Investing is 'like approaching a girl you like'
As long as you've done your research, don't be afraid to take some risks, says young investor
At an age when his peers were grappling with dating woes, Mr Robin Lim was busy reading up on investment tips.
By the time he was in junior college, he was already an investor.
Mr Lim, now 20, started investing seriously last year but he first practised using stock simulators and virtual cash.
He says: "While it was easy to make a trade in trade simulators using fake money, it was not the same with real cash.
"I was hesitant to make the first move a few times, and I ended up with a few missed opportunities.
"While I have done some due diligence before buying into the stock, I am still not sure if my analysis was relatively sound.
"Come to think of it, it is like finally going forward to talk to the girl whom you have a crush on for the longest time."
Both his parents are keen investors so Mr Lim, who will be studying business at the National University of Singapore next year, was indirectly introduced to investing.
He says: "My parents often talked about the stock market and I picked up things along the way.
"They would also tune in to the radio pretty often and I would hear about the news on the stock market."
He gleans most of his knowledge from reading and the Internet, as well as advice and experience shared by other investors.
He says: "I look for stocks that will provide decent dividends or capital appreciation in the future.
"I only deal with blue chips, or big and mid-cap stocks. I avoid penny stocks because they are too speculative for my liking.
"I would prefer to have some sleep, rather than ponder over some risky investments."
His first trade turned out to be his most memorable one. He invested his savings - from pocket money and holiday jobs like working in a bookshop - in ST Engineering.
He said: "It made me some (extra cash) but it was also memorable because that was my first trade!
"I remembered the stock had a bit of a roller-coaster ride after I bought it but thankfully, it rebounded later."
Since the middle of this year, he has not been holding any positions.
He says: "I had the niggling feeling that the market was too high... so I thought it would be a better idea to sit out and observe from the sidelines.
"I am still waiting very patiently to pick up some blue chips when they are priced attractively to their book value. Attractive dividend yield, coupled with good fundamentals, are also some prerequisites that I am looking for."
When he makes a profit, he spends a little to reward himself while the rest goes back to the fund for further investment opportunities.
He also keeps a financial diary in which he records the daily movements of various indices and happenings in the financial world.
He is still learning through Investopedia and other financial sites to understand the jargon that is used in the reports, he says.
His worst financial decision was during his junior college days when he dabbled in a complicated investment (binary options) with his friend.
Mr Lim says: "We lost a fair bit of money. This experience taught us not to speculate blindly and that there is no such things as a free lunch in this world."
Starting to invest? Here are some tips
Ms Janice Chua, head of equity research at DBS Bank, shares tips on how to avoid a bad investment for beginners:
- First, learn about products available in the market and their respective risks.
- If you are investing in complex investment instruments like bonds or shares, consider doing it via unit trusts.
Says Ms Chua: "Unit trusts pool together money from individual investors to form a larger collective fund, allowing access to a wider variety of assets." This helps to diversify your risks, she adds.
- Follow this golden rule: Do not put all your eggs into one basket.
"Diversifying your investments into various assets is crucial for protecting and growing capital," says Ms Chua.
- Establish a clear investment plan and define the timeline and purpose for which you want to invest, such as housing, retirement or your children's education.
- Understand your own risk profile. Set the level of risk you are ready to accept for your investments. Your investment plan should not keep you up at night and should not jeopardise your original savings plans.