Asked on 06 Dec 2019
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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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)
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.
Some pointers to guide you
Do your homework, don't base your decisions off a 'tip' or similar
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
Manage your asset allocation
Review and rebalance
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.
Didn't spend time to do due deligence and simply listen to others. End up with loses
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.
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.
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.
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.
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.
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.
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)
Putting all your eggs in one basket. Pretty self explanatory. Overexposure to a single counter will dramatically affect your portfolio returns should it tank.
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.
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
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.
Most important thing is to not listen to "tips" or advice and buy into them. Nobody cares more about your money than yourself.
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.
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
Before you start investing, it will be best to understand your objective. Here are some questions to help you:
What is your capital?
How will you want to invest your capital? E.g. lump sum or an amount on a regular basis
How long will you want to stay invested? E.g. 10 years
What is your risk appetite? E.g. How do you feel about short-term volatility?
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.