Thursday, June 24, 2010

Buying stocks

Buying stocks is like buying a used car. You have to spend time and attention to make sure that you buy the right stock and pay the right price. Read this article. Do not listen to tips from friends or ask for their advice.

My observation
If you are not sure which stock to buy, buy the STI ETF. It is invested in the shares of the 30 largest companies listed in the SGX. It has low transaction and annual management fee. You can mitigate the risks of investing in this ETF by following the principles explained in Practical Guide on Financial Planning.

Another alternative is to invest in a life insurance policy, provided that you are able to find a product that offers a low "effect of deduction" as explained in that book.
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6 comments:

Anonymous said...

Buying individual stock is a losers' game.
What tools you have to pick the winners?.. You have better chances at the casino or at the race course.

June 24, 2010 2:14 PM
Anonymous said...

Problem with the STI ETF is that there is little liquidity since not enough people understand the product.

Compare that with the TRACKER Fund which tracks the Hang Seng.

June 25, 2010 3:26 AM
curios said...

Is it worth my time,money and effort to buy US stocks via a broker here or go online and buy through a online facility with a local brokerage house?

Any tax issues with USA / Singapore?

June 25, 2010 9:52 PM
Createwealth8888 said...

Beware of Tracking Error Risk when investing in the STI ETF?

http://createwealth8888.blogspot.com/2010/03/5-myths-about-etfs-part-3.html

June 26, 2010 8:20 AM
Bongo said...

Perhaps because the STI-ETF is an indexed fund with low expense ratio, it is probably a good investment instrument over the longer term -- 5 years or even more.

I agree that in the short term, it could be fairly volatile.

Liquidity is also not a big problem for the longer term investor. This usually takes the form of a sometimes significant spread between the asked-for buying and selling price.

June 27, 2010 10:40 AM
Bongo said...

Stock punting is not necessarily a loser's game. But one needs to do a good amount of research before buying. Selling is in fact even trickier.

The ideal stock is when one buys to keep and does not desire to sell because it just performs extremely well. So far, I am fairly pleased with the Noble Group.

But I guess nothing is forever.

June 27, 2010 10:43 AM

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