Thursday, July 12, 2012

Is gambling your investment strategy

It is normal to hear unit trust consultants advising you to plan early, invest for long term and regularly. That is because it is a proven strategy.

The alternative is to try predicting the market movement, and invest at the right moment aiming to grab a quick profit. In another word - gambling. The fact is, no one is really sure which way the market will turn. That is why they are predicting, which mean betting, which mean gambling.

Even when you have the best technical analysis skill and know how, the market can move against you. That is why the statement Guarantee Return is forbidden in any types of investment.

Take the recent KLCI price movement (end June to early July) for example. Technical indicators suggest the market may turn bearish, couple with weak sentiment in Europe, but it break through resistance line and record another all time high. 

Unless your prediction is right most of the time, the consequences could be loss, time wasted waiting for the right time and missed opportunity. While, since when any types of prediction turns out right most of the time? Otherwise most people would have stop working and start predicting stock and lottery wins... :-)

Investment can be a stressful experience for you, unless you can get over short term thinking and guess works.

Here is a formula for profit and peace of mind. Plan early, plan long term and invest regularly... :-)