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04 Mar 2019
Chief Investment Officer at Autowealth
Let me try to address this scientifically.
Investment markets, particularly stocks and bonds, are yield-generating and therefore makes positive investment returns over the long-term (barring short-term temporary corrections). If you look up the global indices like the MSCI All-Country World Index, you would noticed that they are upward sloping over the long-term.
Therefore, you should invest as much as you are comfortable with and invest as early as possible.
You may mitigate risk of losing money by investing in a lower risk portfolio and/or taking a longer investment horizon. Go to this link and try adjusting the portfolio risk and time levers to understand the effect on probability of ending with a profit and projected maximum decline in portfolio value: https://www.autowealth.sg/advisory_module.php
Take for example the AutoWealth Balanced Portfolio of 60% global stocks 40% global government bonds. There is a 77.5% probability you will make a profit if you are to invest for 12 months. That probability moves towards near certainty when you choose to invest for 5 years. Selecting a lower portfolio risk would increase the probability of making a profit and shorten the required investment horizon to achieve a near certainty probability (at the expense of lower investment returns).
I have also shared in last Saturday's panel that investors who just got started should go low risk to avoid catastrophic losses. Be patient. Go through a market correction to feel the market fluctuations and better understand your emotional resilience towards market volatility (ie fluctuations). When you gain more confidence and experience, gradually increase your portfolio risk to accelerate your wealth accumulation.
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