My wife attended a course on investing recently. It was organised by her employer and so I got curious- What could a 2-day course possibly teach people with zero background in investing? By the way, the course isn’t cheap. The training company charges something like $300 per participant and there were easily 30 people in the class. That’s $9,000 in revenue of which I’m sure the presenter got at least $4,500. $4,500 for two days work, that’s not bad.

As it turns out, the course covers a lot of ground from the motivation for investing, basic financial planning calculations, risk management as well as an overview of different asset classes such as stocks, bonds, unit trusts, ETFs, gold, property, investment-linked products, structured funds and more. Obviously, the trainer can’t be a specialist in all those areas. Typically, one specialises in a particular asset class. For example, an analyst that covers equities won’t cover the bond market or much less property for that matter. Even within equities, analysts specialise in different sectors as the economics and cycles of each sector can be very different.

In short, looking at the course material, I get the sense that the course is dangerous because a little knowledge can be a deadly thing. In fact, if I were to do a course, I’d focus on general principles that all investors (especially those at the beginning) ought to know.

Which brings me to my top 10 list which is backed by research.

  1. Costs matter.
  2. Active investing requires investment in knowledge. If you can’t or won’t, go passive.
  3. Even active investors find it hard to beat the market.
  4. Turnover is costly (see point 1).
  5. Start early, be often (i.e. timing the market is mostly futile but see point 7).
  6. Live simple. (see point 1).
  7. If you go active, valuation matters.
  8. Diversify but do not over-diversify.
  9. Don’t worry about the economy (so much).
  10. Don’t ask for tips.

I’ll elaborate more on each point in separate posts but essentially, that’s it!Investing is fun but it’s not for lazy people. You may take a lazy approach (such as going passive) but if you don’t understand basic concepts, you may be convinced that all passive approaches are the same. They aren’t! For example, products touted by financial planners are passive for you as an investor but odds are they would do worse than a plain vanilla approach such as an index fund or an index ETF that is fully replicated (i.e. not constructed with derivatives). So you know what? There’s plenty of good investment bloggers out there (even within the Singapore blogosphere)

Investing is fun but it’s not for lazy people. You may take a lazy approach (such as going passive) but if you don’t understand basic concepts, you may be convinced that all passive approaches are the same. They aren’t! For example, products touted by financial planners are passive for you as an investor but odds are they would do worse than a plain vanilla approach such as an index fund or an index ETF that is fully replicated (i.e. not constructed with derivatives).So you know what? There’s plenty of good investment bloggers out there (even within the Singapore blogosphere)

So you know what? There’s plenty of good investment bloggers out there (even within the Singapore blogosphere) that’s written a lot about investing. You don’t really need to pay $300 to attend a two day course.

 

PS: By the way, if you would like to know more about using economic concepts to understand the world, head on over to my other site, RGEcons.sg and you can either follow our blog or our facebook page.

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