Lessons learnt so far

The month of September has been a big upset for the financial market here in Singapore. Besides the US mortgage crisis, we also experienced, yet again, another AIA problem. Both investments and insurance areas in our local financial markets have been thrown to a challenge.

While September just ended, and October is unlikely to be a turning point, there are still valuable lessons that we can learn from this:

1. Diversify - everyone made losses on their investment portfolios. Those that had some money market or cash funds suffered lesser than others. In terms of insurance, the public has learnt that big brand, size and history of the company no longer guarantees stability. Diversify even your methods. Been investing lump sum? Have another account that invests on a regularly timed basis. See here.
2. We cannot time the market, but learn better how to tell the signs - I believe I have learnt a lot better in how to anticipate market peaks. When peaks come, it's probably high time to cash out or transfer to safer instruments. When everyone on the streets say, "It's a good time to buy." it's probably a good indicator to run for cover.
3. Cash liquidity - Fortunately, I've yet to have met anyone who is screaming in misery because he or she has lost all life savings in the stock market. Never ever invest your emergency fund. Emergency fund should be around 3 to 6 months of your income, for events whereby you quit, get retrenched, or fired, you still have this buffer space to make necessary adjustments.
4. Never lose sight of your goals - You have invested for a purpose. There is a point to reach. Markets will always rise and fall. Don't let today's setback make you make irrational moves and delay, or if not, derail your track to your financial goals.
5. Take ownership of your investment and insurance portfolios - Your insurance agent is the guy who sold you the insurance plans, but don't ever mistake him to be the guy solely responsible for your policies. Always know what you bought, and why you were recommended that product.
6. Surrendering your insurance plan is not punishing your agent - Sadly, many people I know surrender their insurance plans because they began to hate their agent. They don't realize that the ones hurt is themselves, not the agent.
7. Have more choices to make - Either you do your own research in the investment and insurance products in the market, or work with a professional who can recommend the various products. If you work with a tied agent or banker, that's just about all you will be sold -- THEIR products.