The following content was recently published on Paul Low's blog and is republished with permission. Paul says he is in his late 30s, and divides his time running his own business and running family errands. He is an accredited investor and likes to buy and hold good stocks for dividends. Recently, he was delighted that his son gained entry into the Gifted Education Programme in Nanyang Primary School.
Stocks in my 2015 portfolio:
1) ST Engineering
4) Lee Metal
6) Noel Gifts
7) Nam Lee
8) Stamford Land
9) Tai Sin Electric
Have a workable plan and stick to it.
On a blog I came across recently, I saw that some people buy shares based on recommendations on other people's blogs.
Now, the reasons for the blog owner's buying might be different from that of the readers. Or worse still, the reasons might NOT be sound at all.
So it's far more important to develop a strategy based on one's own unique situation and circumstances and buy/sell/hold based on the latter.
I feel it's important to question the purpose of buying an equity. Is it for long term capital gain or short term flipping (the latter I do not practise and I do not recommend)? Is it for dividend income? What is the downside of the equity? What are the safeguards?
In addition, for myself, I ask the following questions:
a) How does one know and have a conviction that a price increase will happen in the next few years?
b) How does one know and have a conviction that a dividend increase will happen in the next few years?
c) What then is the appropriate entry price, with respect to a long term investing horizon?
The answer to b) is actually sufficient to answer a), as a dividend increase will invariably be accompanied by a share price increase.