Updated: Jun 20, 2019
You may have heard that when you invest in the stock market, you spend hours spotting the right stocks, researching the companies, reading their financial reports, looking at their historical charts.
You can invest in mutual funds and let the fund managers do all these work for you.
Mutual funds are indeed a convenient way to invest, even if you are only starting with the price of a chicken rice a day.(read my Chicken rice investment blog article). But before you jump straight in and start comparing mutual funds, it's important to choose an investment strategy that will best meet your investing goals.
The 8 Bohorserun investment strategies
1. Monthly subscription (dollar cost averaging) - If you are young, time is your biggest asset, starting a regular investment plan with a minimum of $100 is definitely the best way to go. Go for funds which have the growth potential like equities fund. The benefit of dollar cost averaging is that you ride the ups and downs of the price fluctuation, meaning when the price is low, you buy more units. And when the funds price gets higher, you acquire lesser units. Generally in the Long term, fund pricing usually rises with time.
2. Lump sum subscription - Usually when people are looking to invest a lump sum ($50000 and above), most common questions asked- will the fund price drop? how much returns will the fund generates? Key factors to take note will be 1)Time horizon (how long can you stay invested), 2)what type of fund to invest in according to the amount of risk you are willing to take. A more detailed study of fund should be done before plunging yout money.
3. Adhoc top-ups (when funds value decline) - This action is executed when there is a dip in the fund price of your holdings. The amount to Top up can be a percentage of current holdings. For example If the fund price dip by 10%, then do a 10% top-up. This can be used as an indicator.
4. Rebalancing (when funds value increase) - This is done when your funds have achieved a certain amount of profits, by switching from funds (which have profited) to a lower risk funds.
5. Timing the market (buy low sell high) - Market timing is the strategy of making buying or selling decisions of funds by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis. This is an investment strategy based on the outlook for an aggregate market.
In my opinion, when the two largest economies are playing loggerheads with each other, with each time the leader of the largest economy in the world opens his big mouth, it causes a dip in the global stock market. NOW is the time to take a buying position, considering the fact that in 2020, he might not get re-elected, and the market could only get better.
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6. Buy and hold (Long term investing, retirement purposes) - For the long term investors. 10 years will be a good time, the longer the better.
7. Dividends funds - Generate passive income while preserving capital, some dividends funds do have some growth opportunity, while there are some have minimum price fluctuations-usually income funds. Suitable for mid to Long term investors.
8. The 70/30 rule - Invest 70% with a 30% capital in reserved, In the event when fund prices drop, that 30% reserved can be used for ad-hoc top up to buy more units. This percentage is up to individual risk appetite.