Newbie advice

(12-01-2015, 11:09 PM)opmi Wrote: Actually I really mean treating invested money as dead money. If see as spare cash, there is still emotional attachment to it.

My view is that it should be neither. When investing, one should view their capital as being sacred (i.e. prevention of loss is paramount), and therefore strive to ensure downside is minimized and that one has a requisite margin of safety.

Treating is as "spare cash" would mean one may have a flippant or careless attitude towards the money as one has already written it off. Seeing it as "dead money" is also incorrect in the sense that money is fungible, so why should we subject ourselves to mental accounting and compartmentalize the money as "dead" or "well-placed" or put any other label to it? As a rule, money should be protected as it is hard-earned, and everyone should, ideally, view the preservation of capital as being the most important tenet in investing.

(12-01-2015, 11:45 PM)Musicwhiz Wrote:

(12-01-2015, 11:09 PM)opmi Wrote: Actually I really mean treating invested money as dead money. If see as spare cash, there is still emotional attachment to it.

My view is that it should be neither. When investing, one should view their capital as being sacred (i.e. prevention of loss is paramount), and therefore strive to ensure downside is minimized and that one has a requisite margin of safety.

Treating is as "spare cash" would mean one may have a flippant or careless attitude towards the money as one has already written it off. Seeing it as "dead money" is also incorrect in the sense that money is fungible, so why should we subject ourselves to mental accounting and compartmentalize the money as "dead" or "well-placed" or put any other label to it? As a rule, money should be protected as it is hard-earned, and everyone should, ideally, view the preservation of capital as being the most important tenet in investing.

Seeing the invested capital as 'dead' is my way of minimizing emotional baggage that comes with investing/trading. Dont see it as in conflict with 'preservation of capital' tenet.

2 ways of not making money :-

1) Wrong on the investment thesis/valuation
2) Right on the investment thesis/valuation, but sold out due to emotional pain of unrealised loss.

Hope to minimize (2) through this 'mental compartmentalization'

I agreeded with the point that it has to be scared hard earned money. Once we have little emotional crack on that principle, we will be careless in our investment.

This is very personal thing, it all depending on your risk appetite, the more aggressive you are, the more you willing to risk your money. But since you have said whether "you should keep half and invest half", I guess this is already your risk appetite level, just follow your gut felling.

Quote:Most people in their lifetime (including me) are most probably going to earn more from their fixed income jobs, rather than through investing.

It is not only about asset and financial freedom. There are generally more satisfactions with having a good job.
I mean you might feel happy after achieving financial freedom but that happiness will not last for the next 20-30 years.(probably half a year or less..haha)
So, it might not be a good idea to sacrifice a good job/education/opportunity and put more effort into personal investment.

(12-01-2015, 11:45 PM)Musicwhiz Wrote:

(12-01-2015, 11:09 PM)opmi Wrote: Actually I really mean treating invested money as dead money. If see as spare cash, there is still emotional attachment to it.

My view is that it should be neither. When investing, one should view their capital as being sacred (i.e. prevention of loss is paramount), and therefore strive to ensure downside is minimized and that one has a requisite margin of safety.

Treating is as "spare cash" would mean one may have a flippant or careless attitude towards the money as one has already written it off. Seeing it as "dead money" is also incorrect in the sense that money is fungible, so why should we subject ourselves to mental accounting and compartmentalize the money as "dead" or "well-placed" or put any other label to it? As a rule, money should be protected as it is hard-earned, and everyone should, ideally, view the preservation of capital as being the most important tenet in investing.

The reason to highlight the vested capital should be spared cash, is to ensure a long term perspective in investing. A principle in value investing, which to ensure we wouldn't be hurt by short-term irrational of Mr. Market. In layman term, it means never invest with short-term debt, or fund you might need in near future e.g. emergency fund.

It shouldn't conflict with the statement of "view the preservation of capital as being the most important tenet in investing". IMO, the statement probably the most important principle for value investing, where the compounding relies on.

(13-01-2015, 08:56 AM)yeokiwi Wrote:

Quote:Most people in their lifetime (including me) are most probably going to earn more from their fixed income jobs, rather than through investing.

It is not only about asset and financial freedom. There are generally more satisfactions with having a good job.
I mean you might feel happy after achieving financial freedom but that happiness will not last for the next 20-30 years.(probably half a year or less..haha)
So, it might not be a good idea to sacrifice a good job/education/opportunity and put more effort into personal investment.

Financial freedom, and satisfaction of a good job, isn't necessary mutually exclusive. You can achieved financial freedom, and yet working on a good job.

A good job should be a job where you are looking forward for Monday mornings, and having blue during weekends. It might not necessary a highly-paid job.

The best part is, you have more freedom in the good job. You will not fight for pay, promotion etc, and chose to enjoy the good job fully.

Agree. Having a job keeps the mind fresh and get to know motivated individuals and mentors who can give you new ways of looking at things. Got to stay in work and business to see how the economy trend is shifting.

It's important to not just rely on income from job thinking it is secured forever unless your skill set can never be replaced which is impossible. Remember there are robotics coming up. So its crucial to also have a sideline business which drives you steady income. Find one that you can do after work and on weekends to maximise your youth to earn money. Otherwise when age catches up and with more commitment, it will be harder to pursue such opportunity. Time never waits

(13-01-2015, 09:12 AM)CityFarmer Wrote:

(13-01-2015, 08:56 AM)yeokiwi Wrote:

Quote:Most people in their lifetime (including me) are most probably going to earn more from their fixed income jobs, rather than through investing.

It is not only about asset and financial freedom. There are generally more satisfactions with having a good job.
I mean you might feel happy after achieving financial freedom but that happiness will not last for the next 20-30 years.(probably half a year or less..haha)
So, it might not be a good idea to sacrifice a good job/education/opportunity and put more effort into personal investment.

Financial freedom, and satisfaction of a good job, isn't necessary mutually exclusive. You can achieved financial freedom, and yet working on a good job.

A good job should be a job where you are looking forward for Monday mornings, and having blue during weekends. It might not necessary a highly-paid job.

The best part is, you have more freedom in the good job. You will not fight for pay, promotion etc, and chose to enjoy the good job fully.

Certainly, by all means to go multitasking.
But, if a first class honour is within reach by putting more effort into your final year project, I suppose it should rank higher than part time investing unless you already have a few millions of investments.
Or, putting in more effort to be recognized in your job rather than being a faceless worker in a company.

(11-01-2015, 05:51 PM)WBJR Wrote: Hi all,

I am just 20 year old and quite a newbie in investing. I have
only have a small capital of 7k which mostly by savings. Any advice

Since there are many old bird here. I have a few questions.

- Should I deploy half of it and keep half of it in case just in case of the next crisis. If not, I am afraid that if crisis happen, I do not have any war chest to deploy?

-How many stocks to Invest with 7K?

Thanks

Hello WBJR

Yes, your post has stirred up lots of views!!

Perhaps you might consider starting off with a very simple approach:

1. Allocate 50% of your 7K for your 1st foray into stock investments.

2. Create criteria on stocks:
(example for dividends that beat fixed deposit rates over 1 year)

3. Shortlist at least 3 companies that meet your criteria

4. Open a securities account with CDP

5. Open a trading account with a brokerage with online trading. Many buddies here have suggested lots already!

6. Open a bank account and deposit your 7K and link the account with the CDP and Brokerage. (Your bookeeping will be neater with a separate bank account)

7.Execute your 1st purchase!

Once the purchase is completed, understand how different fees, charges operate, how the trading software behaves. Sit back and watch:

Big picture - Industry trends
Small picture - Company annoucements, financial statements,

Monitor as often as you like but a general rule is quarterly within a calendar year and also the company's financial year.

Meanwhile, put aside some money into the bank account used for trading. Dividends recieved into this account may be withdrawn or left to help build your war chest!!