First things first, we don’t talk about which is the best investing strategy first. Hold your horses, you will understand in a short while. Before we even talk about the investing strategy, you must first know why you are on the journey of investing.
Investing is a needs-based process. For example, are you investing to FIRE, or to retire early? Or are you investing for the purpose of seeking stability in consistent cashflow because you are now nearing retirement? Or are you doing this just for speculation? For punting?
Instead of asking what is the best investing strategy, the first question you should be asking yourself is, what is your financial objective for investing? Given that, you can then move on to identify which is a good market or a suitable instrument to invest in that has a comparative advantage to you.
Perhaps we can explain it in another way using an analogy. Let’s say you are going on a vacation to Phuket. If your goal is to reach Phuket in the fastest manner, then to achieve this goal, the best mode of transport will be to take a plane. However, if your goal is to enjoy a nice road trip, you can drive there.
Unfortunately, many individual investors fail to grasp this concept. Now what do we mean by this? For example, if you are seeking consistent dividends, being a Singaporean, there is little reason to focus on U.S stocks that have a 30% withholding tax. Instead, we can focus more on the Singapore REITs.
Another example. If you are seeking capital appreciation, you might have a better chance and a bigger pool of options to look at with the U.S markets, as opposed to the small handful that we have in Singapore.
Or if your goal is strictly for capital protection, then you can simply just look at fixed deposits or T-bills.
Once you are clear of your investing objective, you know which instruments or market to zoom into before you can even talk about any strategy. Get the suitable instrument right first. Diagnose first before you prescribe, like when you visit a doctor.