1 Useful Quote for Investing in 2016

Does it feel like stormy weather in the investing seas will appear for 2016?

It could be, if we looked at what happened to the Straits Times Index (SGX: ^STI) in 2015 – it fell by 14.5%.

Oil companies like Keppel Corporation Limited (SGX: BN4) and SembCorp Marine Ltd (SGX: S51) did worse – falling oil prices had led to lower profits in the two companies, in turn resulting in bigger share price declines for them than the Straits Times Index had experienced during the year.

And then, we had the U.S. Federal Reserve’s interest rate hike in mid-December, the first time the central bank had done so in nearly a decade.

In short, dark clouds appear to be gathering and i t might feel like you should keep your boat away from the awful stormy seas and stay in the harbor, where it is safe. But, author John A. Shedd has a different take:    

“A ship in harbor is safe, but that is not what ships are made for.”

Not investing when the outlook is uncertain may feel safe. But, investing may be best done during downturns – when the outlooks are generally poor. This would mean plowing ahead to invest despite the uncertainties.

But, bear in mind that we should not charge forward without a proper process. A good investing process could be made up of the following:

  1. Having emergency cash
  2. Building a cash cushion
  3. Executing a steady investment plan

To be sure, taking advantage of market declines doesn’t mean that we have to make a big splash. My U.S. colleague Morgan Housel once shared Napoleon Bonaparte’s words in a tweet:

Like Napolean, what we may want to do is quite simple and that is, to just keep on investing. 

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.