I have shared some information and tips when it comes to personal investing. I believe those are probably not the first time for you to read about them. So I have come with another idea. I suddenly got an idea to share to you the DON’Ts when it comes to investing. The DON’Ts are also important to know. The purpose is let you stay investing and making it a habit. A lot people just want to know the positive side and they usually are upset and give up when reality hits them.
Start with small baby step when you start investing. In investment, we are playing a marathon not a sprint. Start with taking your risk profile questionnaire. Invest in products with 1 notch up of your risk profile. Let’s say you score Conservative profile, try to invest in product that is in Moderate risk profile but don’t go for Aggressive one. You can revisit again your risk profile in a year to see whether you are comfortable enough to take higher risk for your investment portfolio.
Bear in mind that the ultimate goal of investment is not to get you rich beyond imagination. Investment is one of many (and not the only) tools to accumulate more wealth. For me investment is a tool to make sure my value of money stays relevant with the inflation. The purpose is to maintain the same lifestyle regardless where you are in your phase of life. Therefore, with this mindset please be reasonable with your investment goals. The high percentage of return is not the only aspect you need to weigh in when making investment decision. Don’t forget the rule of thumb of investment: risk and return always go in the same direction. High risk, high return. Low risk, low return.
This is also another rule of thumbs in investment. What it means is don’t out all your money into 1 type of product. For example: 100% in stock mutual fund A managed by company B is a big no. Always do diversification. Diversification can come in many forms: product risk profile, investment underlying, investment currency, investment industry sectors, investment country origins, etc.
I bet this sounds odd when you read it but actually there is no need to check the performance of your investment portfolio too often. Why? Because most likely it will just stress you out when you see it is not performing accordingly to your expectation. Investment is a long-term thing to do and it can reflect the real value of the underlying which will likely showing negative performance. However, if you are playing for a marathon, temporary negative performance should not bother you. What is more important to do is: do invest regularly without missing it and make it a habit.
I hope you benefit from what I write above. Should you have anything to ask or discuss, please drop an email to morgan@mandate-ess.com. I will be happy to engage a conversation with all of you.
