It's not true that investing is risky, it's.......

[Dennis Ng]

A often heard comment is:"Investing is risky". I want to play safe, I put money in Fixed Deposits."

My response is:
If you put ALL your money in Fixed Deposits, you are GUARANTEED to lose money. to put it in Singlish, putting money in Fixed Deposits in the long run is a SURE LOSE strategy, NOT a SURE WIN strategy that most people thought.

Why? Becos the interest you earn is UNLIKELY to ever beat inflation. 20 years ago a cup of coffee cost 25 cents. Now it costs 80 cents, or ANNUAL compounded increase of about 6%.

The truth is investing money WITHOUT Investment Knowledge is risky. Recently, a friend said he got a stock tip to invest in a stock. He said according to the rumour, the price would shoot up by 100%.

I ask my friend a few questions:
1. what business is this listed company doing?
2. what is its NTA, PE ratio, Debt-to-equity ratio
3. why would share price shoot up 100%?
4. show me the 5 year chart of this stock

My friend said:"Wah, you so cheem one, I don't know all these lah. Only know the rumour say sure "chun" one, price would go up at least 100%. I wished my friend good luck.

I just casually check this stock's current price after the recent market correction. The price has dropped by over 30%!!!

What's the morale of the story?
It's not investing that is risky. It is investing WITHOUT investment knowledge is risky.

The more you increase your investment knowledge, the more you can REDUCE risk of investing.

[Dennis Ng]

Many say investing is risky.

Wrong. The truth is INVESTORS who invest without investment knowledge are risky.

Let me give an analogy: you watch a "tight rope" walking act in Circus. The audience say:"wow, this guy is so dangerous."

Wrong. It is dangerous if a person is untrained and try walking on tighrope. However, to the cirus performer who has been training his act since he was a few years old, walking on tightrope 6 stories high is similar to walking on tighrope 6 centimetres above ground.

Some people mentioned about Luck. Yes, we do hear of people who strike millions from 4D and TOTO. However, the KEY is NOT how much money you have, is whether you know how to MANAGE your money.

From statistics, those who strike it rich typically end up being poor again a few years later. Why? It is becos this person has not LEARNED Financial Literacy.

If you cannot handle S$10,000. Giving you S$10,000,000 only MAGNIFY your incompetency in managing money, it does NOT make you richer.

However, it is possible for the AVERAGE PERSON to start with NOT much money (say s$50,000) and even without knowing how to invest, can easily DOUBLE or TRIPLE his money by investing during CRISIS.

The problem is MOST people want to get rich QUICK. The problem is MOST Get Rich Quick Schemes are MERELY SCAMS. Do not be IMPATIENT. If you have a 30 year time horizon it is very possible to GROW your money to a MILLION DOLLARS.

Give you an example:
S$100,000 double becomes S$200,000. (One Crisis)
S$200,000 double becomes S$400,000. (2nd crisis)
S$400,000 double becomes S$800,000. (3rd crisis)
S$800,000 double becomes S$1.6 million (4th crisis).

And above we did not even factor in the fact that this person might be saving more money and having more CAPITAL to invest rather than just S$100,000.

Above example is based on someone who knows NOTHING about investing but who can still retire a MILLLIONAIRE by investing ONLY during Crisis.

If one bothers to learn about investing, this person is likely to do even better.