How should I decide whether equity investing is right for me?It is not even a question of deciding whether equity investing is right for you Equity investment IS a must for any well-balanced investment portfolio.
04 Dec 2008
It is not even a question of deciding whether equity investing is right for you Equity investment IS a must for any well-balanced investment portfolio. As an investor, high net worth or small, large or timid risk appetite, it is absolutely important that a portion of your assets must be in equity. This is the only instrument that will deliver a truly high return over a long period of time.
If you are uncomfortable with the high risk high return nature of equity investing, you could reduce your exposure. The best practice rules for equity investment are the same as any other investment tool - investment objectives, time horizon and risk appetite. If you have a clear cut investment objective in terms of capital appreciation, a clear lock-in period for the investment and a well-thought out risk appetite, you will rarely go wrong in any investment, including equity investing.
But just to give you a head start in this investment channel, here is a rule of thumb: Reduce your age from 100 that should be the proportion of your assets that go into equities, with the remaining going into less risky avenues such as fixed income securities.
Remember, the rule of thumb mentioned above is only a guideline. It gives you a good starting point to decide the percentage of your assets that need to be invested in equity to create wealth for you.