Investment Perspectives
1. Reasonable Yield Targets
Everyone would love to multiply their investment value by two, three and even multifold but to be realistic, we must recognise that buying company shares are like buying a company. This means that we need to wait for returns and at the same time have reasonable yields from our invested capital. so how much do traders and investors really earn in a short term of a few months to a year in comparison to others?
How much would you earn from investible and other products?
| Name of instrument | Regular Savings Acct | Govt. or Corp. Bonds | Company shares |
| Yield Range | 0.05$ – 2% | 2% – 5% | 3% – 10% |
| Comments | No risk, regular returns | Lock in period defined, higher yields | Risk present, potentially higher yields. |
For capital growth, we need to consider how much is actually reasonable and that would be defined by our risk appetite and level of patience. The higher your patience, the greater potential for greater upside (higher yields). The lower your patience, the lesser potential for any substantial upside as price of shares need time to climb.
2. Actual Profits (factoring commission)
If all we care about is percentage yields then we might be missing the whole point of trading. After all what is 100% growth of a $1? Hence we need to first set a decent profit figure (E.g. $100) with a realistic timeline. For novice trades, it will be better to trade smaller amounts with a target profit of around 3-5%.
For absolute clarity in terms of trading commission, net profit figures and cost, visit https://sgxprofitcalculator.com when planning for your next buy or sell order. Play around with actual share prices when you buy and sell and discover the truth about trading and investing. Its free and it will teach you more than you think you knew about traders and investors.
3. Portfolio Value Evaluation
What is a good amount to invest (Sweet spot amount) when buying your first share?
Basically, a good starting point would be to decide what kind of investor/trader you are. Click here to know more about types of investors). Once you have decided on your trading preference, you should act based on how much money you can afford to “lose” rather than how much money you can potential gain from investing. Once you have settled on that amount (which you can afford to lose), set 5 – 10% of that amount as your profit target. Look at the table below for an example.
| A) Total Capital | B) Allowance for losses | C) Profit targets (10% of B) | Actual profits (A*C%) |
| $10,000 | $5000 | $500 | 5% |
| $1000 | $400 | $40 | 4% |
4. Target Setting
Setting actual profits will provide you with the realism you need to stay objective and discipline when making a purchase. Needless to say, I believe that everyone wants to earn (maximum) and loss (minimum). But bear in mind that when money is involved, the activity will tend to be a lot more emotionally stressful/taxing then you anticipate. My best advice to everyone out there is to try setting a profit target, loss allowance and then sticking to the plan. This is to ensure that greed will stay out of the way when you trade.
This is how investments differs from gambling. This is because investments are not based on probability, a true investor’s plans are based on proper planning, strategies and a lot of discipline. In other words, to become a long term successful trader or investor, greed must not have a place in your heart.
