Qns: Hi Mr Stockbroker, is it correct to do a Regular Saving Plan for stocks? I have been doing it for insurance, should I do the same for equities?
Ans: I think one common misconception about investing is that you plough your salary into investment every time. But it is important to have a sizable war chest as well. In a bull market, your stock picks provides the return, but in a bear market, you have enough cannons to slowly nimble if the market gets over irrational and there is blood on the street and panic in the stands (and forums)
And so when major declines occur, if you hold a sizable war chest, you will find opportunities while others around you lose their heads in the bloodshed.
The greatest advantage normal investors have over institutions is that we can afford to hold cash which generates zero returns.
So back to your question, I do not think it is simply a correct or wrong thing to do. In every transaction action, regardless long term or short, we are always aiming to fulfil the equation of "Buy low, Sell high". If the regular saving plan has a way to maximise your profits gains, then, by all means, you should do that.
Ans: I think one common misconception about investing is that you plough your salary into investment every time. But it is important to have a sizable war chest as well. In a bull market, your stock picks provides the return, but in a bear market, you have enough cannons to slowly nimble if the market gets over irrational and there is blood on the street and panic in the stands (and forums)
And so when major declines occur, if you hold a sizable war chest, you will find opportunities while others around you lose their heads in the bloodshed.
The greatest advantage normal investors have over institutions is that we can afford to hold cash which generates zero returns.
So back to your question, I do not think it is simply a correct or wrong thing to do. In every transaction action, regardless long term or short, we are always aiming to fulfil the equation of "Buy low, Sell high". If the regular saving plan has a way to maximise your profits gains, then, by all means, you should do that.
