Mistakes of a novice investor

Even though I have only started investing in May this year, I realized that I have made many amateur mistakes. Despite reading up so much from other financial bloggers, I thought to myself, I would never make such mistakes. I still failed to avoid making such mistakes.

It may not be mistakes yet, but it is definitely a bad habit for a investor.

I shall share with you guys some mistakes that I have made as a novice investor.

Not researching enough

When I first read up about Maybank KE’s Monthly investment plan (MIP), I was stoked! 1%  commission for contract value less than $1000! WA I can invest in blue chips companies some more, confirm better than POSB Invest Savers!

I went on to create my Maybank KE account and proceed to enrol in the MIP. It was after the 2nd month that I realised that although it is indeed 1% commission charged when purchasing the shares. BUT, when you want to sell it off, there is a $18.00 minimum commission. 

Lesson learnt. I have stopped my MIP with them, since I have my SCB account with no minimum charges.

Ok. I am exaggerating. But you get the idea.

Chasing the market

Thinking that the market is recovering, I continue to buy more shares at a higher price, fearing that I may not capitalize and ride with the wave. Now, when the market is down, I am left with limited funds. And with limited funds, I am only left with the option of averaging down and missed out the opportunity of holding other companies that I am targeting.

In this case, I realized that I have unknowingly forced myself to pump more money that I would like to into the market, just to average down my cost.

Lesson learnt. Now I am sticking to this strategy whereby I will only buy more if it is below my entry price. For new counters, I will need to do more of point 1, which is to research more before committing.

Being too affected by short term market trends

As a long term investor, there is no need to keep monitoring the market. However, I kept checking my phone to check on my watchlist and portfolio market value. I really need to stop doing that. Any one out there have a good advice? Other than deleting the app all together? HAH!

On a positive note, at least I realized my mistakes and made these mistakes when I am still fairly new to the scene.

Managing your portfolio is like managing a Football Club

I always have this weird thought about the different asset classes in a portfolio.

Just imagine, emergency savings, fixed deposits and insurance are like your defensive players. Equities and real estate are your offensive players. If you have too many defensive players in your team, it is unlikely you will score goals (Profits). Likewise, if you have too many offensive players, you may be vulnerable to conceding goals (Losses).

The important thing is to strike a balance, so that there will be “chemistry” in the team. (Diversified Asset Class). Building a football team or a portfolio isn’t something you can do overnight. Always find ways to strengthen your weak point. Buying a offensive player to boost your attack or buying a defensive linchpin to shore up your defense.

This is how i envision different asset class will look on a football pitch.

To sum this post up, there are times to be offensive and also a time to be defensive, it just depends on who your opponent is (Market) and the philosophy of the manager (YOU).