Tuesday, 23 July 2019

SIMPLE LESSONS ON STOCK MARKET INVESTING 2019

You probably heard this one too many times. London is a very beautiful place to live but it also is very expensive. Living costs here are higher but if you think about it, there is inflation everywhere, no exception. Inflation is simply your money's purchasing power. If this year you can buy 10 chicken nuggets for £10.00, next year you can only buy 9 for £10.00. I am over simplifying but you get the idea. I started investing around six years ago, I have tried a handful: stock market, unit investment trust fund (UITF), mutual fund, property development to name a few. By far, stock market investing yielded the most gains for me (I also suffered losses but it's a net gain, thankfully).

I tried investing in the Philippines Stock Exchange (PSE) for about five years. One of my mentors shared that if you want security, invest in first world commodities but if you want growth, emerging markets (like third country stocks) are your best bet. I started with PSE out of convenience. It's a familiar territory for me and I took advantage of initial public offerings because gains (mostly) are almost immediate. Last year though, I decided to liquidate 90% of my investment to diversify. I also made the jump to invest using a UK based stock platform, March 2019.

I REALISED THAT I CANNOT DELEGATE MY 'HOW TO MAKE MY MONEY GROW?' HOMEWORK
I say this respectfully but be careful when listening to other people's advices. Even if they mean well, YOU are responsible for your money actions. One good litmus test is if someone is offering me a 'free consultation', are they trying to sell me something? Maybe an insurance, a subscription or simply asking for a capital? That's not to say all of them are a scam but take a moment and realise that it took you years to earn that capital, don't get swayed wantonly by the next best pep talk because, I tell you this, worst comes to worst, they probably cannot help you withdraw the money you've invested when sh*t hits the fan.


PAPER INCOME IS JUST ON 'PAPER' UNTIL YOU SELL THE STOCKS
I only have a portion of my investible money on stock markets and my long term investment money is not in it. Having said that, I shifted my stance from being in it for the long haul to selling my stocks if I reach a certain percentage of gain. Before, I was waiting for the gains to be 25% but unless it's on IPO, chances are rare. My tolerance on gain is lower than that these days. I am happy to know that I took advantage of the swing and this time, I cashed my gain - not just on paper - but for real! In addition, I buy the same stocks again when it dips (I have to give Gab the credit because he was the one who spilled which stocks to invest in).

I STOP AND APPRECIATE HOW HUGE THE YIELD IS COMPARE TO BANKS
It is very easy to be greedy especially when you're on a crossroad whether to pull out the stocks or wait it out for higher gains. To put things in perspective, I call to mind the measly 2% interest rate that any commercial banks are giving us while charging us 200% interest when it's our turn to borrow money from them! Seriously, how can they get away with that? Anyways, all the more reason NOT to have any outstanding debt whenever possible. Going back, if it's a debate between 9% to 10% gain, I usually realise it but I always consider any commission charges, etc. to make sure it's a worthwhile sale.

I INTENTIONALLY KEEP IT SIMPLE
Here is my strategy: a) pick five stocks b) wait for it to yield gains (can be weeks or months) c) cash the gains d) buy it again when it dips. Among these, I think picking the right stocks is the most challenging. I tried to do complex calculations before believe me, but in the end it's the simple things that yield the best returns. I also have a peace of mind knowing I only take the risk that I can appetite.

I LOOK AT IT AS AN INSPIRATION
Money is not just a currency so you can buy things. If you take a closer look, your money represents your time and effort... how you spent your life basically. However long you have worked or established your business, your pot is a marker of your hard-earned labor. Money, whether we like it or not, is power. You can choose to help your loved ones or donate in a worthy cause (please don't forget to share with the less fortunate ones), you can use it to have a meaningful experience with your nearest and dearest (like, ahem wedding) but most importantly, you can treat it with respect enough to make sure you maximise its earning potential by doing your due diligence and research. 

I hope you've learned a thing or two! If you like to know which stocks I am invested to, ping me on @callmekristineanne, I promise I won't sell you anything. Any catch, you ask? Of course there is - you need to buy me a Pret coffee! X -CMK

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