is traded followed by its unique number to identify the stock. If you try googling APPL (which is the stock ticker for Apple stock "iPhone") on the internet, you will be able to obtain the current stock price of Apple as shown below:
Mutual Fund (also known as Unit Trust)
An investment fund that pools money from various investors to invest in a wide range of investments such as stocks, bonds, real estate, and cash equivalents. This fund is professionally managed by a fund manager who determines what to invest in. In short, you are giving full control of your investment to a fund manager who decides what to invest in depending on the fund purpose which is usually stated in the fact sheet as shown below:
To conclude, the end goal is to put your money wisely in these assets over the years so that it will help you accumulate wealth through time compounding.
This website is intended for information only and is not to be relied on as advice, as it does not have regard to the specific objectives, financial situation and particular needs of any specific person. Investors should seek advice from a financial adviser regarding the suitability of the investment product before making any investment. In the event that an investor chooses not to do so, he should consider carefully whether the investment is suitable for him.