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“What Can I Buy Now?”

The title above is by far the most common question I get when someone realizes I work in the investment industry. It’s a weird little question as it is both simple and yet complex at the same time. Let me break it down for you.

Firstly, when someone asks me the question, sometimes what they are really asking is “What are you buying right now?” And, even though I can easily tell them what I’m currently buying, it might not be a suitable investment for them at all.

How I would answer the question

If you – my dear reader – were to ask me the question, I have to know how much time you are willing to devote to investing. If there is a complete lack of time or simply no interest, a simple fund that tracks a broad stock market index might be the better option. In Singapore, there are exchange-traded funds like the SPDR Straits Times Index ETF (SGX: ES3) and Nikko AM Singapore STI ETF (SGX: G3B). Both tracks Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI).

If history is a good judge of the future, then those funds could possibly achieve relatively reasonable total returns over the long-term.

For those of you who have an active interest in investing, I would then need to know what industries you are comfortable in; it is important for us to invest within our own circle of competence.

It will not be very useful for me to tell you that I am investing in a certain company after doing sufficient research if it is something that you’ve never heard of before. If you buy into such a company, you might just panic and sell it off at the first sign of any temporary stock market downturn (remember, the market is very volatile) . That will not do much for your investment returns.

Foolish Bottom Line

Investing is a very personal affair at the end of the day. Two people owning shares in the same company might have vastly different views and reasons for investing in it.

If you happen to ask me one day “What can I buy now”, do not be surprised if I just smile and answer “I don’t know.” That’s because I do know enough of all the above – what’s a good investment for me, might be a poor one for you. Keep that in mind the next time you ask someone what’s great to buy now.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.