PG here! Would like to share a few things I learnt from investing so far 🙂
1. Do not invest for the sake of investing
It is a common belief that investing is better than not investing. After all, they always say that “time in the market is better than timing the market”. I have to admit that at the start of my investment journey, I felt so eager (in fact overly eager) to invest all the idle cash that I had, thinking that once I deployed my funds into some investments, it would be a job done.
I believe that due to my hasty behavior, I may have made a few investment mistakes, whereby I did not do proper due diligence and just bought shares based on what others claimed were “good”. Thankfully, I did not lose from these mistakes, but it was really stressful when I noted the price moving down south. Without my own personal conviction to buy these shares, it really made me nervous, especially for a first timer.
I would say that instead of making hasty decisions, if I were really keen to invest at a particular point in time, it would have been less risky to buy into some ETFs or invest into robos. That being said, I would like to caution that investing into robos is not “safer” than investing in shares.
This is a very well written article on robos which I would encourage you to read if you are keen to invest in robos!
2. Do not take analyst reviews blindly
Don’t get me wrong, I believe that analyst reports are a good way to get quick information on a company’s performance and business operations. The danger here lies when you do not question the validity of their assumptions and just blindly trust their opinions and follow the actions recommended. PB used to tell me “PG, if analysts were always right, they wouldn’t need to work anymore as they would be filthy rich”.
I learnt this the hard way when I made decisions heavily influenced by these analyst reports. For instance, not too long ago, one of the banks made a buy call on one of the hospitality REITs. Truth be told, I was so fixated on their analysis (and mildly FOMO) that I did not really analyze the market conditions properly. As the price just kept rising, presumably from this company’s buy call, this led to a costly buy at the peak of the REIT’s price. Till date, I am down almost 10% and don’t foresee any upside in the near future.
3. Do not get too hung up on daily price movements
PB can testify to this, as there have been numerous occasions where I felt hung up whenever the stock I bought into started sliding downwards after (despite doing due diligence). Not going to lie, this will definitely take time and experience to get better at. However, PB always reminds me that as long as the company has decent fundamentals and has risk in line with my risk appetite, I should not be too worried about the daily price movements, especially if I am investing for the long term.
As such, it’s good to have an investment thesis in mind as to why you bought into a stock, and continue to revisit it from time to time to see if it still holds.
4. Do not take risks that will compromise your daily routine
I am sure most of you have heard of the recent GameStop saga. PB and I decided to take a small bet into this whole episode and we bought a tiny portion of shares in GME just to try our luck. (Remember, only spare what you are willing to lose!) While PB was cool as a cucumber, I was fretting about the daily price movements. I remember there was even a night that I dreamt of GME and woke up in the wee hours of the morning wanting to check the price of GME. Needless to say, PB decided that this was affecting my well being and rest, and I decided to just exit my position. Thankfully, I still managed to earn a tiny bit from this whole saga, but most importantly I learnt a lesson on how I should only invest at a risk level that I would be comfortable (to rest well) with.
5. You need to start somewhere
As much as one can keep reading about investing, there is still no better way to learn than to start small and try it first hand. In my opinion, investing is as much about doing proper analysis as it is understanding investor psychology. While I used to read investing books from time to time, I must say I really learnt so much just trying it out by myself. It also helps if you have a like-minded partner/friends/family members who are keen to bounce ideas off one another. Truth be told, I feel like it really helps that PB is also very into these investment related topics, whereby I never felt “alone” in this journey. Our chats are filled with many articles we constantly share with each other and I don’t mind it one bit (compared to before I knew PB)
If you feel like the costs are too high just to even try investing in individual stocks, you could try Interactive Brokers with only $0.35 commission per trade (check out our review here!). It also allows you to buy fractional shares and buy into a variety of stocks. A note of caution here, diversifying into stocks doesn’t mean diversifying risk, especially if you buy stocks that are highly correlated in movement with one another.
Peanut Butter & Gem 