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Investment Basics

At Lion Global Investors, we believe strongly in investor education. We feel that in the expanding investment universe, investors need to equip themselves with the necessary knowledge and tools, in order to make the most informed decisions on how to manage their wealth.


Getting Started

With a plan, you can evaluate your current financial situation, integrate your financial decisions into a cohesive, long-term investment programme and set a realistic strategy to reach your goals.


Three Main Reasons to Invest

Everyone has their own unique needs and thus each has different reasons to invest. However, these needs can be broadly classified in the following categories:

  • Capital Preservation - You don't want to risk your capital or principal; security and preservation of capital is what you seek. 
  • Income - You would like to have a regular stream of cash inflows.
  • Capital Appreciation - You are seeking capital gains for maximum profit.

It is possible that you could have all the above reasons to invest. This depends on the types of needs you have, including but not limited to your investment objectives, time horizon, financial resources, risk profile and appetite.


Define Your Goals and Objectives

You have different needs throughout the various stages of your life. You could be just starting out on your career or be at the peak of it. Maybe you're starting a family or perhaps you're preparing to retire. You could be buying your car and your first house, a second property perhaps, or the holiday you've been dreaming of all these years. These are important milestones that call for different financial approaches to saving and investing. If you have more than one goal in mind, you might want to allocate assets to a separate portfolio for each of these goals. Goals serve several purposes. They:

  • Help you focus on why you're investing.
  • Guide you in charting the progress of your investment plan.
  • Help keep you on the right course when market volatility tempts you to change your investment strategy.
  • You also have to be specific in your goals. The goal "I would like to maintain my current lifestyle when I retire" is simply too vague to make any planning worthwhile. Be specific and quantify your goals as realistically as possible.


Define Your Time Horizons

Next, you need to look at your time horizon - the number of years you have available to invest. If you are saving for retirement at 30 years old, you should anticipate an investment time frame of 45 years or more, because your life expectancy is likely to be 75 years or more. The longer your time horizon, the more risk you can afford to take. Most fund managers will give you an indication of the following time frame:

  • Short Term: 0 - 3 years
  • Medium Term: 3 - 5 years
  • Long Term: > 5 years


Your Risk Tolerance

 Your risk tolerance is your ability or willingness to endure declines in the value of your investments while you wait for them to return a profit that will help you meet your investment goal. The more tolerant you are to risk, the more you can stomach risky investments or fluctuations.


Your Financial Resources

Your financial resources strongly influence your asset allocation decision. Some questions you may like to ask yourself:

  • How stable is your job and your income? If your income is sporadic, it might not be advisable to assume risky investments.
  • Is your current income adequate to meet your expenditure? Do you have rollover credit card balances?
  • Do you have savings set aside for emergencies or unexpected short-term expenses? Financial planners typically advise allocating six months' worth of net income as emergency funds.
  • Are you anticipating any large cash outlays in the near future, such as down-payment for a house or a post-graduate education?



Investing is a long-term process, thus it is important to have realistic expectations of your investment returns. Nobody can time the market and investors must understand that market correction eventually happens. Therefore staying focused on your long-term goals with a disciplined investment approach will help you ride out the market fluctuations.


Build your Portfolio

In order to build a well-diversified portfolio, you need to understand the various investments available. Equity, bonds, and cash investments (such as money market instruments) are all "asset classes" which, when used together, can establish an effective and well-balanced portfolio.

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