, welcome to our topic on long-term investment.
Today, we are going to try something new
. We are going to use our TOPI matrix to decide how to go about with our investment.
The TOPI matrix covers Timeframe, Objectives, Positioning and Investment.
First, we decide if we are going to put our money for short term (1 to 3 years), mid term (3 to 8 years) or long term (more than 8 years), before we harvest to pay for our goals.
Objectives [O] (or Goals)
Next, we need to find out our objectives (or goals) that we wish to achieve. These can be down-payment for a car or birthday gifts for our loved ones (short term goals), buying a new house or going for an oversea tour (mid term goal) or our retirement (long term goal).
Positioning [P] strategies
After setting our objectives, we use different positioning strategies to help us. Positioning strategies includes short term trading (positions that last at most a day), mid term trading (positions that last at most a month), long term trading (positions that last more than a month) and size of position (the amount of money into the investment for each position).
We can choose the positioning strategies that we are more comfortable with.
Lastly, we decide what kind of investment that we are keen & comfortable with. It can be short term investment (e.g. saving accounts, fixed deposit), mid term investment (e.g. bonds, index funds), long term investment (e.g. blue chips stocks), low risk investment (e.g. saving account), mid risk investment (e.g. index funds) and high risk investment (e.g. cryptocurrencies
& commodities). It can also be mixture of any of them too.
By using the TOPI matrix, we can customize our investment to suit any duration investment, be it short term, mid term or long term ones, and to achieve the objectives that we set earlier.
Before we end, I would like to share a book, titled 'A Few Lessons for Investors and Managers From Warren Buffett'. It is one of the best book that summarize the essence of Warren Buffett knowledge in 81 pages.
(^ Image from Amazon.sg, which only 5 left in stocks.
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