Saturday, 9 November 2019

MY PERSONAL EXPERIENCE WITH STOCK MARKET INVESTING

As of this writing, it has been ten months since I started stock market investing (on S&P stocks particularly). When banks only give you approximately 1% income from your savings, I'm pleased to report that I've realised a 12% return from my investments. I said realised because I pulled out some of my investments and cashed in the income so it's no longer paper gains, technically speaking. One of the ethos of this blog is sharing positive things and so I thought if there's one or two who will benefit from this post, I'd say it's worth the effort! I won't cover the basics but feel free to check out my MONEY MATTERS section as this narrates my financial journey going back as far as 2013!

1. Invest on businesses that you believe will be around for the next 50 years.
We use the term invest loosely these days. A designer bag is not an investment in my personal opinion. It's nice to have one but it's an expense and a luxury item that won't give me more money (but probably a good feeling, totally!). My point is it's important to call things as they are. Investment is something that yields future income. I have a handful of stocks in my portfolio but all of them have moats. The term economic moat, popularised by Warren Buffett, refers to a business' ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms. Source: Investopedia


2. Do your research but not too much.
A common caveat on any investment blogs is to do research. I definitely agree but sometimes, you just have to go for it. Though this advice seems counterintuitive, my experience tells me not to overthink things and - dare I say - you have to trust your guts. I am an accountant but the idea of spending my weekends reading financial reports is not appealing at all. Asking the right questions is a more sensible approach. Things like, am I personally using this product or services? What are their past performance? What are their future plans?

3. Do not procrastinate.
It's very easy to let your money sit on the bank and do nothing. As creatures of habit, we often have difficulty incorporating new changes into our routines, no matter how beneficial they are for us, because we tend to do the things that make us feel good, secure and comfortable. Source: Psychology Today. I know it's very tempting to binge watch Netflix and Youtube but all it takes is a measly 15-20 minutes of your weekend to invest and get this... your future self will thank you for it!

4. Have a strategy.
We all know that buy low, sell high is the way to go but we don't have a crystal ball to predict floor and ceiling prices. Part of my strategy is not to look at my portfolio everyday, it takes practice but it's easier over time. Since March (when I started), I probably traded less than ten times (mixture of buying and selling). I also have two sets of accounts. One for long term investment and another for medium term. The latter is the one where I'm more risky while the former is reserved for my retirement.

5. Celebrate victories!
Gathering wealth should be punctuated with short celebrations every now and then. It's true not only for finances but for health milestones among many others. I'm not saying I splurge all my gains but simply acknowledging that I made some right decisions and the proverbial patting myself on the back is a good practice. Lastly, I have a stocks portfolio excel sheet. It's a simple sheet where I keep track of my earnings - nothing fancy, it has five rows: a) stock name; b) buy price; c) sell price; d) gain and e) gain percentage (gains divided by the buy price). -CMK
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