Forget Password?
  1. Indices
  2. Commodities
  3. Currencies
Straits Times 3,124.45 +10.48 +0.34%
Hang Seng 26,521.85 +213.41 +0.81%
Dow Jones 26,816.59 +319.89 +1.21%
Shanghai Composite 3,007.88 +34.23 +1.15%
Adam Khoo: Knowing How to Invest Is the Best Investment
Aspire, Thought Leaders | 27 August 2015
By: Chen Xushuang
Articles (26) Profile

17 percent of Singaporean households are millionaires, and the numbers are still growing. Today, Singapore still remains the most expensive city in the world, which makes it seem even harder for one to gain financial freedom, considering how much spending is required.

Singapore has been crowned the most expensive city for the second year running.

But achieving financial freedom is apparently still possible—through investment gains. In fact, for millionaires in Singapore, 72 percent of their wealth was made from personal investments-the stock market. Forbes also reported that making investments is the number one way for people to become billionaires in the world today.

On the other hand, people who have little or no financial education may actually lose their money by heeding the wrong advice, or simply by not being able to grow their money during times of inflation. With these in mind, Adam Khoo offers four tips on making investing “consistently profitable”.

Knowing What And How Much To Buy

Adam Khoo explains that knowing what to buy is based on fundamental analysis, which involves the analysis of the right businesses and companies. In other words, the ones that are consistently increasing sales revenue, net income and cash flow from operations.

In Adam Khoo’s opinion, the decision of how much shares to buy is not based on gut feel or emotion, but on mathematics. He recommends that one should always risk a fixed percentage of his total capital. The next thing is to “always place a stop loss for every investment” and calculate the risk per share, in order to minimise losses when wrong decisions had been made.

“In life, you cannot be right all the time,” said Adam Khoo. Thus in a way, how many shares one can buy is partly determined by how much money one can lose. In his live workshop, Adam will also share about how to determine the intrinsic value of a share, and how to calculate its risk/return ratio.

Knowing When to Buy

Adam Khoo pointed out that stock prices move in trends. He emphasised buying only when the price is deemed undervalued and is on an uptrend. In addition, he advised: “Never ever buy on a downtrend. It may seem cheap, but it can get cheaper and cheaper, and you will never know how low it can go.” In order to identify an uptrend, he recommended using the Moving Average crossover.

Knowing When to Sell

An illustration of when to buy and sell by Adam Khoo

Many have bought the right stocks at the right time, but still end up losing money because they missed the right time to sell, said Adam Khoo. In his opinion, 40 percent of success can be attributed to “knowing when to sell”, which gives it the highest weightage out of the four keys he listed.

Similar to knowing when to buy, the decision to sell should be based on trends. Again, the simplest way to do so is to study the Moving Average to identify a downtrend. “Every trend will end, and you must lock in your profits and get out when the trend goes down.”

Adam Khoo is conducting a FREE three-hour seminar on 2 September (Wed) and he will be teaching attendees the fundamentals of investing as mentioned above. Other topics like the psychology of successful investors and certain strategies for retail investors will be covered as well. Click on the button below to find out more.

As a Communications Studies graduate specialising in journalism, Xushuang is keen to observe and explore issues that readers want to know more about, and to deliver quality content through engaging writing.

Please click here for more information about this author.

Join The Conversation
The Shares Investment editorial team welcomes constructive feedback on our coverage and content. We would also be delighted to answer any questions on the above article. Leave us a comment below, and we'll get back to you shortly!

All Rights Reserved. Pioneers & Leaders (Publishers) Pte Ltd. Best viewed with Mozilla Firefox 3.5 and above.