I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!


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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Saturday 23 April 2011

Playing The Game of Leverage (4)

Read? Playing The Game of Leverage (3)

The mind of an investor can easily change their perception of risk/reward when the investing idea for the SAME financial instrument is presented in different scenarios depending on the mind perceiving it as Greed, Doubt or Fear.

Let take DBS 6% NCPS as an example for such financial instrument

Scenario 1

I believe Investor easily has SPARE $20K that can be used for investing; but he rather keep it in bank or money market earning low return of 1% for whatever reasons or simply waiting for better investing opportunity to come.

If you ask him to invest this SPARE $20K in DBS 6% NCPS to earn passive income of 4%. He have to think hard whether is this a good idea or not?

Scenario 2

But for the same financial instrument, in this case DBS 6% NCPS can be thought to be a good candidate for leveraging for passive income.

To use your OWN money to invest in such financial instrument to earn passive income.  NOT SURE.

To BORROW $20K and use it as leverage for passive income looked like a good idea. Really strange? Greed playing out in the investor's mind? 

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