Successful investing involves more than just stock picking ("Target: Financial independence by 40"; Jan 17).

Diversification, saving to invest, emergency funds, and low-cost exchange-traded funds are simple investment concepts, yet very important for successful investing. However, there are other important concepts too.

An example is valuation. I agree with the proposed stocks and bonds for Ms Shona Chee's portfolio allocation. But we should note that some of them may be overvalued at present and we should ensure we do not commit the error of buying the right stocks at the wrong price.

We know it is important to buy the stocks of the right company, at the right price and at the right time. We may find the right firm, but the "right" time is debatable as the world is simply unpredictable. Thus, it is left to us to judge whether they are at the right price.

Another important concept is portfolio tracking. Frequent portfolio monitoring defeats the purpose of long-term investing. It is more important to understand that luck and existing market conditions play significant roles in the rise and fall of investment returns over one year, whereas in the long run of five, 10 or 20 years, a profitable and growing company will ensure that its share price rises.

According to a study, the Straits Times Index's historical records have shown that the market will fall on half of all days, a third of all years, a fifth of all decades but none for 20-year holding periods.

Portfolios' performances are unpredictable within a short timeframe, but there is a higher probability of positive returns with the right instruments over the long run.

Hayden Wu Hanlong