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Volatile markets can be both a boon and a bane.
It is natural for us as investors to feel jittery about investing our monies in a volatile market. No one likes to see their investments lose value soon after they are purchased.
Nevertheless, volatile markets represent an opportunity to invest in good-quality companies at lower prices (and valuations). This is because when the markets turn bearish, good companies that are still recording strong growth and revenue could see their stock prices plummet due to the overall weak market sentiments, even though the company’s fundamentals haven’t really changed.
In fact, it’s during a bear market that it’s easier for us to find value investments. Think of it as travelling overseas during off-peak periods when we are more likely to get good deals on the more popular destinations.
The financial markets have performed well since the beginning of the pandemic in 2020. However, growth in 2022 has been stunted for a conflation of reasons. These include the Ukraine-Russia war leading to high energy prices; supply chain disruptions leading to soaring food prices; and the US Federal Reserve increasing its interest rate to curb hot inflation.
While it’s anyone’s guess how long these current problems may last, or when the next black swan event might happen, history has shown us that markets do eventually recover. And if that is what we believe, this also means that the current volatility in the financial market is a good time to start investing.
Opt For Dollar Cost Averaging Instead Of Timing The Market
One of the biggest reasons that inhibit many investors from investing in good companies, even when prices are low, is the fear that prices will become even lower in the future.
It’s an understandable fear. After all, none of us can predict when the market will bottom out.
As such, market timing isn’t an ideal strategy.
The truth is that the market can, and will sometimes, bounce back quickly even before any of us know it.
According to a CNBC article based on JP Morgan data, $10,000 invested in the S&P 500 index from 1999 to 2018 would have resulted in an average annual return of 5.6%. However, if an investor had missed the market’s 20 best days, their average annual return would have fallen to -0.3% per year.
For example, two years back at the onset of the pandemic, investors may have panicked and sold out their holdings when the market declined about 30% from 21 February 2020 to 20 March 2020. However, as we all know, the S&P 500 quickly recovered its losses and ended the year on a high.
During this volatile period, implementing a dollar-cost averaging (DCA) strategy could be ideal for giving us the best of both worlds. If prices go up, we generate a positive return on our portfolio while still adding to our portfolio size as we are investing a fixed amount each month. If prices go down, the fixed amount we invest each month will allow us to buy more share units each month since prices are lower. In the long run, we pay a lower average price for our shares.
For those who are keen on considering a DCA strategy, we can use the newly launched SMART Plan by uSMART. The SMART Plan allows us to subscribe to periodic investment by investing a fixed sum on a regular basis based on our chosen interval, whether it’s daily, weekly or monthly.
Unlike other regular investing plans that tend to only offer a small selection of stocks, with the SMART Plan, you get access to a large universe of more than 10,000 US and Singapore stocks and ETFs. We can even select the specific date, time and frequency we want to execute our trade, and also do fractional investing with uSMART.
Get Trading Ideas With Daily Stock Picks
For investors who are actively searching for trade ideas, uSMART has a Daily Stock Picks under the Intel tab that highlights specific stocks for the US, Singapore and Hong Kong markets that an investor can consider.
Curated by uSMART Research, this could be an easy way for busy investors to shortlist potential companies to take a closer look at.
While being an excellent feature, it’s important to stress that this should not be taken as a recommendation to trade the stock. As investors, we should all do our own research before deciding to invest in a stock or ETF.
Execute Trades At The Price Level We Want
In volatile markets, prices for stocks can show large swings in a week or even within the same day itself.
As investors, if we choose to invest in a company, we naturally want to get the best price. This is more so when prices are volatile but still trending within a certain range.
SMART Order from uSMART allows us to automatically execute trades based on predetermined price levels that we have set. This can be set based on the investment strategies that we have.
Buy-Low is the most straight-forward price condition. It triggers a buy order when the stock price falls below a preset price. We can also use Breakthrough Buy, where a buy order is triggered when the stock price breaks above a preset price level.
SMART Order can be used for selling as well. A Sell-High triggers a sell order when the stock price breaks above a preset price. A Breakdown Sell does the opposite of Breakthrough Buy, where a sell order would be triggered when the stock price falls below the preset price level.
There are other order types that can be executed in line with our investment strategies. These include a Take-Profit, Stop-Loss and Trailing Stop instructions.
If you are not familiar with some of these terms, don’t fret. The good thing about the uSMART app is that it’s designed in such a way that even if you are not an experienced investor and have not used any of these conditional pricing order strategies before, they are well-explained and easily understood.
Just look at the screenshot below, taken from the app. Most of the SMART Order options are self-explanatory.
SMART Order is particularly useful for busy investors during volatile market periods as they may not have the time to monitor the market constantly. We can use it to help us get the best entry and exit prices in line with our investment strategies.
uSMART Is Suitable For All Retail Investors To Start Learning More About Investing
Traditionally, brokerages are typically seen as platforms that merely facilitate our transactions. However, with uSMART, they are also another avenue where we can learn more about investing.
In this aspect, the uSMART philosophy is simple. Smart investors will make for better long-term customers. This is why uSMART provides a range of tools, information and content to help their customers become more knowledgeable about investing and to succeed in their investment goals.
These include a Learning tab that allows users to access a large variety of content, including the BeeRich videos that would resonate well with younger, first-time investors. uSMART is also the only platform (that I currently know) that has its investment strategists actively providing answers to questions about the market posted by investors using the uSMART platform. Their strategists also regularly share their views on the market, so this is useful for anyone who is looking to learn more about investing.
With uSMART, we can learn, gather the information we need, and invest using a single platform, as opposed to having to find information and trade on separate platforms. Equally important, if we wish to act and to trade based on our knowledge, we can fund and trade using the platform almost instantly. Read more in our guide to opening and funding a uSMART account in Singapore.
Competitive, Low-Cost Commission Fees
Having a great user experience and interface is one aspect of a mobile brokerage app. Equally, if not more importantly, is being able to enjoy low-cost commission fees. After all, the objective of investing is to make money, and one simple way to do so is to simply minimise our commission fees.
uSMART offers one of the lowest commission fees in the markets that it operates in – US, Singapore and Hong Kong.
Under uSMART Standard, commission fees are as follows:
US Market
For the US market, there are currently no commission fees (until 31 December 2022), while platform fees are at 0.005 per share (minimum USD 1.00 per order and a maximum of 0.50% of the transaction amount).
Singapore Market
For the Singapore market, there are currently no commission fees (until 31 December 2022), while platform fees are at 0.03% of the transaction amount, making uSMART the cheapest broker for Singapore stocks.
Hong Kong Market
For the Hong Kong market, there are currently no commission fees (until 31 December 2022), while platform fees are a flat HKD 12.
Open & Fund Your uSMART Account And Get Up to SGD 420
For anyone who is thinking about opening a uSMART account, you have good reasons to do it now.
For a limited time only, uSMART is offering one of the most attractive sign-up promotions where investors can receive a free welcome reward worth up to US$400 (~S$570). Here’s what you may be entitled to.
Account Registration Reward – Free US and SG market Live Price
Account Opening Reward – Fractional Tesla Share
Deposit & Earn
Maintain an AUM of US$200 or more: Cash vouchers worth US$36 (~S$50)
Maintain an AUM of US$1,500 or more: Cash vouchers worth US$180 (~S$255)
Maintain an AUM of US$10,000 or more: Cash vouchers worth US$360 (~S$510)
T&Cs apply. Find out more details about this promotion here.
Guide To Opening, Funding & Trading A uSMART Account In Singapore (Within A Day)
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