Happy New Year to all readers!
As we welcome 2025, it’s the usual time to make resolutions as we seek to better ourselves in the New Year.
When it comes to investments, you can do the same, too.
You should resolve to take action to improve your portfolio returns and reduce risks.
By taking an active interest in your investments, you can achieve a better outcome and go on to enjoy a comfortable retirement.
Here are five investment resolutions you can make to improve your portfolio’s results.
1. Trimming the weeds
Gardening involves regularly watering your flowers and trimming your weeds to ensure that your garden can grow strong and proud.
It’s the same for your investment portfolio.
As 2025 rolls in, take a good, hard look at the stocks within your portfolio.
Some of them may not be performing well and their investment theses may not be valid any longer.
On the other hand, others may be doing well and have the potential to continue to perform.
Like a careful gardener, you should cut out your weeds (bad stocks) and water your flowers (good stocks).
By regularly doing so, you ensure that you retain the stocks with the best potential to deliver outsized returns.
Selling your losing stocks will also free up capital for you to reinvest in more promising investment ideas.
2. Revisit the risks
For those stocks that you decide to retain within your portfolio, do a review of the risks surrounding them.
It may have been a while since you purchased these companies and as the business landscape changes, you will need to make a periodic assessment of any new risks that may crop up.
By focusing on the risks rather than the rewards, you are better prepared in case something goes wrong.
Your emotions will also be better controlled and you will not be prompted to sell in a panic should something unexpected occur.
Henceforth, it is a good idea to review the risks pertaining to your stocks so you will not be caught by surprise.
3. Seek sustainable yields
It’s a common mistake for income investors to chase for higher yields.
While a high dividend yield may seem attractive, they are frequently unsustainable.
The market may be aware of something that you are not when it comes to the health of the business, and the high yield may be a symptom of a deeper problem.
Investors could be looking at a business that’s about to lower its dividend in the future, thus making the historical yield look high.
The business could also exist in a cyclical industry where boom and busts are common, as are the dividends paid out by the stock.
The stock could be set up for a sharp fall should the industry cycle turn without warning.
Because of these factors, income investors should look for yields that are sustainable even if they may not be eye-catching.
Some examples are REITs with strong sponsors such as Mapletree Industrial Trust (SGX: ME8U), or MIT, and CapitaLand Integrated Commercial Trust (SGX: C38U), or CICT.
CICT offers a trailing 12-month distribution yield of 5.6% while MIT’s trailing distribution yield is 6.1%.
4. Venturing out
It may feel secure to invest in your home market, but this limits you to businesses and sectors that are on the Singapore Exchange.
While Singapore is well-known for providing solid yields and has a stable of strong and dependable blue-chip stocks, you may wish to seek better returns in other markets such as Hong Kong and the US.
For instance, the US offers subscription-as-a-service (SaaS) stocks such as Salesforce.com (NYSE: CRM), DocuSign (NASDAQ: DOCU) and Okta (NASDAQ: OKTA) that you cannot find in Singapore.
It also has trillion-dollar technology and social media stocks such as Alphabet (NASDAQ: GOOGL) and Meta Platforms (NASDQ: META).
2025 may be a good year for you to explore stocks in other markets around the world that can help to boost your portfolio’s returns.
Even as you venture out, do remember to take note of the risks associated with such businesses.
Gunning for a higher return is a good move, but not at the expense of taking on significantly more risk.
5. Documenting your mistakes
Finally, you can polish up your portfolio’s performance by noting down the investment mistakes you make.
These notes can be made in a journal to document your thought process and what you learnt by making these errors.
As you browse through this list of mistakes, you will inadvertently learn valuable lessons so as to avoid repeating these errors.
Over time, your skill as an investor will increase as you become more aware of your flaws.
The beauty of documenting your mistakes is that it not only helps you to learn and improve, but it also results in a better investment performance over time as you become a sharper investor.
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Disclosure: Royston Yang owns shares of Alphabet, Meta Platforms, and Mapletree Industrial Trust.
