Sow early to reap better rewards

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#1
The Straits Times
www.straitstimes.com
Published on Mar 03, 2013
SMALL CHANGE
Sow early to reap better rewards

A regretful investor looks back and wishes he had started his forays into the stock market earlier

By Jonathan Kwok

There always seemed to be something better to do at university than grapple with my personal finances and try to get to grips with the stock market.

All those numbers and charts flying around were confusing and as was normal with students, why worry about something now when you can put it off for a bit?

There was also the notion that finances and investing were for "adults", and as an undergraduate it was more natural to focus on the various aspects of student life, like hanging out with my friends... and studying, of course.

During those years, I viewed money only as a means to acquire my immediate material wants and needs. Inevitably, I was not careful how I spent it: Splurging on relatively expensive meals in restaurants and taking taxis to get around were the norm.

Goodness knows how many thousands of dollars I wasted during those years when I really should have saved cash by choosing cheaper alternatives like hawker centre meals or taking the bus.

The result was that my bank balance was practically zero at the end of my four-year course.

I had spent all of my army allowance and pocket money that my parents gave me during university while not saving a cent.

It was around this time that I read American author Robert Kiyosaki's best-selling book, Rich Dad Poor Dad.

I quickly took to the idea of making money work for me, to create a source of "passive income" - essentially, money that would flow into my pocket without me having to work for it.

It was only then, right at the end of my schooling life, that my interest in investing was kick-started.

With property so expensive and out of reach, it made more sense for me to focus on the stock market, where I could get started with a few thousand dollars or even less.

Since then I have started to slowly but surely learn more about stocks. After saving part of my salary from one year of work, I finally bought my first lot of shares in 2010, at the age of 26.

That investment cost me $960, excluding brokerage fees.

Many of my friends my age or older have still not started their investment journeys. Their reasons are the same as the ones which I used to have - that the stock market is too opaque, too confusing, too technical.

Compared with them, I started my journey at a relatively young age.

But with the benefit of hindsight, I wish I had started when I was even younger - during university or perhaps during my national service days.

Starting young has several advantages. For one thing, it brings a new perspective to money.

Above and beyond fulfilling my material wants, I see money now as a valuable tool that can earn me handsome returns if I were to deploy it wisely.

There was a fresh impetus to save and I have become much more thrifty. So if I had started earlier, I would have saved more instead of wasting my cash.

Starting young also allows you to harness the powerful magic of compounding that much earlier.

Basically, compounding means the dividends or gains you earn are added to the principal sum initially invested, which in turn generates even more gains.

You can earn a substantial sum by putting money into the market from a young age, reinvesting the dividends and watching the sum grow over the years. Needless to say, the returns will be greater if they are given more time to grow.

Another reason involves the opportunities to time the market. One major school of thought in investment involves trying to "buy low and sell high" to make a profit.

The market moves in cycles, and you will encounter more "dips", or buying opportunities, the longer you are in the market.

The 2008 and 2009 market crash presented a massive buying opportunity for stocks.

The market has dipped on occasion since then but never reached those depressed valuations seen during the global financial crisis. Indeed, stocks may never be as cheap again.

Take blue-chip DBS Group Holdings. It was trading at between $7 and $10 during those years, and I remember a friend urging me to buy at that time.

"It's a good bank, it's a good stock," she said. "Just buy one lot, you are sure to make money."

The problem was that I was only starting to work and had no savings. I also had no brokerage account and no idea how to even buy a stock. So I passed up on the opportunity.

DBS shares are now at about $15 so I would have made at least 50 per cent if I had started saving and investing much younger.

Starting early does not mean you need to buy stocks all the time but it does mean you are prepared to strike when the opportunity presents itself.

Of course, all investments entail risks and timing the market can be a nerve-racking game.

Older investors are replete with stories of how they bought shares in 2000 amid the dot.com boom only to see the market crash over the next two years as the bubble burst.

But starting young gives an advantage. It means you have many more years of working life and investing ahead, allowing time to recoup those losses.

That is why financial advisers often recommend that young investors buy "high risk, high return" instruments such as stocks or even commodities, before switching to "low risk, low return" instruments such as bonds as they near retirement.

And this is not just theory for me any more. That first stock investment I made is now worth $1,300, a return of 35 per cent excluding dividends.

Nothing to complain about for sure, but a shame I didn't start a bit earlier.

jonkwok@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#2
Don't you worry or get discouraged. Many bloggers know i started investing in stock at the age of 40. And i have been surprised by some even started investing later than me. What is more important is you should realised you have your lifetime to invest. And you must make good use of this point.

IMO. (Extract)
A: The three best things to have before starting to invest.
They are Luck (rather God’s Blessings), Longevity & Deep Pockets.

B: Six Absolutes.
1) Nobody knows the answers.
2) There’s always an exact opposite opinion
3) We’re predisposed to fail, but not predestined
4) There is symmetry in the market
5) The market is king—News is mostly irrelevant
6) The durability of Major trends is underestimated

C: Seven Core Convictions
1) Assets allocation is the key to managing risk.
2) Proper entry level is crucial
3) Be aware of negatives: There’s always a column A and a column B.
4) The best you can do is put the odds in your favour
5) The worst you can do is be totally and instantly informed (A critique of CNBC)
6) Many strategies can work - The key is consistency

D: Nuggets
1) A sure thing if you have the patient.
2) No single stock has to be bought
3) The sticky question of when to sell
4) When is more important than what

After all the Extract, Caveat Emptor!
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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#3
thanks for the experience advice uncle temperament. seldom see you around anymore.
Dividend Investing and More @ InvestmentMoats.com
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#4
Hi Drizzt,
i accept your thanks only for making people realised that stock investment should be a lifelong journey. Therefore it's better late than never is true.Big Grin
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
#5
so many rules I only know a few buy low sell high Big Grin

when many people are negative about something it's a good time to relook to buy. last year I remember many people in this forum said China stock cannot be trusted cannot buy all tarred with the same brush and I said in time people will not remember this when they see the market cheonging like now they will go in and buy cheap china stocks Tongue

Sometime uncle and aunties comes in is good consider if they hadn't comes in who the heck is going to chase these stocks?
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#6
Like it or not, the stock market is also a "Casino" to some people. And i never say i am not one of the victim before. If i am not careful, i still will be one of the victim. But make sure you have the capacity of financial risk tolerance before you embark to be a gambler anywhere.
The market is so simple (aka Buy Low, Sell High) yet also so complicated that even Isacc Newton said :- “I can calculate the motion of heavenly bodies, but not the madness of people", after his investment in the South Sea Bubble became Bubble.
Who are we?
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
#7
Just buy low sell high nothing to it. Don't borrow don't leverage don't margin so simple even 12 year olds can follow.

Just find a few counters that have more assets over debt ratio 3:1 or more, use electronic calculator simple +/- anybody don't have calculator or pencil & paper at home? Big Grin

last year I picked up a fat chunk of magnus assets/debt 5:1 only at 2 cts now less than 1 year later cheong like anything all sold away to my favorite uncles and aunties that everybody here don't like. Big Grin
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#8
Ah......! i had posted in this blog about 2 Noble Prize winners who "designed" the "LTCM" hedge fund that went kaput; about WB's EQ is more important than IQ and of course Isacc Newton.
If only maths alone, why so many are still not very, very rich in the stock markets. i think i have said more than enough.
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
#9
(05-03-2013, 10:16 AM)Temperament Wrote: Ah......! i had posted in this blog about 2 Noble Prize winners who "designed" the "LTCM" hedge fund that went kaput; about WB EQ is more important than IQ and of course Isacc Newton
If only maths alone, why so many are still not very, very rich in the stock markets. i think i have said more than enough.

singaporean mentality everybody want to "sure win" pao jia and nobody want to lose I myself also same who like to lose but I willing to take risk. Not everybody can take risk.

You look at magnus 5:1 asset/debt vs share price if it goes kaput maybe you will still earn money. That's taking calculated risk. At most it ding dong a few years no earnings or some losses kena laughed at by forumers here but you need just to get a run like now lah and it will cheong like anything.

5:1 but last year it was losing money this year cheong is it a good stock? OF course not so what has changed? the speculators are here they are like piranha anything that looks weak and vulnerable in the water they will whack. It's piranha season boys and gals.

Big Grin
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#10
(05-03-2013, 10:35 AM)sgd Wrote:
(05-03-2013, 10:16 AM)Temperament Wrote: Ah......! i had posted in this blog about 2 Noble Prize winners who "designed" the "LTCM" hedge fund that went kaput; about WB EQ is more important than IQ and of course Isacc Newton
If only maths alone, why so many are still not very, very rich in the stock markets. i think i have said more than enough.

singaporean mentality everybody want to "sure win" pao jia and nobody want to lose I myself also same who like to lose but I willing to take risk. Not everybody can take risk.

You look at magnus 5:1 asset/debt vs share price if it goes kaput maybe you will still earn money. That's taking calculated risk. At most it ding dong a few years no earnings or some losses kena laughed at by forumers here but you need just to get a run like now lah and it will cheong like anything.

5:1 but last year it was losing money this year cheong is it a good stock? OF course not so what has changed? the speculators are here they are like piranha anything that looks weak and vulnerable in the water they will whack. It's piranha season boys and gals.

Big Grin

If it's good for you, who can say otherwise?
Cheers!Big Grin
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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