Sunday, March 30, 2008

Invest in a diversified fund for the long term

Dear Mr. Tan,
I have just opened an investment account with fund supermart. I wish to begin my first investment in unit trust. I am an moderate aggressive player and high returns are important to me. I am willing to take higher risks for significantly higher returns over time (above 10% p.a.). I am willing to take the risk of downside around 20% in 1 year. Can you please provide me with some suggestion on what fund to invest in the year 2008?

REPLY
My advise is to invest in low cost, diversified funds. You can aim for a more modest target of 6% to 8% p.a. for the long term. You have to deduct about 1% to cover the expenses.

Read this FAQ:
http://www.tankinlian.com/faq/savings.html
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1 comment:

Anonymous said...

Hi Mr Tan,

I often find visitors to your blogs asking about what funds to invest and/or when to invest. It'd be prudent to advise such people to first educate themselves on the importance of having an investment plan which would entail determining your risk profile, asset allocation (e.g. 70% equities; 30% bonds) etc.

Extensive studies have shown, and as an Index-fund proponent yourself will agree, more than 90% of investment returns are determined by one's asset allocation plan; RATHER than what funds one chooses or when one buys the fund. This is a fundamental issue that all investors need to be made aware of. More needs to be done to highlight this important investment principle. Thank you.

March 30, 2008 6:11 PM

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