The market always repeats the same pattern over and over again. The same applies to how humans, or investors, react to the market. Therefore, these five tips for investment success are likely to be relevant no matter the time or place in the market cycle. Investing may seem daunting at first, but these 5 investment tips will definitely help you start investing or to take your investment to the next level.
1. Evaluate your options
People are inclined to follow the trend. When the market goes bullish, everyone is very optimistic and, therefore, they decide to buy. With so much buying going on, stocks become overvalued. When investors realize this, the bubble will burst, and prices barrel downhill. People are stuck between realizing their losses and keeping their low-value assets. No one knows when things would get better.
Instead of rushing to sell with the crowd, do your research and see whether the sell-off makes sense. You should always evaluate your available options before taking action.
2. Be open to changes
There is no such thing as the best investment product ever. It all depends on your financial goals, your risk appetite, and the market situation. Sometimes blue-chip stocks can give you the best return, and sometimes you need to slow down and opt for relatively safer investments like bonds. Analyze your financial situation frequently and be open to new opportunities.
For example, peer-to-peer lending hasn’t always been around. It first started in 2015 and only in the last few years have we seen digital P2P platforms introduce themselves in the market. In this short span of time, however, P2P lending has become a great alternative for short-term to medium-term investments, offering competitive returns. At Minterest, you can get as high as 18% p.a. for investments in invoice financing loans.
3. Diversify your portfolio
You can’t predict the market trend the same way you can’t predict your future. Things happen, pandemic strikes, recession hits countries, companies go bankrupt, frauds revealed. Thus, you need to diversify in order to mitigate your risk.
There are many ways to diversify. You can can diversify by risk, by industry, or by country. That sounds like a lot of diversifications, but it is for the best. Let’s say you diversify some of your assets as follows:
- Tourism industry stocks: 10%
- FMCG industry stocks: 15%
- Dow Jones: 10%
- P2P consumer loans: 15%
- P2P invoice financing: 20%
If the tourism industry crashes, you can still gain potential profit from FMCG. If you fund a relatively risky consumer loan, your invoice financing loans can back you up. And if the Singaporean market goes bearish in general, you can still count on your Dow Jones stocks. Makes sense, no?
4. Monitor, analyze, and learn
The market is ever evolving and you need to adapt quickly. Study your portfolio frequently. If you’re investing for the long-term – ten to twenty years at least – make sure your potential return can cover the taxes and inflation in all those years. Many long-term investors don’t take these two things into account and end up regretting it in the future. If you don’t know how to calculate your taxes and inflation, you should either learn or hire an expert to help you.
When you start investing, chances are you will make mistakes here and there. This shouldn’t stop you. Instead, learn where you went wrong the last time. For starters, you can learn from experts by joining Minterest webinars to learn about investments, money management, business strategies, and many more!
5. Don’t trade, don’t gamble
This rule is especially true if you invest in stocks. Once you decide to become an investor, then do invest, don’t trade. Trading is a completely different ball game. And if you just start investing, it is better to stick to it until you master the rules and strategies.
Remember that investing is long-term, and long-term investments can vary from two years to more than twenty years. Avoid buying and selling every time you hear a “trustworthy insight.” Not only will you end up spending too much on transaction fees, but it is also pure gambling if you don’t even analyze the price movement. Keep in mind that when you invest, it’s always buy, hold, and sell. Now read that again with an emphasis on “hold.”
It is never too late to start investing. It is never too early, either. Start investing today to help you secure your future and be sure to revisit this page from time to time, so you will always be reminded of these rules for investment success.
*Disclaimer: Always do your own due diligence and exercise discretion when using these tips.