10 Things I wish I knew before I started Investing

1. Decide whether you are looking for capital gains, dividends or am greedy like me and want both! This will help you to narrow down the industries to look at and then the companies which you would like to own

2. Have a sizeable sum of money (a couple of thousands would be good enough) to start off. With the new and smaller 100 lots per counter, you have so much more options and at a cheaper price especially if you are going to use iOCBC since they have a current promotion with lower fees! Click here for more details

3. It is better to invest in one solid counter rather than small lots here and there. If a counter is worth your investment, you can build up your stake in it rather than diversifying as diversification means you need to spend much more time just trying to ensure that your entire portfolio is doing well 

4. Only invest in what you can afford to lose (touch wood) so you won't have a panic attack if you do lose your money. This ensures that your life goes on as per normal and you won't have a meltdown at work, which for most of us, is our main source of income

5. As a beginner, it's best to invest using your own money and not do fancy stuff like margin trading. That can wait until you are good with investing in your own money. Plus you won't lose sleep which can corrupt your decision making 

6. Think of investing as a better way than savings as a good investment earns you much more than what the bank can afford to pay you in interest. I netted a 30% gain over 1 year on 1 counter alone. I doubt any bank can give you that kind of return

7. Do your research thoroughly as I've written here and don't rush into investing or following the herd if you are new to investing. Read the investment blogs, forums, books etc but remember you bear the consequences to your decision

8. Learn how to read an annual report which I've written here and here. It's never too late to pick up how accounting ratios are calculated, what kind of world news can potentially affect your counters and even watching the counters daily for a period of time before buying it. 

9. Take time to learn about fundamental analysis and technical analysis as they are tools that will help you greatly before you take the plunge. It will also help you to decide on your investment horizon as you choose the counters to match that time frame

10. Lastly, start when you are ready. Don't start because everybody is doing it. Do it for yourself and because you want to. I started late but I don't regret it since I was mature enough to know what I was getting into, my working experiences helped a great deal and my salary was comfortable enough for me to take this step

Related articles: The art of stock research
                           The allure of the annual report (Part I)The allure of the annual report ( Part II)
                           10 Common Newbie Investing Mistakes to Avoid
                           Million Dollar Traders

Comments

  1. Don't worry if you started late. You are right starting late has the advantage of "maturity" of age.. i started at the age of 40 and surprise, surprise, some even much later at the age of 50, 50+.
    Just always remember investing can be for a lifetime if you do it right. Then you will never be bored in your twilight years.
    My 2 cents.

    ReplyDelete
    Replies
    1. Hi temperament,

      Yup it's better late than never! I guess earlier on I was just busy with work and what not so investing was on the back burner. That's true, I find myself enjoying investing more now and yes it'll be a great way to keep my mind alert when I'm old since I can't play mahjong!

      Delete
  2. Good work highlighting the part about reading annual reports. People attribute too much importance to the opinions of research reports. I used to work in equities sales and trading and the guys writing these reports were just normal people like you and I, working in the next room, whose opinion just happened to be backed by a brand name bank. They can easily be wrong, the way we are too.

    As a side note, tell me a week later if this post gets you the highest number of hits on your blog. People love clicking on posts styled as numbered lists.

    ReplyDelete
    Replies
    1. Sometimes I guess we think that since they are doing that job they will be in the know but I've also seen cases where the same analyst flip flops on the same counter within months. Sure, I'll let you know in a week's time 😄

      Delete

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