“Eh, makan where later bro?” “Makan already ah?” “Have you tried the char koay teow at Kopitiam 118?” (Don’t bother searching, I just made it up).
As Malaysians, we really, really indulge and enjoy our food. So much that we rarely get through a day without talking about food and eating. To us, it is more than a means of sustenance, but rather it is our way of life and culture.
Ask yourself, do you eat to live or live to eat? There. I rest my case.
To those of you who are new to me, I am a self proclaimed, self admitted, true blue Malaysian foodie. So when I was invited by the nice people at FinPosts to write an opinion piece, I wondered, “Can I cook up a dish that melts food and finance together in one pot?”
Metaphors, such as financial health and risk appetite, are often thrown around in the investment marketplace. Health? Appetite? These are words that often go around with… Yes! Food!
So along this tangent, here are some recipes for healthy eating habits that I find to be beneficial towards investment habits, as well.
Recipe #1: The best meal is a BALANCED meal.
With so many investment vehicles available in the marketplace, ranging from bonds to unit trusts to equities, we often ponder, “What is the best investment?” Similar to food, we are spoilt for choice and are always looking for the best. Know this: There is NO SINGLE BEST investment. Your investment should always be a portfolio, not unlike a balanced meal! Accumulate and grow a well diversified portfolio. For example, having too many high risk, fatty and sugary investments would result in risk obesity, or worse, financial death. Instead, you may want to opt for some nutritious and necessary low risk investments to balance out your portfolio. This brings us to the next recipe.
One of the legends in Klang Valley: Village Park Nasi Lemak. MUST TRY!!! Yes, yes, yes… I am using Nasi Lemak as an analogy for an investment portfolio.
Recipe #2: Appetite Awareness is key.
Don’t bite off more than you can chew. Be self aware of your risk appetite. Just as a diabetic should lay off the sweets and sugars, a risk averse investor should opt for an investment vehicle with a lower risk profile. As a wise investor, you should take the time to put yourself through a simple risk appetite test, kind of like a medical check-up. Some questions you may ask yourself are:
- When you hear unexpected adverse or bad financial news, do you overreact?
- If you could increase your chances of improving your returns by taking more risk, would you?
- Would you invest in a stock based on a friend’s tip?
- What would best describe your ideal investment portfolio? Aggressive , balanced , or conservative?
- Do you believe luck is important in making your investment decisions?
(Credit: Financial Freedom: Your Guide To Lifetime Financial Planning)
A healthy apple or a sinful dessert: Know your APPETITE, then make your CHOICE.
Recipe #3: Invest in High Quality and Healthy Food.
Cheap food is rarely ever healthy and of high quality. Think about that for a moment. ‘Cheap’ investment tools are a no-no. If it sounds too good to be true, it probably is. Sometimes, due to price, the lines between scams and investments are blurred. Always do your due diligence before investing in any investment. Yes, there are undervalued investments and you should always be on the lookout for them, but undervalued does NOT equal cheap!
Take the time to read up on the company offering the investment. A great place to start is the company profile and financial reports. This information is likely to be found on the company’s official website. You will get a grip on the investment’s health and quality when you’ve done your homework. It’s like going through the nutrition facts on the back of a food label. Your investment chips are limited so make sure that they are put to work in a worthwhile, healthy and quality vehicle.
Like food, great investments are never cheap BUT they can be UNDERVALUED.
Invest after you’ve done your research.
There you have it! Three recipes for an awesome healthy investment diet. It is my hope that this article gives you a clearer insight on good investment habits (as well as good eating habits 😉 ). There’s a saying that states: You are what you eat. Similarly, You ( Your financial self) are what you invest in.
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