Know what is good for us (UPDATED).

I was reading the weekend edition of The Business Times and read an article which mentioned a survey done by the Monetary Authority of Singapore more than a year ago on banks and insurance companies. 

It was found that:

1. 50% of investors were not asked about their financial objectives or risk tolerance.

2. 48% of investors were not informed of fees and charges.

3. 40% of investors were not asked about their investment experience.

4. 30% of products recommended to investors were not suitable for them.


Have things changed? 

I very much doubt it.







Why do I say this? 

I still receive cold calls from insurance companies and tele-marketers, representing banks, promoting insurance and investment products. 

Usually, these callers would launch right into why a product had good features, good potential returns and was good value for money.





A call I just received last week from an insurance agent whom I don't know from Adam was a good example of this. 

The caller did not even make an effort to understand me as a client. 

He simply made certain assumptions. 






Although I was unusually patient with him, I finally told him that I would tell him what I was looking for in a product and if he had anything which met my requirements, let me know.

To his credit, before he put down the phone, he honestly told me that he put his own money in REITs. 

I guess he realised that there wasn't a chance that I would buy any of the products he proposed to me. 

Revelation!





Before we buy anything, we have to make sure that it is good for us and how do we know if it is good for us? 

We have to ask the right questions because we cannot depend purely on the goodness of others to do this for us.






Related posts:
1. Inflation adjusted retirement income plan.
2. Why a wealthy nation cannot afford to retire?

Do not love unless it is worth the loving.

We often hear that we should not fall in love with stocks.

What does this mean?

"The most important thing to realise is simple: The stock doesn't know you own it. All those marvelous things or those terrible things that you feel about a stock, or a list of stocks... are unreciprocated by the stock or the group of stocks." - Adam Smith

Basically, don't love things which can't love us in return. However, I am only human and cannot avoid loving and hating unappreciative things. 

I have no doubt that I made many decisions before based partially on my emotions. Could I continue to make emotional decisions? As long as I remain human, I could, of course.

Recognizing that we are all emotive is an important step in becoming better investors. The challenge is in how to be more rational in our decision making process.

Remembering that we should not fall in love with our investments, a friend sold his entire investment in an S-REIT which he feared he was falling in love with only to see its unit price rising higher. Now, what can we say about this? There are probably many people out there who love this S-REIT even more. This brings to mind another saying and that is we do not know we have a good thing until we lose it.

Although there is definitely wisdom in saying that we should not fall in love with our investments, I think that it would be less misunderstood if we say we should not blindly love our investments. Being blindly in love with our investments could see us holding on even when there is a deterioration in fundamentals.

Regular readers know that I have reduced my exposure to Singapore real estate by selling my properties. Readers would also know that I cautioned against being too optimistic about real estate and S-REITs as prices have appreciated a lot, yields have compressed significantly and the low interest rate environment is unlikely to last for many more years.

Then, why do I still have significant investments in certain S-REITs? Am I in love with these S-REITs? Perhaps, I am. However, I like to think that I am not blindly in love with them. I like to think that they are still worth loving.

So, what makes them worth loving?

They are still worth loving if they provide me with good recurring income. They are still worth loving if they take care of their health. They are still worth loving if they are growing stronger, day by day. In short, they are still worth loving if they give me joy and not angst.

Here are links to some of my past blog posts on S-REITs which show the way I think:
1. First REIT: This one is for keeps.
2. AIMS AMP Capital Industrial REIT: Making money.
3. Saizen REIT: Why did I buy and would I buy more?
4. LMIR: Divested 42.5% at 52.5c.
5. LMIR: Too cheap to sell.

Want to teach yourself Fundamental and Technical Analyses to be a better investor?
See: Recommended books for FA and TA.