FSM INVEST EXPO 2020
Asked on 14 Jan 2020
Am looking at REITs or dividends stock. Any advice? What are some basic REITs or stocks that I should be looking at? How should I analyse these stocks?
Hey there Beevan!
Kudos to you for taking the first step into investing! So first of all, you must understand what is your objective for investing. Are you looking to get passive income every quarterly? Or are you looking more at lump-sum gains? One must also understand one's risk appetite. Would you be able to sleep soundly at night seeing your $10k portfolio drop to $9k?
If you don't require the money urgently, I would suggest putting your money in REITs. It's a good investment class given the land scarcity of Singapore and the nature of the business. Just make sure you find REITs that have good sponsors and have low debt (so they aren't drastically affected by interest rate fluctuations). REITs would also give you about 5% yield, not too shabby compared to putting it in banks!
Hey Beevan! Before you invest, I would strongly suggest you to build up your knowledge first. Understand how does it work, what Brokerage are there, and read a lot of books! You can start from forums (I started from HWZ) or finance blogs too. Afterall, the idea is not to invest just because you have the cash now, but rather wait for the correct opportunity to come by. REITs are pretty overvalued now too.
The right answer would revolve around your objectives, risk appetite, etc. etc. However, a more direct answer would be
the reason is, you are starting out so you wouldnt want to be exposed to ccy risk. Blue chips usually are household names and their businesses are familar to you. They are more stable and usually are cash cows which will not scare you unduly due to volatility. Lastly, dividend yields are very encouraging for starting investors who get to see some returns credited back to your account! Hope this helps. You can choose to DCA through a RSP as well, but that's abit more passive
The key word to me is "good start". This suggests to me it is tallied to a beginner point of view.
Hence I would recommend the STI ETf, little research and monitoring is needed and the STI ETF delivers a decent long term positive annual returns
Before you start investing, it will be best to understand your objective. Here are some questions to help you:
What is your capital?
How will you want to invest your capital? E.g. lump sum or an amount on a regular basis
How long will you want to stay invested? E.g. 10 years
What is your risk appetite? E.g. How do you feel about short-term volatility?
What is your objective for investing?
Instead of reading what others are recommending, spend considerable time to understand yourself and your needs. Create a goal that you are after and find out how this investment can help you achieve your goals.
Every investment, e.g. REITS has its advantage and disadvantage. On the whole, one possible goal may be to build a diversified portfolio such that each asset covers for one another.
For stocks analysis, I will personally perform fundamental analysis through the company's annual reports. This is because through the reports, I am often able to gain insights on the company's business, and whether it is a worthy business to invest my money into.
A good start to this will be to start to learn how to read and conduct fundamental analysis on the stocks. This way, you will become more confident on the investment choices that you are about to make.
Here is everything about me and what I do best.
One advise is do not buy a REIT purely base on its Yield. Some REITs yield can be very attractive eg 7 or 8%.
Do ur research on the reit, price to book, their sponser, WALE, Gearing ratio. Google and You can find how to analysis reit easily.
You can choose to look at larger cap reits, however I feel they may be at a pricy side now, you may consider to invest in batches of 3k, 3k , 4k? Up to you, whenever you feel the technical analysis shows you a good price.
If you are interested in REITs with small capital, I would suggest checking out REIT ETFs. They offer diversification across different REITs and you don't have to worry about rights issues.
If you invest in individual REITs, you will need spare cash in case of rights issues.