How do I decide what to invest in? Am I investing too much or too little? Am I diversifying enough?


There are many different investments & opportunities. Imagine there is this guy called Mr Market who shows up without fail rain or shine at your door everyday offering you different investments at different prices. At any day, you can choose whether to invest or not as he will show up again the next day.

Investments can generally be grouped into lower risk secure investments, moderate higher risk investment, & high-risk speculative investments.

Secure Investments
  • Fixed Deposits (FD)
  • EPF (Government Pension Fund)
  • Endowments, Annuities
Higher Risk Investments
  • Unit Trusts
  • Shares
  • Property
Speculative Investments
  • Futures, Derivatives, IPOs
  • Foreign Exchange (FX)
  • Gold, Silver, Precious Metals
  • Art Work, Wine, Collectibles
Note: There is a 4th group known as the DO NOT TOUCH EVEN WITH A STICK investments. These are generally unlicensed, unregulated investments which are ponzi schemes, recruitment/referral schemes & get rich quick schemes. If something appears too good to be true, it very likely is.



Contrary to popular believe, diversification is actually not good & is like taking a gun & randomly shooting everywhere hoping you hit the target. Selective diversification is much better. For example, imagine you are given a gun with only 10 bullets. You can only make 10 investments in your entire lifetime. And these 10 investments are more then sufficient for diversification. And also saves you a headache of monitoring a hundred different investments.

There are many different methodologies on how to allocate your investments. One simple yet effective methodology is an age based methodology. The age based methodology proposes that one allocates more in higher risk investments when young as you have more time to invest & can survive an economic downturn, while gradually becoming more conservative when you get older.

First & foremost though is to ensure you have emergency savings of 6 to 12 months of your expenses. After that only should you look into investing.

Age Based Methodology

Take your current age. This is the minimum you should have in secure investments. Take 100 minus your age – this is the maximum you should have in secure investments. The risk then would be place in higher risk investments.

E.g. Age 30
Secure Investments Min: 30%
Secure Investments Max: 70% (100-70)
Remainder in Higher Risk Investments: From 70% to 30%
E.g. Age 40
Secure Investments Min: 40%
Secure Investments Max: 60% (100-40)
Remainder in Higher Risk Investments: From 60% to 40%

Note: Would suggest staying away from very high-risk/speculative investments unless you really have spare cash that you can lose & will not affect you.

Making the Investment Decision
To select specific investments, it is essential to have a good personal finances consultant who puts your needs & interests first instead of his/her own pocket. Even if you plan to handle all your investing decisions on your own, a personal finances consultant can help you to discuss through your suggestions & offer input that adds value.