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THE GIC DNA
Our 5 investing principles
The world has become increasingly volatile, uncertain, complex and ambiguous (VUCA). In such an environment, when it can be difficult to work out what to do, we must then know what to be. Our principles and values are a crucial compass for our survival, and our success.
Our investing approach is guided by five principles. These principles have proven to be helpful in other life applications.
1. Invest for the long term
A major factor in our investment success is patience.
Investments aren’t very different from durians.
Fruit from older trees that have matured and developed more complex flavours tend to sell for a higher price, while young trees grown for quick yields are less favoured, therefore selling for less.
Our long-term view of holding an investment for up to 20 years allows us to earn more from riskier investments with greater return potential, as well as from compounding interest.
We invest for the long run, and patience often pays off by bearing the best fruit.
2. Focus on value
To make the most from an investment, we have to first learn everything we can about it. And it goes beyond price.
Price isn’t the only determining factor when buying your first apartment.
You have to consider the developmental potential of the location, proximity to your parents, as well as valued amenities.
Just like how you consider other factors besides the price when purchasing a home, we are disciplined about investing based on fundamentals, and consider an asset's value, in addition to its price and timing.
Knowing an investment inside out gives us the confidence to buy and sell according to the worth of an investment, instead of being guided solely by price.
3. Leverage Your Strengths
While planning our investment strategies, we rely on our strengths, and shift our expertise around to make up for areas that we have less knowledge or experience in.
Just like strategising a game plan in a match of football, we focus on scoring goals based on the strengths we have.
Playing to our strengths allows us to make wiser decisions about our investments and produce better results.
4. Be Risk Aware
Managing investment risk is akin to riding a bicycle.
If you wish to be a leisure cyclist, then you manage your risks by sticking to park connectors and pavements.
The trade-off is a slower speed and you may take a longer time to get to your destination.
But if you wish to be a competitive cyclist, then you manage risks differently, such as heading out earlier in the day when there is less traffic.
Being risk aware requires you to know what you want to achieve. It certainly won’t be not cycling at all!
To achieve good returns on Singapore’s reserves, risks must be taken. But we mitigate these risks with research, understanding and good investing processes.
5. Prepare, Don’t Predict
It can be daunting to think about what an uncertain future holds.
That’s why we always take steps to prepare for the appropriate reaction when the unexpected happens, keeping our investments protected.
No one likes being caught in the rain without an umbrella…
…or worse, with a flat battery.
That’s why the best prepared of us always carry backups.
Likewise, when we map out and prepare for a variety of different scenarios, we ensure that we can respond flexibly and quickly, keeping our reserves well-guarded.