What are things I should be careful investing and mistakes that you have done in the past (if you are open to share)? - Seedly
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Anonymous

Asked on 06 Dec 2019

What are things I should be careful investing and mistakes that you have done in the past (if you are open to share)?

Hi Seedly community, I am a new investor, I have tried trading on forex throughout my NS years. I am trying to start investing as I want to obtain financial freedom during retirement

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Bjorn Ng
Bjorn Ng
Level 9. God of Wisdom
Answered on 07 Dec 2019

Don't follow just because you see a track record. I've made this mistake - this group was hitting their TA on stocks, so I decided to follow for 2, and those 2 went in the opposite direction. It would just be a gamble, and you will be affected by it emotionally because it's your hard earned money.

Do your own due diligence, build your conviction, and only invest in something when you yourself believe in it! And also, if something sounds too good to be true, it probably is not good at all. (eg 20% monthly returns from some Malaysia durian farm)

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Daryl Liao, Fti
Daryl Liao, Fti
Level 7. Grand Master
Answered on 06 Dec 2019

Reflecting on my personal mistakes, I lost the most money when I was FOMO and believed the people pitching their investments. One was espeically painful when i lost 30k on a Pre-IPO bullshit.

Luckily my then gf (now wife) held back my hand from plowing more money in.

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Hi anon,

Some pointers to guide you

  • Do your homework, don't base your decisions off a 'tip' or similar

  • Start early

  • Don't leverage unlelss you know what you are doing

  • Market will always give you opportunities, you just need to be patient and wait for it

  • Don't chase performance

  • Understand risk

  • Manage your asset allocation

  • Review and rebalance

and lastly

  • Don't mix insurance with investments!

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Bibiana
Bibiana
Level 7. Grand Master
Answered on 06 Dec 2019

There are actually quite a lot of mistakes that many new investors made.

I feel that having a good mentor and having someone by your side to guide you in your initial stages would help a lot.

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Wallace Chai
Wallace Chai
Level 9. God of Wisdom
Answered on 06 Dec 2019

My mistakes:

  1. Didn't spend time to do due deligence and simply listen to others. End up with loses

  2. When i first started, i learn option trading. I always go for stocks which has super high premium, i dont care about the fundamental. I will leverage and trade on margins. Everytime when the stock price drop to lower then my strike price, i will be panic. I checked the share price every day, minutes! I couldn't sleep at night if the share price drop. I end up always losing money cuz i will cut loss immediately if the share price drop lower than my strike price.

  3. Fear of missing out is a very bad thing. I am in a community of alot of investors buddies. Whenever they buy into a certain stock and the share price fly, i would have this fear. Fear if the share price will go up further and i will miss the boat. I never bother to do my research further and do not have much understanding about the stock. Often times when i buy in, the next few days the share price tank. I would be panic and not sure what to do. If i would have do my own due deligence, i will know when to buy and at what valuation to pay before buy into the company.

  4. Holding on weeds and hoping the share price to go back to the original price at the time i bought it. If the business is a lousy ones, share price will always go lower and if you keep waiting, you will have more losses and you can actually deploy the money to a better companies out there. Cut your losses fast and sit tight to your winners is the right thing to do.

  5. Putting too much money into one stock. I invested in one of the local stock heavily because i have a super high conviction in it. Then what happened is, there's a few short report came out for this company, share price tank and yet i continue to buy more. Now the company got halted and stop trading. Though i know the company will do well in the long run but i got my huge capital locked in and i am now left with less capital to be deploy to better companies. If i would have be strict to portfolio sizing, my portfolio will do better.

  6. Selling out my winners when it is all time high. The reason for why the stock keeps trading at it all time high because the business is performing well. We shouldn't sell away the winner if the business still performing greatly. What is high can go higher. Should train ourselves to sit tight on the winner and delay gratification.

  7. We should always have a community to discuss about an stock idea. Look for the nay sayers. Look for ideas that challenge your thesis. This will help us to manage our blind spot.

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Jonathan Chia Guangrong
Jonathan Chia Guangrong

06 Dec 2019

Did you learn options from someone? Selling or buying options?
Kelvin Seetoh
Kelvin Seetoh

06 Dec 2019

Wow! Wallace, I love your answer a lot. you should save your answers up to guide your future friends!
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Jonathan Ang
Jonathan Ang
Level 7. Grand Master
Answered on 06 Dec 2019

1) Avoid cyclical companies

2) Never invest in companies with high debt even if they are sexy

3) Never invest in a company unless you have read the annual report cover to cover

4) Dont chase the stock price.. it doesn't know you, staring at it wont move it.. chase instead high quality companies back by solid fundamentals

5) Do not put more than 20% into one company (saved my countless times)

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  1. Putting all your eggs in one basket. Pretty self explanatory. Overexposure to a single counter will dramatically affect your portfolio returns should it tank.

  2. Not maintaining a sizeable warchest for the following reasons:

  • Inability to dollar cost average down for instruments you own and still maintain a bullish outlook

  • Inability to buy the dips on instruments on your watchlist

3.Not doing your own due diligence.

Never blindly follow what people tell you to invest in. Trust no one, not even your friend or family member.

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Wilson Nid A Break
Wilson Nid A Break
Level 9. God of Wisdom
Answered on 06 Dec 2019

Dont made the mistake of not learning from other people's mistakes which cost dear to them but free to you

Never invest if you dont understand the business, how to make informed decison(s) on when to buy/hold/sell if you cant comprehend news/articles/opinions that are written about stocks you are interested in

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Kelvin Seetoh
Kelvin Seetoh

06 Dec 2019

Great answer!
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Geraldo L.
Geraldo L.
Level 7. Grand Master
Answered on 26 Feb 2020

One advice is that if something is too good to be true, it probably is. I always keep this as a reminder to do my own due diligence and research before investing, and avoid getting greedy due to attractive / extravagant returns (especially common from Facebook ads). At the end of the day, only invest in something you are familiar and comfortable with.

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MT2020
MT2020
Level 7. Grand Master
Answered on 25 Feb 2020

Most important thing is to not listen to "tips" or advice and buy into them. Nobody cares more about your money than yourself.

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Jonathan Chia Guangrong
Jonathan Chia Guangrong, Fund Manager at JCG Fund
Level 9. God of Wisdom
Answered on 06 Dec 2019

Invested in a few ICOs over a year and didn't earn anything.

Invested in ipo for xmh at the start of my investing journey when I didn't know better. Now this is just sitting in my cdp as a cautionary tale to myself.

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Choon Yuan Chan
Choon Yuan Chan
Level 9. God of Wisdom
Updated on 12 Dec 2019

Being gullible and believe the Optimistic growth prospects of companies presented by their management.

Most listed company like to spin cock and bull stories to glorify their growth, but history has shown many have fallen short of their words. So whenever a company says it is diversifying into a new industry and expect to grow earnings by XX%, be very scared. Most of the time its diworsification​​​

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Before you start investing, it will be best to understand your objective. Here are some questions to help you:

  1. What is your capital?

  2. How will you want to invest your capital? E.g. lump sum or an amount on a regular basis

  3. How long will you want to stay invested? E.g. 10 years

  4. What is your risk appetite? E.g. How do you feel about short-term volatility?

  5. What is your objective for investing?

My biggest mistake will be to hear-read and follow what other people are saying. Instead, the best way is to always do your own research and understand the best wya to grow your wealth.

With many tools and information available now, it has definitely made investment more assessible for everyone.

Here is everything about me and what I do best.

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