Remove the weeds

Just as weeds reduce the harvest, investment myths can mislead investors from achieving desired investment outcomes. We bust these myths and uncover the facts on some common misconceptions.

Myth 1

Any investment risk is bad


Risk is part of any investment

Risk is not to be feared but understood. Understanding risk and being comfortable with it is the key to achieving one’s financial goals.

Even the most conservative investors would need to take on some risk so that their savings can grow faster than inflation.

Myth 2

Only high risk will produce high returns


Low risk can produce high returns, if the purchase price is low and holding period long

Utility stocks, for example, are typically considered lower risk due to their non-cyclical nature. Investing in these at the right price and holding them can potentially result in attractive regular income and capital gains, as many utility stocks pay regular dividends.

Myth 3

Risk is the same as volatility


Higher volatility does not necessarily equate to higher risk

Typically, the greater the price fluctuations, the more volatile the investment. However, higher volatility does not necessarily mean higher risk. Investing during periods of market volatility can be rewarding for long term investors.

Having well-defined financial goals can help investors ride through choppy markets and stay the course during turbulent times.

The general concepts shared are for educational purposes only and not for the use in the marketing or sale of any Eastspring investment products.

Viewers are advised to be cautious if they intend to invest in any products that are used in the illustrations as the illustrations do not cover the full spectrum of considerations required in making an investment decision.

This information is not an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not lawful or in which the person making such an offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such an offer or solicitation. It should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any investments if mentioned herein.

The information contained herein does not have any regard to the specific investment objectives, financial situation or particular needs of any person. Investors may wish to seek advice from a financial adviser before any making investment decision. In the event that an investor chooses not to seek advice from a financial adviser, he should consider carefully whether the investment in question is suitable for him.

Eastspring Singapore is a wholly-owned subsidiary of Prudential plc of the United Kingdom. Eastspring Singapore and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America.