In short term trading, the risk is the price fluctuation and the psychological effect of market participant on the prices.
In long term investing, the risk is the company bust and wind up business.
So in long term investing i also believe in diversification. Diversification comes with a cost. If you want to diverse the portfolio yourself, you need big big money, probably 500k for Singapore market. (What you mean by diverse in SG, our economy depend alot on others, so by buying the shares in singapore market alone with 500k is not really diverse. Bcos you are subjected to country risk)
You need to diverse in different region and sector. Woow mean need more than 500k to do so.....yes of course...
The cheaper alternative is investing in unit trust.Is like REIT, a collection of investment. You can tap on different region, sector, market. The fund manager bonus,reputation is peg to the fund price.
Of course there are cost involve. ETF have cost involve, Unit trust have cost involve. There is no free lunch and there is nothing that is free. Unless u can do research on your own on all the stocks that can make your portfolio really diverse and also unless you have that cash to buy all these, there may not be any cost. Most people wont have the expertise, time and resource to do that.Even for trading when you are working, pls really think of the physical constraint before start to trade. Can you check your stock in a meeting? Can you check your stock when on site, in a lab?pls consider it carefully, it can be done but make sure you still do your job properly.
If you cant and you need to rely on some expert to invest for you there is a cost.For any outsourcing, you need a cost. That the fact of life. We are not expert in all things. A doctor cant be an expert in wafer fabrication. A wafer fabrication engineer cant be the best chef. A chef cant be the best waiter.Etc Etc.If you are so conscious of the cost, then you could never be able to reach another height or achieve your goals.
