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Where to Invest? (A tip for Beginners)

This is a guest post by C.L., thanks for sharing!!

Where should I invest? What should I invest in? These are often the questions asked by people with some money, who want to let their money to work for them but don’t know where to begin.

I first accumulated $100,000 after 3 years of working hard, spending smart & saving as much as I possibly can. The journey was excruciatingly slow and arduous, too often, I was tempted to throw in the white towel because it was an agony; holding myself back from possessing all the beautiful things money can afford.

If I continue at this rate ($100K @ 3 years), it will take me 30 years before I make my first million. By then I’ll be in my sagging late-fifties and 3 decades long of inflation will render my million dollars almost worthless.

I might as well splurge and live happily and extravagantly with nil savings and heavy liabilities like what average people do these days.

I knew I had to put my money to work but I was clueless as to how then. Here’s an account of my first unsuccessful attempt to make money out of thin air:

The first 10 grand I had, I unwittingly invested it in a Capital Guaranteed Fund (inclusive of insurance coverage for as long as the fund was active which was 3 years) with a local renowned bank, with the promise of average returns of 12.33% per annum IF the market performs at its optimum (the lady at the counter said).

Hearing that, I did a mental calculation and figured I would be banking on 37% ROI (Return on Investment) by the end of the 3rd year upon the maturity of the fund.

The same lady also warned me that IF however market crashes, the projected returns will merely be 4.33% per annum (which is nonetheless better than fixed deposit) which is equivalent to 12.99% after 3 years.

Before I could change my mind, she went on to reassure me that based on the history of their WORST performance; during the Asian Financial Crisis; they’d easily managed 9% annual returns.

That’s 27% after 3 years, a proven track record during the previous economic downturn. How can I not be hooked at that point?

As gullible as most 23 year olds were when it comes to the subject of investment, I signed the contract on the spot; I clearly remembered that was year 2007.

I reasoned and consoled myself with the notion that even if things were to go absolutely awry, I’ll still emerge fairly safe from fatal wounds as my capital of $10,000.00 was guaranteed.

The next year, the “credit crunch” of ’08 came knocking on my front door and everyone else’s. Although the market in general recovered by 2009, the fund I invested in didn’t (Coincidence?).

Consequently, when the highly anticipated year 2010 came, I was appalled, disappointed and indignant to find only $10K (the same amount I invested 3 years ago) was returned to my bank account.

What ever happened to the sales pitch of "at least 9% returns each year"?

I was determined to speak to someone from the bank and demand an explanation on how this thing worked. The lady in charge of this fund was not at her desk, I took from her colleague her contact number and her DDI but no one ever came to the phone. Two days later, I returned to the bank only to learn she had gone on leave.

It was pointless because upon recollection; there was a clause (for ants, mind you) on the brochure of the investment fund that stated: “All figures are based on projections only”.

Even before the maturity date, my boyfriend had been reminding me not to get my hopes up high; “You’ll never know how much your returns are until you receive them as it’s a Capital-Guaranteed fund, not a Returns-Guaranteed fund.”

I swore there and then never to leave my money in the hands of another ever again.

The first thing you need to know (if you’re asking 'Where to Invest') is that no one can answer the question except for yourself. Never, ever, let someone else answer that question for you.

There are a number of places one can invest their money besides the conventional method of starting a business. Here’s how; what works for me may not work for you, so read and find the one that fits best to your personality and preference.


Owning a stock is like owning a business. When the business makes money, its value or worth increases. As the value of company increases, the value of your investment appreciates and this is where you profit from your investments.

Most people however, view stock investing as a process of buying and selling stocks. They are looking for stocks whose price would increase so they can sell it and make a profit -- Not something that I would recommend.

While the concept of buying low and selling high is widely accepted as the philosophy of investing, the difficulty arises in determining how low is ‘low’ and how high is ‘high’. Value investing helps address this concern.

Early 2010, a very wise and kind man took the time to explain to my accounting/economics-averse brain the theory of value investing for the very first time. I was thrilled to learn this same theory was what made Warren Buffett the multi-billionaire that he is today. What I picked up from these informal lessons completely changed my life.

Suddenly, life didn’t seem so hopeless and bleak after all. After months of poring over financial reports from various companies and reading up on any books (on value investing) I could get my hands on and the many painful hours spent trying to make the right decisions, I took the plunge in Aug 2010 with all the cash on hand and purchased my first shares on the stock market.

It was a decidedly momentous event of my life because almost a year after that, the paper profit on the stocks I now own is 32.88% even while the stock market is in a tumultuous state due to a "possible US default".

Now although 32.88% ROI a year doesn’t make me an instant millionaire, it has reduced significantly my futile 30 years’ quest to only 8 years. In the years to come, I must continue to work hard, spend way below my means & save as much as possible and besides my day job, I’ve to constantly monitor the progress of the financial market to manage my investment portfolio effectively.

While value investing is a viable investment vehicle and everyone can try investing for themselves, an amateur must be aware that the stock market is volatile and carries great risk if one does not do sufficient research or practice due diligence.

WHERE TO INVEST #2: Mutual Funds

Instead of taking investing into your own hands, one can seek to invest conservatively with institutional investors in mutual funds which is usually managed and monitored by a fund manager. I ruled out this option for myself because I prefer to manage my own money and portfolio.

Conservative investors usually prefer mutual funds than fixed deposits because they provide a greater return in the long run (usually 8% to 10%) while the latter are usually under 3% depending on the capital invested.

Not all mutual funds are created equal and some may impose more fees than the others. Therefore, investing in mutual funds will also require prudence and research in order to make a well-informed decision and in the process helps to reduce or eliminate risks.

WHERE TO INVEST #3: Property

One of the reasons why this investment avenue is so popular with majority of investors is that it allows the use of leverage. Investors buy property with the bank’s money and reimburse the bank loan using rental income from tenants.

Besides the monthly rental income, investors also yield a profit at the time of disposal as the value of the property (if well-maintained and strategically located) understandably appreciates over time.

However, not all properties appreciate in monetary value. In places where new houses are built in abundance and can be obtained at reasonable prices, old houses have been known to depreciate in value.

As far as passive income go, investing in properties isn’t as passive as one thinks. To protect the investor’s interests, they would typically have a rental agreement signed with the tenant to ensure sufficient notice is given by either party in the event of vacating the unit. Most landlords will also make it part of the agreement to collect at least a month’s deposit.

Maintenance works such as repairing leaks and faulty facilities are impossible to avoid and can also be rather cumbersome.If running errands and seeing to the tenant’s comfort in your unit is deemed as too much of a hassle, it is crucial to reconsider these facts before making a decision.


REITS (Real Estate Investment Trusts) trade like shares on the stock markets. Although investing in REITs are in essence similar to buying stocks, they generally undertake large commercial real estate projects and generate income from rents (based on long term lease agreement).

As the value of the real estate increases, the value of the REIT also increases, thus gradually pushing the share price of the REITS up as well. Because it trades like shares, unlike property investment which are illiquid, REITs are easily acquired and disposed of.

The same advice of caution applies here : To ensure REITs provide the consistent stream of income you expect to derive from this investment method, research carried out upon the projects invested on (location, location, location) and its development potentials will assist you in making sound judgment and avoid taking unnecessary risks.

Some REITs are known to be portfolios which comprise of properties of shabby value. These were properties that weren’t appealing to property investors and in an attempt to conceal their unpopular locations or unattractive market values; these properties were subsequently collated and converted into REITs to garner interests from unsuspecting investors.

Result: The initial property owners prosper at the expense of new investors. Beware not to fall into the latter category.


One of the advantages of investing in gold is that it protects one’s wealth and assets from inflation. The price of gold rises in proportion to the depreciation of the currency as the economy undergoes booms and busts. But the value of gold remains steadfast with regards to the goods and services one can get with its value.

In simpler words, invest in $1 gold today and it may appreciate to $2 in 5 years’ time, but you’ll find that the $2 you have then is only worth $1 today. This means the ‘value’ of gold has not increased at all, it’s merely inflation-proof.

Being inflation-proof does not make it an investment, rather, an asset protection avenue which I highly recommend. When there are no investment opportunities, it would make sense to store your savings in the form of physical gold.

Though this is thought to be very conventional investing method, it has its advantages as gold is an entity that is rarely undervalued. When was the last time you heard that the ‘gold market crashed'? :)

Learning to invest is a way of life. It is a lifestyle you’ll be glad to have in the next 20 to 30 years to come.

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