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The Battlefield of Money

>> Thursday, September 3, 2009

Investing is similar to going to a war.

Rena He Hanxi, co-author of 36 Stratagems for Investors, offers several suggestions.

1. Have a plan

A successful military commander never enters a battle unprepared.

Similarly, investing requires thorough planning, in particular, planning for asset allocation. If you cannot be sure of when to enter and exit the market, asset allocation may help you to ride out market volatility.

Understand your goals, strategies, instruments and your own personality before investing. It is crucial to have clear objectives, which will help you to define your investment horizons and the associated strategies. Goal, term and staged planning are fundamentals of investment planning.

2. Invest with discipline

Around late 4th century BC, the King of Wu wanted to test Sun Tzu, so he asked the general to train his harem of 360 concubines.

During training, some concubines would giggle at Sun Tzu's commands, while others would just refuse to cooperate. Sun Tzu ordered the execution of the King's two favourite concubines who were the de-facto leaders of the "harem army". The fear of death saw the remaining concubines fall in line.

You will inevitably face many distractions as you invest, regardless of these distractions, discipline is a must. In the long run, it is the "slow and steady" investor who reaps the reward.

3. Invest with flexibility

"Kill with a Borrowed Sword" - meaning to use the help of a third party to fulfil your goals.

You may want to invest in convertible bonds but are hesitant because you are unfamiliar with them. However, a convertible bond fund may be a solution. Learn more about it and take the enemy by surprise.

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