5 Things I have Learned from my first 1.5 Years of Investing in Stocks

I want to start this post by saying that I  am still very much learning. This has been my experience and  things I have learned that I wish someone had taught me from day one. I am not going to publicly recommend any stocks at this stage, as I don’t have the knowledge or experience in the field to share such tips. Hopefully the tips I do provide can help you learn and do your own homework so you can make informed decisions for yourself. So let’s jump in:

⁃ Number one is a great place to start if your just starting out or interested in learning about stocks: Have a plan!

Maybe you want to invest in a sector, or maybe you want to develop a diversified portfolio. Either way, don’t just randomly start buying stocks that you hear or read about. On the same line don’t just buy ones that are recommended because they’re ‘cheap’ or ‘a bargain’. Rather look for stocks with good value that fit into your overall strategy. Are you looking to invest short-term, mid-term or long-term? Do your homework and know the risks and advantages of each stock. Are you investing in the local market (ASX for Australians) to save on costs and exchange rates or do you want more exposure to global markets? Ask yourself these questions and consider your options before jumping in and ‘hoping for the best’. There might be creative ways to do both if it fits in your strategy, such as investing in an ETF trading in USA stocks but listed on the ASX.  Will you have a broker or buy directly? I suggest having a low cost broker while you start out so that you have some support while learning the ropes.

⁃ My second tip: Don’t buy the hype. Don’t panic buy and sell.  Set rules.

 I know that this probably sounds like common sense, but when you see that little line creeping up or down, the fear of missing out never feels so real! I’ll give you an example, I just sold a stock that had been losing for the last year. I set a rule of once it hit under $5/share, I would sell. I sold it two days ago, and ironically two days later, after a year of declining, it gained drastically. Is it disappointing? Yes. Am I glad I followed my rule? Yes. Here’s why:  If I have rules, it means I have done my homework and know what I’m willing to lose and gain. I won’t get sucked into buying or selling at a whim or holding out for things to get better or worse with no confidence of either. I’ll give you another example… a more positive one so you don’t walk away discouraged. I bought an ETF during Covid that I knew was undervalued, but I didn’t buy it straight away. I did my homework, followed the positive rebound for three days before I bought. Am I still making money from that investment? Yes. Could I have made more if I hadn’t waited those three days? Yes. For myself, the confidence in my rule was worth it. Your rules may be different to mine, and I know many people wouldn’t have bought or sold how I have, but make rules that you can trust, and follow them.

⁃ Number 3: Know what you’re buying into. 

Seriously! I don’t care if it has risen 12% in the last 4 hours. If you can’t explain what the business is or how they make their money, and you buy it- you’re not investing, you’re just gambling. If you don’t know how to do this starting out or are time poor, ETFs and blue chip stocks are a good place to start. Even then, take the time to see what the business is and how they make their money. You’ll thank yourself in the long run!

⁃ Tip Number 4: Don’t invest what you can’t afford to lose. 

This has been one of the best pieces of financial advice I have received so far and like most of the others, it can seem like common sense. For myself, starting out with little information or understanding of the stock market, I needed all the common sense I could get! Don’t pull money out of your mortgage, grocery allowance, kids’ school fees, bills, tithes or gifts  to invest with. (This applies to stocks but I also believe all for all investing). If losing what you invest would ruin you, my advice would be that you can’t afford to invest it! Focus on trying to grow wealth in other ways first,  like starting a small business or taking some after hours work. I only invest money that I consider to be spare after all the other things I mentioned. It’s a hobby for me, and while I think it’s a great resource, I don’t think it’s worth losing the other things I mentioned above. You still need to provide for your family, help others, live surrendered and enjoy life. It’s a balance.

⁃ Lastly, don’t stop learning and have fun.

 If it’s extra change, be wise and invest it well, but don’t lose nights of sleep over it. Learn from your mistakes and successes, as well as others’.  If you do this and be patient, it will grow.

I hope that these tips are helpful in getting you started. If your’re giving this a go for the first time or simply gathering information, feel free to ask me any questions in the comments. I’ll be honest if I can’t answer them! If you’ve been doing this for a while or are experienced, hopefully you’ve enjoyed reading this from a less wise and experienced learner. If you have any tips or suggestions for others you would like to add, feel free to add them to the comments too. 

As always, appreciate you coming and hanging out with me. 

Lots of love. 

Dano

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