Where To Find Good Stocks

What does it feel like to be taken out of our comfort zones?

In a word….awful.

It happened to me recently. But thankfully, there was help at hand.

Thrown in the deep end

So there I was, just another member of a large audience that had gathered for the opening night of Cirque Adrenaline.

I settled comfortably into my seat and waited expectantly – like many others – for the dazzling display of physical strength mixed with artistic prowess.

But before the show started, a physical comedian (otherwise known as a clown) entered the stage from the left.

Whilst entertaining the crowd, the clown, Darren Partridge, was also scouring the crowd for assistants to help with his act. I think a better term might be “victims”.

I sank lower into my seat, which was probably a mistake.

Before I knew what was happening, I was thrown in the deep end with a sink plunger stuck on my head.

Actually, I thought it was a party hat, or at least that was what Darren put on my bonce initially. The audience howled with laughter.

Crowd pleaser

Things went from the sublime to the ridiculous, as I lost my wristwatch and also my unmentionables.

But it was all in good fun. The audience seemed to be enjoying it, enormously.

I was not aware, before stepping onto the stage, that I had the gift for slapstick. But with the help of Darren the clown, it was easy. I was in the hands of a professional.

Investing can be like that too.

Many of us are unaware that we have the talent, the ability and the skills to invest for ourselves.

Consequently, we are reluctant to step outside of our comfort zones. Instead, we slink lower in our seats, when the right thing for us to do is to take the plunge.

Lost opportunity

As far as some of us are concerned, money left in the bank feels much safer. We can even check that it is intact, from time to time.

But all the while, it is losing its value. It’s just that we don’t necessarily notice that it is shrinking, until it is too late.

As inflation picks up around the world, our money in the bank will lose its buying power.

At an inflation rate of 2% inflation, $100 will have the buying power of just $50 after 36 years.

At 3% inflation $100 will have the buying power of $50 in 24 years.

If inflation should climb to 5%, $100 will only have half its buying power after just 14 years. That is not a long time at all.

We must not let that happen. That would be a dreadful waste of our savings.

Creeping inflation

Inflation is already creeping higher, which is why the US Federal Reserve increased interest rates in December. Three rate rises are forecast for 2017.

If we are to preserve the buying power of our savings we need to invest them in assets that not only have a chance of keeping pace with inflation but could also beat it.

The stock market is one of the best places for that.

Over the last decade, no fewer than 20 Straits Times Index (SGX: ^STI) companies have delivered returns that have beaten Singapore’s long-term inflation rate of 2.7%.

That could be a good place to start investing our money.

A good starting place

More than a dozen of those companies have delivered returns of more than twice the rate of inflation, which is even better.

So rather than watch the purchasing power of our savings shrink, we could buy twice as much in about a dozen years, if we had invested in those shares.

Investing in companies that have the ability to outperform both inflation and the market can mean stepping outside of our comfort zones, though.

But we here at the Motley Fool we can help you to find those market-beating companies.

For us, it is now second nature, although in the beginning we, like you, had to step out of our comfort zones too. It can be the same for you.

But first, let us show you how – through the Stock Advisor way.

A version of this article first appeared in Take Stock Singapore. Click here now  for your FREE subscription to Take Stock – Singapore, The Motley Fool’s free investing newsletter.

Written by David Kuo, Take Stock — Singapore tells you exactly what’s happening in today’s markets, and shows 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 Director David Kuo doesn’t own shares in any companies mentioned.