Most people get started on investing for 2 reasons: one is to build more wealth and the second, is to prevent their wealth from being eroded with time, by inflation.
However, different people have different expectations and risk appetites so it is important to be clear on what you hope to achieve through investing so that you can adjust your risk tolerance accordingly to your investment objectives.
Do you wish to acquire wealth in the shortest time?
If yes, then you may need to take on high risk in order to earn your high returns. However, you must also be mentally prepared for both outcomes where you could either win big or lose big, like what happened in the recent Luna crash.
Do you wish to achieve a steady stream of passive income that can complement your main income, without having to lose your capital?
If yes, then investing in shares of fundamentally strong companies that pay good and consistent dividends may be a good choice for you.
Do you wish to just preserve your capital and not let inflation erode the value of your saving away?
If yes, maybe you want to park your money in ultra-safe Singapore Saving bonds that can guarantee both your capital and interest, which is just enough to beat inflation.
Do you wish to invest to grow a sideline income that can one day replace your day as your main source of income?
If yes, then you may want to learn more about options trading that can help you achieve your goals of having consistent sideline income every month. Or simply, put more money into dividend stocks to help increase your passive income to a level that is close to your main income.
Why Is It Important To Know?
It is important to know your investing objective upfront so as not to get carried away by your success and lose your way in this journey by succumbing to greed.
Take, for example, you may want to be a passive investor, wanting to earn some passive income out of stocks but with temptation all around, especially when all your friends are talking about it and making lots of money out of it, you may not resist the urge to take on more risk to earn more money (e.g. crypto, speculative stocks) like everyone else. But when the market or trend U-turn (e.g. crypto crash), you will be caught off guard and lose more than what you can afford to lose, i.e. your capital.
Without a plan in mind, you may just wander off aimlessly and follow the crowd, which is a very dangerous thing to do because every one of us has unique circumstances, financial commitment, risk tolerance, and investment capital. Losing $100,000 for a multi-millionaire may be a small setback but for the middle-income folk who has spent years to accumulate that amount, it will be a very big blow.
Concluding Thoughts
If you are now investing without a plan or simply going to the forums or social media trying to follow what everyone is buying, then you need to pause for a moment and evaluate your strategy again. Always ask yourself how much money you can afford to lose in your investment go haywire. With that answer, you can judge your risk appetite and then adjust your objective accordingly. Alternatively, you can decide first what you hope to achieve and then adjust your risk tolerance accordingly.
Whatever you hope to achieve, just remember that the returns correlate with the risks involved. There is no such thing as high returns and low risk. Otherwise, everyone will rush to park their money there. What about high risk and low return? No one will even want to waste their time considering that option.
Lastly, if you are the kind of investor who plans to win big or has already won big, I just want to gently remind you to take some profits out to park them somewhere safe or at lower risk so that if the worst cast scenario happens, you will still have some profits left. Many high-risk investors got carried away by their success and kept reinvesting their profits into their investment to try to earn more and then one day when it crashed, they lost everything.
<< Subscribe to my blog to have all these articles delivered directly to your email address >>
*** FREE MONEY ***
Sign up for WeBull Securities Brokerage and fund any amount to receive up to USD500 in share value (Apple, Tesla, Microsoft, Google)
Receive Free Money (USD30~USD500) When You Sign Up With WeBull Securities Platform (Fund ANY Amount)
*** FREE RESOURCES ***
Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading
After accumulating more than 600k of unrealized losses on my portfolio, I wrote this article to encourage friends and investors who are also losing a lot of money to the market.
If You Are Feeling Depressed From Losing Lots Of Money In The Stock Market, Here’s An Article For You
In the 10 years of my investing journey, I have made many mistakes but also learned many lessons from these mistakes. I compiled the 10 most valuable lessons that I have learned and may they help you succeed in your investing journey.
Happy 10 Years Of Investing | 348k (Realised) Profit, 635k (Unrealized) Loss & 10 Lessons Learnt
The precious 6 lessons I learnt after cutting more than half a million of losses in the stock market through bad investments and risky trades.
6 Lessons Learnt After Losing 551k In 10 Years Of Investing & Options Trading | What Newbies Should Know They Start Investing/ Trading
How I managed to build a 1M investment/ trading portfolio despite coming from humble beginnings.
How A Poor Kid Got To A 1M Investment Portfolio | Tips & Principles Of Building Wealth
I did these 10 side hustles while holding a full-time job, so I share them here so you can be inspired to grow your wealth through a side hustle that you enjoy.
I Did These 10 Side Hustles While Working Full Time | 10 Side Hustle Ideas To Help You Earn An Extra Income
Struggling with inflation and high cost of living? Try these 10 methods to help you save money and accumulate more savings for investments or rainy days.
10 Ways To Save Money To Help You Fight Inflation & Rising Costs Of Living
Why I am building $120,000 of cash reserves in Singapore Savings Bonds (SSB) & 5 reasons why I think SSB is a worthy low or zero risk investment that you can consider.
Why I Am Building $120,000 Of Cash Reserves In Singapore Savings Bonds (SSB)? | 5 Reasons Why SSB Is A Worthy Low Risk Investment
Sharing why I am doing Dollar Cost Average (DCA) into SPY and QQQ ETF for long term investments and a step-by-step guide to doing it automatically with Interactive Brokers.
Why I Am Doing DCA (Automatically) For SPY & QQQ For My Long Term Investment? (20% ~ 30% Upside Potential) | Step By Step Guide To Activating Automatic Recurring Investment On IBKR
*** FREE MOTIVATIONAL BOOK ***
If earning more money from your investment does not excite you anymore, you may be seeking a purpose that brings fulfillment and meaning in life. I have written a motivational book that may be useful to you in some ways. You can also download a free copy here:
https://learninginvestmentwithjasoncai.com/finding-the-magical-realm-of-happiness-motivational-book
Learning Investment With Jason Cai 