Why a core/satellite approach pays

IF you have been investing for some time, you are likely to have made some decisions that you regret. These include entering or exiting the market at - on hindsight - the wrong time, investing in a company that then went bankrupt or having to top up a loss-making account due to a margin call.

Fear and greed are powerful human emotions that often cause investors to sell at the market's bottom or to buy at the peak. It may take years just to get your investment or portfolio back to an even keel. An asset that drops in value by half will need to rise by 100 per cent for you to recoup your capital.

Time and again, Bank of Singapore managing director and chief investment officer Hou Wey Fook has seen investment missteps by both high-net-worth and retail clients. "Clients must have a core/satellite approach. To make 6 to 7 per cent consistently, year after year, is not an easy feat. It's not an unrealistic return, but to really harness that, you need to be there for the long term. You need to structure your portfolio according to your objectives and the volatility you can take."