Why Investment Planning is Important While Trading In SGX Market?

It’s Important to Frame Your Investment Plans

When it comes to investing in SGX stock market, financial planning is the utmost important factor to manage your finances. Before investing, it’s recommended to know investment concepts, how to manage risk factor through diversification & what investment horizon means; because what you save & invest will help you to fulfill your financial goals. With this means, it’s important to keep in mind that investments that offer higher returns also put you in risk of losing capital which is termed as risk return trade off.

What Investment Horizon Means?

A portion of time, which the investor invests to achieve their financial goals. A long time investment horizon tends to trade for longer time with short term price fluctuations. But, if you’ve short term investment horizon as well as you can’t take the risk of losing money; it’s recommended to invest only in less risky assets. Besides this, whether you’re a short term investor or long term, an accurate Stock picks in your trading can help you to analyze the market movements to trade confidently.

If your investment horizon will be longer, it will be necessary to save more through compounding. The compounding tends to earn returns by reinvesting your previous returns. It’s recommended to start investing as early as possible because earliest returns can be reinvested for long period of time to produce good returns.

Why Diversification is Beneficial?

 

Diversification generates from the term co-relation. Co-relation is all about movement in stock price that takes place together in the same direction. In addition to this, the diversification in Stock investment is all about creating the investment portfolio with less co-relation which doesn’t take place in same direction. In diversification of your portfolio, you will have to lose your profits as well it will also minimize your risk of losses in your portfolio.

Your diversified investment portfolio comprised of various assets such as shares, commodities, bonds & cash. By having diversified portfolio, you will be capable to withstand market fluctuations.

The Wrap:

Well, as stock market is all about price movements therefore adopting a disciplined approach to investment are necessary while buying & selling stocks. Also, be sure about your investment plans & objectives.

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