First trading day of 2016 started with a blood pool sea of red. Chinese stock trading was halted after the CSI300 index plunged more than 7% at around 1.28pm Singapore local time, triggering China's circuit breaker mechanism. This was triggered due to poor sets of result from the manufacturing sectors for the 10th consecutive month of contraction with the world's second-largest economy set to post its weakest growth in the last 25 years. THE STI was also affected by the news and ended -47 points to close at 2,835 points on Monday.
If the markets continue to release poor sets of result in the coming quarter, we would be seeing the economy goes into the bear. It is always good to have a warchest ready when we see the opportunity to buy if the economy is in southward trending. The impact for not having a warchest, we could miss the chance to buy the counters at a lower price which are on the watch-lists and had to blame ourself if we couldn't make full use of the chance.
In the journey of investment for income, there must be proper allocation of your assets on equities, bonds, ETF, fixed deposit and cash to wait for the right opportunity to invest in order to generate maximum returns for our portfolio. So please bear in mind not to be 100% vested all the times. Set aside 20% to 30% of your assets as warchest to ride on to opportunity when it comes.