1. Risk Vs Reward

Any kind of investment would involve a certain degree of risk. What’s important is that you take on calculated risk and stick to a risk/reward ratio suitable for your risk appetite. A risk/reward ratio compare the expected returns of an investment to the amount of risk undertaken to invest in that asset.

This ratio is calculated by dividing the amount the investor stands to lose if the price moves in the unexpected direction (the risk) by the amount of profit one expects to have made when the investment is closed out.

2. Individual Risk Appetite

One man’s food is another man’s poison – the same goes for investment. What works for your friend may not be the best investment choice for you. The main reason could be you have a different risk tolerance, which may lead you to sell off the investment during volatile periods.

Think about this, if an investor has bought stocks of company A, which he was sure to be fundamentally and financially sound and there is a sudden overnight drop of 10% due to news adversely affecting the country’s outlook, should he sell or hold on to the stocks?

3. Investment Capital

The amount is investment capital you have can also affect your choice of investment. There is a clear difference between what you can invest in with $10,000 compared to $100,000. However, this does not mean that you are severely limited if you do not have a huge amount of spare cash. It is not rare for investors to invest in leveraged products or use loans to give them the gearing they need.

In fact, taking on a mortgage loan is a rather common way to make use of leverage since most of us will not be able to pay down the entire amount needed to buy a property.

4. Time Horizon

One of the key distinctions between trading and investing is that the latter usually takes on a longer time horizon. The investment horizon determines the investor’s income requirements and desired risk exposure, which then helps in choosing the appropriate investment product.

For certain investment, there is a risk of loss if you close out before the expected investment horizon, especially when it comes to fixed-income assets. Another reason is that given a longer time horizon, the relative volatility of the investment is smoothed out over the entire period and can effectively temper huge potential losses during certain volatile months.

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Founder @ The New Savvy
Anna Haotanto is the Advisor (former CEO) of The New Savvy. She is currently the COO of ABZD Capital and the CMO of Gourmet Food Holdings, an investment firm focusing on opportunities in the global F&B industry. She is part of the founding committee of the Singapore FinTech Association and heads the Women In FinTech and Partnership Committee. Anna is the President of the Singapore Management University Women Alumni. Anna invests and sits on the board of a few startups. Anna is also part of the Singapore Chinese Chamber of Commerce & Industry Career Women’s Group executive committee. Anna’s story is featured on Millionaire Minds on Channel NewsAsia. She hosts TV shows and events, namely for Channel NewsAsia’s “The Millennial Investor” and “Challenge Tomorrow”, a FinTech documentary. Anna was awarded “Her Times Youth Award” at the Rising50 Women Empowerment Gala, organised by the Indonesian Embassy of Singapore. The award was presented by His Excellency Ngurah Swajaya. She was also awarded Founder of the Year for ASEAN Rice Bowl Startup Awards. She was also awarded the Women Empowerment Award by the Asian Business & Social Forum. Anna has been awarded LinkedIn Power Profiles for founders (2018, 2017), Tatler Gen T, The Peak’s Trailblazers under 40 and a nominee for the Women of The Future award by Aviva


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