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Should an average person be "playing" the stock market?

Saturday, January 25, 2014

Is investing in the stock market a game?

And if we play the game well, will we be rich?

Should an average person play the game?



In a nutshell:

Buy index funds and keep for 20 to 30 years.

(AK71 being kaypoh: And hope we don't suffer a lost decade or two.)

Related posts:
1. Dollar Cost Averaging.
2. POSB Invest-Saver Account.
3. OCBC Blue Chip Investment Plan.
4. Common Sense Investing.
5. Retiring a millionaire is not a dream.
6. Is investing in stocks suitable for you?

9 comments:

AK71 said...

By Invest Apprentice on my FB wall:

AK, your "kaypoh" point at the end hits the jackpot. When Warren Buffet suggests the average person buy an index fund, he's usually referring to the S&P, which is currently 50% of the GLOBAL mkt cap. STI is less than 1%. So I am not surprised if we truly enter a "lost decade" while the rest of the world rallies 8-12% per year. Think Japan.

If we really want to go passive, consider at least combining a GLOBAL index fund with STI ETF. My view.

Alternatively, buy more at low and less at high. In short, dollar cost average up (or value cost average up, if viable).

Dow is constructed to represent only 30 of US companies. The index construction is price-weighted, not mkt cap-weighted. Not a good index fund (if you are really thinking index investing).

Look out for Vanguard Total World Index ETF (VT). http://sg.finance.yahoo.com/q?s=VT

Solace said...

I agree with this approach.

Saw someone post this on your FB wall, :)

http://www.bloomberg.com/news/2013-10-14/fama-s-nobel-work-shows-active-managers-fated-to-lose.html

It is without doubt that index funds work for average investor

AK71 said...

Hi Solace,

And I said to him that I should liquidate my entire portfolio tomorrow and buy an index fund. LOL. Hmmmm... Food for thought.

Solace said...

Hi AK,

Hahaha, i know you won't do it.

Index funds generally work. But it also depends on individuals.

i have actually seen people who derives fun from reading reports and charts to find stocks that is of value to them. It help to exercise their brains and it becomes a entertaining hobby for them.

If one is really so good in picking individual stocks, he/she should continue to do so. They have a chance of beating the market. I know you have the ability, hahahaha LOL

AK71 said...

Hi Solace,

I think you have more confidence in me than I have. -.-"

Technically, the STI looks set to test the 3,000 points support in the near future. If that goes, then, the GSS will come early.

War chest on standby. ;)

Solace said...

Hi AK,

I would like to post a question, perhaps you can help me ask your audience,

I have been researching how to buy "Vanguard’s S&P 500 ETF "

Need information on how to go about doing it, which brokerage account to use etc.

In singapore there is, Infinity U.S. 500 Stock Index Fund, SPDRS 10US$ and iShares S&P 500. These are not my preference for various reasons.

I was thinking of purchasing from Vanguard directly.

Unfortunately, i do not know and cannot know everything about shares. Haha, this time i would need guidance. :D

AK71 said...

Hi Solace,

I will place your question on my FB wall. Check to see if you get any response from other readers, ok? ;)

Solace said...

Hi AK,

Thanks for posting, got lots of replies. plenty of gd info in there. Much food for thought.

i did read andrew haliman bk before and have a rough idea on hw to go about buying ETF in US. But i feedback from experienced investors on what is the best way to go abt it.

Wanted to know the experience of people who have done it before, i am glad to receive so much valuable info :)

AK71 said...

Hi Solace,

You are welcome. :)

Although I am not thinking of doing what you are thinking of, it is interesting for me to learn something too. ;)

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