In a recent interview with Warren Buffett on CNBC, Warren Buffett gives some good investment advice. It is a reminder of the value investing long term approach that he has always been advocating.
[Free Ebook] How should you invest your first $20,000?
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
1. Your investing decisions should not be affected by what’s happening in the world
Warren Buffett says that even if a war is about to break out, it wouldn’t stop him from investing. That’s sound advice as most of the time our local markets are generally not fundamentally affected even if there was a war or political turmoil going on elsewhere in the world. There are so many investors who panic at every sight of negative news headlines, they are probably better off not reading the world news. In fact, one should take the chance to buy stocks at a discount.
2. Look at Stock Market downturn as an opportunity rather than a loss
It is understandable that many people are focused on short term and get depressed when their invested stocks go down in value. However, if they believe in the fundamental value of the company, they should use the opportunity to buy more instead as the long term trend of stock market is generally upwards.
3. You don’t have to be an expert to do well in investing
Warren Buffett has always been a strong advocate of exchange traded funds (ETFs) that track the index such as S&P 500. For retail investors, it is the lowest cost and a simple manner of getting a well diversified portfolio. There is no need to be an expert at choosing stocks as the basket of stocks are already determined for you.
4. Stay invested for the long run
Instead of looking to lock in short term gains, look to invest in the company over the long run. Not only would it be less difficult as compared to timing the stock price, investing in a company with a good business model and strong growth is the way to build a long term portfolio to achieve financial goals.
About the Author
Calvin Yeo is the Managing Director of Doctor Wealth Pte Ltd (www.drwealth.com), which is an online financial planning platform. He is also a Chartered Financial Analyst (CFA) as well as Certified Financial Planner (CFP).
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