If You are Just Starting Your Investment Journey, Please Read This!
I love seeing more people enter the market, but don’t want to see them get slammed, face to the floor
Disclaimer: I’m not a certified financial advisor nor investment analyst. But I learned quite a lot from an investment/trading certification academy that I attended, with some early experiences (2 years) in market and wisdom from some of the veterans in the market.
If you are living in Indonesia, chances are that you aware of a certain phenomenon in stock market during this past pandemic year (2020). The rise of “coronnial investor”, which is a catchy name for new investors (mostly millennials or younger) that started their investment journey during the stock market crash during Covid-19 pandemic.
Millennials are known for spending money a lot on traveling, or any short-term self-rewards shopping spree. That’s why, I was initially pretty excited that more people, especially in my generation get more aware of the importance of investing early.
But, slowly problems started to rise up to the surface. Turns out, a lot of these new investors entered the market without a proper guide and enough knowledge about the market, that they started to make some of the most red-flagged decision in investing or trading. They were blindsided by the profit that awaits them in the market. They neglected the fact that each profit comes with some levels of risk as well. Just like 2 sides of the same coin.
As someone who has learnt from a trading academy about the market and how to make an analysis , these situations concerned me.
Let’s be real for a moment, the market can be harsh and sometimes cruel at times. Also, not all people in the market are good people that are willing to help you. People enter the market all with the same intent. To gain as much money/wealth as possible. As someone once said to me, “If you want to get a fish, go to the fish market. If you want to get capital/money, go to the capital market”.
Hence, for those of you who are thinking about starting your investment journey, or already getting their heads slammed by the market, here are some tips I learned that might just help you to have a sustainable investment/trading and happier life.
Set a clear financial goal(s)!
When there is no vision, the people perish … — Proverb 29:18
Although the context of the verse is about divine revelation, I am a firm believer in setting a clear goal/purpose for anything especially in starting an investment journey.
When I said purpose, it’s not merely “I want to be rich” or “be financially independent” kind of one. Although they might sound noble, they felt vague and too grandiose that you might get confused or overwhelmed.
So, set yourself a clear, vivid, and attainable financial goal. If possible, break them down into smaller goals so you can measure how closer you are from the ultimate goal.
Know and understand your self as an investor!
Know the other and know yourself, and you need not fear the results of a hundred battles — Sun Tzu
One of the things that I found concerning during this “coronnial investor” boom, is that people started entering any market without first knowing their “investor profile”
Investor profile is a helpful assessment tool that can help you understand your risk profile and what kind of investment/market is best for you. Usually, the profile-market pair would look something like this
- High Risk/Aggressive — Stocks, Cryptocurrency, Forex, Commodity
- Moderate Risk — Mutual Funds (Reksadana Saham), Bond (Obligasi)
- Low Risk/Conservative— Deposit, Insurance, Reksadana Pasar Uang
Thanks to technology and internet, this kind of tools are available everywhere and can be accessed freely. So, know your self first as investor before starting.
Learn some basic analysis & money management skills!
The more knowledge you have, the better investor you’ll become — Market Veteran’s Advice
After understanding your profile, comes understanding the market itself. Each market has its own characteristics and you need to know them before you enter them. Know the game before you play.
Then, learn some basic analysis skills (technical and fundamental) will help increasing your survival rate in the market especially if you are a moderate to high risk profile. Do your self some market due diligence.
Also, learn risk and money management skills so that you can maintain a healthy dose of gains & losses ratio and making sure that you are not running out of money fast.
Beware of the news and so called “influencers”!
Whenever the news are released, it’s already too late — Market Veteran’s Advice
For anyone who is lazy enough to do their due diligence in understanding the market, following the news is an alternative and easy way to see where the market is heading. Or is it?
As I have touched previously, not all people in the market are good people. There are some, who in order to rise their company’s stock prices started coming out with some “made up” stories and performing a “pump & dump” action (buying their company’s stock on their own to raise its price (pump) and selling it when the desired prices is met by the retail investors (dump)). A less-informed investors may be influenced to buy, which by the time they enter, it’s already too late. And in the end, they get stuck in a loss position without knowing when will the price return to rise up (which is almost non-existent).
The other thing is the rise of so called “influencers” or public figures that suddenly recommending some random stocks that people might never heard of. Again, pump & dump action is at play. These “influencers” are also used and get paid by the company to promote their stocks to raise its price, which later will be sold and leaving the unlucky late investors with their dust.
So, be careful with the news and also these “influencers”. Find yourself a good, reliable mentor, community, or group where you can learn about the market together.
There are still quite a lot of tips that I want to give you and also some do’s and don’ts, but that’s for another time if you like. Again, I’m not an expert and I’m also still learning and will continue to learn as I go.
As a bonus tips, start small and work your way from there. Remember that investment is a long term game and sometimes you win, other times you lose. It’s better to have a sustained smaller profit overtime than win big once only to lose all of it in a swoop.
Thank you so much for reading. If you have any suggestions or would like to voice your opinions on this topic, my comment section is always open. Cheers.
