Invest for the long term - applying the idea

Recently, I decided use my spare cash, which was earning a low rate of interest, to invest in the stock market. My reasons were:

• The stock market had dropped by 20% from its peak
• I am investing for the long term, more than 10 years
• Warren Buffett had said that the companies under Berkshire Hathaway's portfolio were showing good results (except for those involved in the housing market).

A few people asked if it was safe to enter the stock market, and I gave the same view.

I was quite surprised that the stock market did recover strongly the past few days. It was unexpected. However, it does not really matter for a long term investor.

I asked my stockbroker for a list of blue chip shares and REITS showing the drop in their prices since their recent peaks and the dividend yields. I was surprised to find several blue chips that gave a yield of more than 4%. I picked a few of them for investment. The  list of blue chips and REITS can be found here.

Another good investment is the Straits Times Index ETF offered by SPDR and DBS which gives diversificaton.. 

I wish to emphasize that while the stock market may be strong for the time being, the situation could turn around easily due to the uncertainty in the global economic environment. But, if you are investing for the long term, you can ignore the short term uncertainty. The situation will be sorted out in a few years' time.