Investing Tips for 2023

1. Prepare for the unexpected

As witnessed in 2022, significant economic events have all contributed to significant market downturns. Most would not have expected the outbreak of the Russia-Ukraine war which significantly plunged the stock market. Coupled with persistently high inflation and rising interest rates, this year proved to be a difficult year for the equity market and many investors worldwide. Hence, moving into the new year, though it is hard to predict the occurrence of such major events, on our end what we can do is ensure we have enough emergency funds to maintain a certain level of liquidity in the event our portfolios are in the red. Besides that, this year has also presented new investment opportunities. The tough business conditions reflected the strength of certain companies that remained resilient despite the harsh economic conditions. This gives us an inkling into the fundamentally strong companies we can look to invest in moving into the new year.

2. Do not panic

Volatility in the stock market is inevitable. From time to time, the stock market will turn bearish. This year was a classic example. Many investors will tend to panic and once they see a slight dip, they will start worrying whether it’s time to abandon their long-term strategy and exit the market before entering again when the opportunity arises. We should keep in mind that it is very tough to time the market and doing so often leads to missed opportunities. Unless your investments were purely based on speculation or without a sound strategy, I recommend sticking by your investment strategy and avoid panic-selling. In times like this, we should examine the quality of the stock and ask ourselves what is it that got us to invest in this business in the first place.

One mistake that I used to make was that I felt too compelled to constantly check the stock’s movement and a slight dip at any point during the day will result in an enormous amount of stress and panic for me. Hence, unless we can stomach huge volatility without being affected, the rational thing to do is to not scrutinize every single price movement and only check our portfolio at certain intervals. Moving into 2023, with potential further increases in interest rates, we should expect the equity market to dip even more, and it is crucial to keep this lesson in mind.

3. Invest time into reading

One key habit that is of utmost importance to be a good investor is to read widely from reliable sources. It is crucial to keep up with the latest market trends as these are often key drivers of stock price movements. As witnessed in 2022, many global events are happening simultaneously and without keeping up with the news, we wouldn’t be able to know why the stock market is reacting in a certain way. For me, I aim to devote a mere 15-20 minutes each day to keep up with the latest news. Each day, I read based on this approach.

1 piece of macroeconomic news - To keep up with the latest economic updates/current affairs and the key macroeconomic indicators such as interest rates etc.

1 piece of industry-specific news – Reading about one specific industry each day allows me to keep up with the major updates and reforms within the industry

1 piece of company-specific news – Narrowing down on the biggest players or movers within the industry allows me to gain insights on specific companies and their business drivers

Final thoughts

In conclusion, these are just some of the more important lessons I took away as an investor this year. I believe that being prepared for unexpected situations and staying disciplined while adopting good habits is key to being a successful investor.

Disclaimer: The opinions expressed in this article are based on my personal experience this year as an investor and solely for educational purposes only. It does not constitute financial advice and I will not be held responsible for any investment losses resulting from applying any of the information mentioned above.