#145. Philosophy Of Unit Trust Investment

What Is Your Purpose In Investing?

Lately, I have undergone a kind of change in my thinking towards unit trust investments. I have always been looking for ways to simplify the things I do in life. Whether it is naming my files in the folders of my computer, or keeping my house organised, or writing my blog postings in numbering system. 

However, when it comes to unit trust investments, we have failed to simplify the things we do. 

By 'simplify', I mean how can we achieve the best efficiency for our money in investment. When you do things in a simplified way, you save time. That's the thinking that sprouted all those concepts on Kaizen, the Six Sigma and The Toyota Way. When you save time, you save money. Money is time. Time earns you money. When you achieve an efficiency in investment, you make more profit. That's the secret that I have finally realised!

The purpose of investment is to make money! If you don't find the best way to make money, you are simply wasting your effort, time and money!

Let me borrow a philosophy from martial arts. The philosophy in martial arts is summed up in three words: Speed, Accuracy and Power.

The reason for learning martial arts is to knock down your opponent. You want to punch your opponent's nose without any time-wasting flowery movements. And the faster you can knock the opponent down, the better. Therefore, Speed. In investment, don't you want to see 'speed' in making your money grow? So, best to buy low and sell high to see your money grow fast.

Next, Accuracy. In martial arts, you don't want to waste energy throwing punches that don't hit your opponent. Every punch has to be accurate to conserve your energy. Imagine how tiring it is to prolong a fight, what more to throw a lot of punches that don't hit. Trust me, I have learned Chinese Wushu, and it is really tiring to spar with your opponent. You want to conserve energy and learn to hit accurately

By Accuracy, in investment, it means you choose the right timing to invest in unit trust funds. You study the charts to invest at the right time when the price is really low. You accurately buy at the time when the chart and market is perfect to do so. And conversely, you sell when it is time to take your profit. 

Third, Power. Every punch in martial arts has to be punched with much power as if that is the punch that will knock down your opponent. It has to have power and impactful.

In unit trust investment, Power means, your unit trust funds have to be from a good company and managed by good fund managers. If it has a good track record, that's the best. You can know the track record sometimes from the Lipper or Morningstar ratings or the awards that it has won. Get the best fund for your bucks!

You buy the best funds to do the job. And the job is to earn money. Don't invest in funds that have a nice name or just because the unit trust agent says so. Make sure it serves the purpose. 

Investment should be made simple. We have complicated things over the years and have forgotten the true purpose of investment. 

What is your purpose in investment? Do you think of ways to simplify your money making effort in investment?