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There Is Nothing To Buy In The Singapore Stock Market!

For those who dropped by for a chat with my colleagues and I at the Invest Fair 2015 in Suntec Convention Center last weekend, thank you so much for spending time with us. (If any of you are wondering why The Motley Fool Singapore team was at Invest Fair 2015, this is the reason.)

Besides meeting fans of the Fool, I also had the opportunity to speak with many people who have not heard of the Fool. When I explained to that group that our free website – www.fool.sg – provides investing insights and stock market commentary on a daily basis, I kept getting similar comments that run along the lines of “There’s nothing to buy in Singapore’s stock market. It’s so boring!”

I think there’s a big issue here worth addressing with those comments.  Many new investors equate investing to gambling in that it’s something that’s fast and exciting and allows one to win big quick.

But, consider what Noble Prize-winning economist Paul Samuelson has to say: “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas [or in the case of Singapore, Marina Bay Sands or Resorts World Sentosa].”

Thing is, investing is about growing your wealth over the long-term through the effects of compounding and it’s not supposed to be exciting in the first place, like what Samuelson says. We can use land transport giant ComfortDelGro Corporation Ltd (SGX: C52) as an example.

Time period through 19 August 2015 Total return (including reinvested dividends) for ComfortDelGro
1 month -2.28%
3 months -0.33%
6 months 5.36%
1 year 22.78%
3 years 92.74%
5 years 132.81%
12 years 549.40%

Source: S&P Capital IQ

If you have invested in ComfortDelGro for only a month thus far, you will be sitting on a loss of 2.28% and will most likely feel that investing is a waste of time. If you had invested three months ago, you are sitting on a loss of 0.33%. Again, investing has failed you.

If you had plonked your capital into ComfortDelGro six months ago, you’d finally be able to see some profit. But, that 5.36% gain is still boring. The real magic though, happens when we start counting your investing period by the years. In the five years through today, you’d have made 132.8% in total returns on ComfortDelGro’s shares. If we go all the way back to 12 years, you can see that ComfortDelGro has generated a total return of 549.4%.

That’s the magic of compounding and of giving time to a business to grow.

Here’s something to help reinforce the point. If you had invested $5,000 into ComfortDelGro 12 years ago, you’d have $32,500 today. Guess how much ComfortDelGro’s shares would need to climb from its current level in order for you to achieve a further 100% return on your initial cost basis of $5,000? The answer’s a mere 15%. If that seems like a boring way to invest, please bore me away!

That wraps it up for this article. For more (free!) investing tips and tricks and to keep up to date on the latest financial and stock market news, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

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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 writer Stanley Lim doesn't own shares in any companies mentioned.