Sunday, December 13, 2009

How to Start Investing?

Dear readers,

I received a few PMs lately on how to start investing and I thought it might be good to share some of my views with all of you out there.

Frankly speaking, I have not commented much on Technical Analysis (TA) strategies since I am a Fundamental Analysis (FA) investor. So, I shall answer this question with a FA perspective.

I started with unit trust investing and therefore I encourage beginners with no prior experience in investment to start with unit trusts. It is not that unit trusts are superior investment product than others out there. It is just that it is quite simple product to understand and more easy for a novice to start building his/her portfolio. One can also start a simple regular saving plan (RSP) with unit trusts by contributing small amount of money every month and buying into his portfolio of funds. It is a disciplined way of staying invested throughout market cycles, without worrying about daily market movements and taking advantage of dollar cost averaging.

As one gets more experienced in investing, he might wish to venture out and beyond unit trusts to ETFs, stocks, bonds etc. Stock investment is not so easy as one would need a bit of business sense, accounting knowledge and ability to interpret numbers. It would need some homework in reading and understanding annual reports, looking at industry prospects, value companies and risk management when building a portfolio of stocks.

All said, the investment journey is not an easy one. There will be ups and downs. Not everyday will be a sunny day. But if one come prepared with a plan in mind to win wars rather than small battles, one will be successful in his/her investment in the long run. Trust me, I have my fair share of misses in investment but as long as I learn something from my mistakes and try not to repeat it the next time, I think I have benefited from it.

Investment is not only about return. Try to focus on the process instead. With the right attitude, right implementation and right execution, the return will come automatically.

Wishing all of you readers out there all the best in your investment journey!



Blogger Wealth Journey said...

Agreed. If you are starting out, you need to know what you are after. Usually, the result will come if you have focus on the right process.

The most important thing when starting out is to know your investment temperament(trader or investor) and lay out your Investment Policy. This is my initial draft investment policy if you are interested to peruse, but you could always find a lot of suggestions from books of proven gurus.


4:04 AM  
Blogger ghchua said...

Hi Wealth Journey,

Thanks for the link.

Agree with you. Knowing yourself is definitely the first step towards successful investing. But what I have encountered freqently is people asking me whether xxx is a good buy and whether should I sell xxx after having x% return/loss in x months.

It seems that a lot of investors out there are too focused on returns, without looking at whether they have an investment plan in the first place.

6:07 PM  

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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