Investing | Article

5 Things You Need to Think About When Investing

by Giem Eing Yapp | 11 Jun 2021 | 6 mins read

It’s safe to say that 2021 has been an eventful year in the world of investing. We had the headline-grabbing and meme-worthy rise of GameStop, and the rollercoaster ups and downs of the crypto markets, all while global stock markets broke new highs.

Given these market events, you may be thinking of jumping on the investing bandwagon too. But before you put your hard-earned savings into investments, here are few things you should know so that you’re fully prepared to take on the risks that come with investing.

1. Don’t invest money you’re not willing to lose

The fact of life when investing is that you won’t win every time; every investment comes with its own risk. So don’t go investing money you’re not prepared to lose, especially if that money is meant for bills or groceries. After all, you don’t want to risk piling unnecessary stress onto yourself.

This is why investors typically limit their losses in investing, where they predetermine how much losses they’re willing to bear (e.g. 10% loss) before exiting an investment. This is useful because it gives you more control over your investments and you will not fall prey to your emotions.

So, what’s a beginner to do?

Not everyone has substantial capital to invest in expensive stocks right away, and it’s unrealistic to expect this from ourselves (especially when we’re trying to balance our financial obligations with our savings and investing goals). So, try approaching investing with small amounts at a time, at a consistent and regular interval.

This approach is also called dollar-cost averaging, where you periodically put money into the market whether things are good or bad. Don’t fall into the trap of trying to buy low and sell high, and instead cultivate a consistent investing habit, the same way you would for your savings.

Dollar-cost averaging lowers the average price of your investments. This way, you will have a budgeted amount you’d be willing to let grow without unnecessarily losing money that would have been better used for other needs in life.

2. Don’t borrow to invest

We already know that losing money that you needed for food and necessities is going to sting, causing undue stress. In a similar vein, losing money that you owe to someone else is a real pain and an even bigger liability!

When you borrow money, whether from a bank or from a private lender, you’re expected to eventually pay it back, or risk incurring hefty late payment fees and other penalties. Don’t make things harder by risking it in an investment portfolio in case you can’t pay it back.

So how do you solve this?

The course of action is the same as the above: save up and also simply don’t borrow to invest!

READ MORE: Financial Mistakes People Make In Their 20s (And How To Avoid Them)


3. Do your own research

Let’s be real, we’re lazy and want fast and easy info. But don’t buy or sell any investments based solely on rumours and word of mouth.

One skill potential investors should pick up is analysing data. This could be financial statements reported and submitted by the company or chart information. These data will tell you if a company is financially healthy and profitable or burning cash and allows you to make an educated decision to invest or not.

So what should you do?

If you’re just starting out, learn as much as you can. Use resources like Investopedia to read up, attend workshops (without dropping a bomb) if possible, and link up with a community to build knowledge.

One fast way to gain knowledge is to engage a financial planner. Once you’re more confident, you can try paper trading as practice.

Paper trading is a system on a trading platform that allows you to invest using real data and charts. The only difference? You’re only using play money i.e. profits and losses will not affect you financially. This way, you get to play with different strategies without risking your money while you gain real experience because you are investing in real-time, through a simulation of the actual stock market.

4. Diversify your investments

Some of us may invest in certain vehicles (like purely stocks or property) just because we tend to stick to what’s comfortable, and what’s working for us already. But we have to remember past performance is not an indicator of future returns.

Also remember the saying, “Don’t put all your eggs in one basket” because different vehicles have different levels of risk; any “investment” that claims to be “risk-free” should be looked at more closely as they might be scams.

There are many vehicles we can diversify our investments into including:


They’re a piece of ownership in a particular company. When a company does well, its stock price goes up but its price also can go down when there’s unexpected news in the company or in the economy.


Bonds are like loans companies take from investors. They are fairly low risk as they guarantee a yearly payout but there’s still the risk that the company could go bankrupt and be unable to pay the interest on the bond, and even the principal.


Ever heard of the S&P 500? It’s an index (or benchmark) consisting of the top 500 companies on the stock exchange in the United States. An ETF (exchange-traded fund) is an investment that mimics these kinds of indices.


A Real Estate Investment Trust (REIT) is a fund that invests in different properties. Depending on the fund, you might invest in commercial or residential properties. Buying this fund gives you exposure to the property market without having to fork out a ton of money.

Unit Trusts

Unit trusts are led by fund managers, who help investors allocate their money into different kinds of stocks, bonds, ETFs, REITs and so on, based on predetermined investment strategies and the fund’s objectives.

Endowment plans

These are savings plans offered by insurance companies. They guarantee a payout if you commit until the end (called the Maturity) with a little bonus that’s usually declared to you on a yearly basis before that.

Annuity plans

Annuity plans are like a pension you build for yourself that will pay you an income during retirement. These plans are usually offered by insurance companies as well.

READ MORE: Why It’s Important to Save $100,000 by 30

5. Always review and monitor your investments

Just like how your investment doesn’t grow overnight, your portfolio should be researched and adjusted towards what you want to achieve; be it retirement, a new house or simply extra spending money sometime in the future. Monitor your portfolio and use various different investments to weather different market movements so that it’s more resilient during bad times.