Tuesday, December 25, 2007

A good time to invest in equities

Hi Mr. Tan,

You advised people to invest in an diversified, low cost equity fund for the long term. What is the best time to make this investment? Is it safe to invest now? Will there be a recession in the USA next year? Will it affect the Asian countries and Singapore?


If you are investing for the long term, i.e. 10 years or longer, it does not matter if there is a recession next year.

At the current level, Singapore equities are about 15% lower than the peak. I think that this is a good level to start investing a lump sum. There is still a risk that it may go down, but it does not matter for a long term investor.

If you are investing a monthly sum, you can start at any time as you will be "averaging" the cost of your investments.

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