Hi, I’m fairly new to the investing world and I want to hear from more experienced investors what they wish they knew before starting.
I wouldn’t call myself experienced but I’ve been investing for 2+ years and I’m still learning along the way.
I think the most important thing I learnt pretty quickly is that with investing it’s all about the long game. Finding companies & ETFs that you like or fit your investing goals and then sticking with them while investing regularly.
When I started I think I got a tad over excited and continued you jump in and out companies and missed out on gains and opportunities because of it
Best of luck with your investing journey
That Telsa was gunna do so well
Dealing with FOMO is a good skill to have too
My lesson: Patience is a virtue – slow and steady wins the race
- Elon’s PIN
- Invest only disposable funds less what you’ve budgeted for emergencies, including that of total loss of income.
- Minimise portfolio churn once you’ve invested with high-conviction.
- Don’t listen to the noise and don’t chase FOMO.
- Sit back and relax, as your assets dangle over a cliff-edge.
- Don’t even think about trading if you’re not up to it - you’ll get burned.
- Chamath’s PIN.
Also, follow Chamath Palihapitiya on Twitter.
That I can’t beat the market
A year in now and pretty much matched VWRL but with much more risk and stress
I would say have a strategy, whatever it is, and stick to it with laser focus. I’m not going to say one strategy is right over another, but whatever you do choose stick with it and build your investments around it. Set clear criteria and requirements of your strategy and ensure you follow it whenever impulse comes along (e.g. a trade/buy of a stock, FOMO, a recommendation, etc.)
So just my personal take. I’m 31 now and this is what I wished I’d known when I started investing at 25
Dont sell out of your index funds because you think the market is overvalued - the bull market climbs a wall of worry. Maybe it is overvalued, you’ll never know until the crash comes and when it does you can keep buying for cheap. It’s a lot worse to feel like a lemon and watch the market appreciate 20% with you sat in the sidelines.
dont focus on domestic indexes: there’s a tendency for people to invest too much in their own country’s indexes. One comparison of the FTSE 100 against the S&P 500 will tell you that’s not a great idea! Go global instead (VWRL is my weapon of choice)
I’m fairly young (early 20s) but I have been doing this for about 8 years now, nearly full time.
I’ve been making roughly 20%+ CAGR. - it is a game of mostly luck and some skill (more like not doing stupid things), we’re in a massive bull market, I haven’t invested through a cycle so I don’t know enough and don’t have enough experience.
- Don’t fall for fads - Bitcoin/Marijuana/EV/Renewable energy etc.
- Lots of people have mentioned Chamath/Elon etc - Big No from my side.
A rising tide lifts all boats.
It’s only when the tide goes out that you learn who has been swimming naked.
I am much happier earning a low return (or even losing money) and looking like a fool in the short term if that means staying away from anything Chamath/Elon/or any Twitter pumper is associated with.
In fact, I have a £1k bet with a friend that a portfolio IPOA/B/C/D/E/F will earn a lower return than the S&P over the next 3yrs.
You’re better off buying high-quality ‘profitable’ growth companies - Microsoft, Mastercard, Google, Visa, Facebook, Amazon, Estee Lauder, Domino’s Pizza, Home Depot, Nike, Starbucks etc - you get my point.
I am genuinely extremely worried at what people are doing/buying these days - permanent loss of capital is highly likely. Buying companies like in point 4 doesn’t mean you won’t lose money in the short term - you’ll make it back faster, and you’ll make a whole lot more in the long run. It won’t be as interesting or as much fun or quick money, but it will be more durable.
I am assuming all of us have jobs that provide us income and savings - put in a portion of savings each month into buying high-quality stocks. Don’t try to time the market.
But hell, what do I know - most people have made more money than me in 2020.
I wish I knew about social arbritage investing earlier.
Don’t fall for the narrative that you can’t beat the market hence you should only invest in an index etf following a passive strategy and that stocking picking is gambling.
There are a lot of good opportunities out there and stock picking is how people have made it in the stock market. And if you must, split your strategy into passive and active together.
One of the great things about FreeTrade is that it allows us to do dollar cost averaging with no addittional cost so if you like a stock you don’t have to buy all at once you can build your position over time.
Don’t sell your winners too early if you are invested in for the long term specially if the fundamentals are good.
I mostly stuck to value stocks in the early days but when I switched to more of a focus on growth stocks the result was that those growthier companies now account for over 80% of my lifetime p&l
I’ve been investing since around 2015.
Patience and don’t panic. Stop and think before pressing that buy, or sell, button. I’ve been trigger happy on both buttons. Which has cost me.
Research. Spend some time understanding the company, competitors, sector, and upcoming changes to government regulations. Read, and subscribe, to the RNS for the company.
Diversify. I didn’t diversify in the beginning. Looking back 5 years. I chose the right sector, but focused on the wrong companies. Had I diversified more widely across that sector I’d have had a much better return. This is where a sector specific ETF may be the better choice for you.
Don’t get greedy. Know when to top slice to derisk. I’ve been x00% up a few times. Not sold. Then seen the price tank putting me on a paper loss.
Know when to average down. This goes back to research. Sometimes you can spot a company that the market is missing.
Be wary of any single article pumping/praising a stock
Watch out for dilution
Keep an eye on your duds. I’ve sat on sudden big paper losses on some shares. Rather than sell and realise that loss I keep them as a reminder and learning exercise. See point 6.
1.Time the market and timing the market. A wise and successful investor taught me to drip feed monthly and also set aside money to buy more shares when they are very low. For example, drip feed 70% of what you can afford monthly and set aside 30% as cash ( or whatever you wish ). This has changed my attitude, so when I’m at a loss it is a opportunity to buy ( unless it is a falling knife lol which thankfully I have not experienced * touch wood*)
Diversify ( by sector, geography, market cap etc.) This has protected me so much
Don’t always follow the crowd, you might get burnt
A loss is not actually a loss unless you sell at a loss.
Not everything can be a winner
Learn from the inevitable mistakes
To put most (>90%) money into ETFs. This lets you sleep easily.
As Kenny Rodgers sung.
You got to know when to hold 'em , know when to fold 'em , Know when to walk away and know when to run. You never count your money when you’re sittin’ at the table. There’ll be time enough for countin’ when the dealin’s done