Investing 101: What is your goal?
This post was supposed to be the very first post that I ever wrote about investing.
Now that I have a mentee, I have more motivation to write educational posts about investing haha. Like I have always said, I am still in the learning process and am still a lousy investor, but I am happy that somebody insisted me to be his/her mentor.
Anyways, chit-chatting aside, time for some "lectures."
Just like any other things in life, you also need a goal when it comes to investing.
What are your goals exactly? Why do you need to grow your money? Are you looking to invest so that 5 years from now, you can put down a down payment on a house? Or do you just want to make some money on the side to buy dinner for this weekend? Or will you be happy just looking for 20% gains this year?
I remember during the Bitcoin craze earlier this year in May, I put in $1000, and withdrew into cash for an almost 100% return. After that, Bitcoin just kept going banana. The crypto-currency just couldn't stop rising. I was really in a bind back then. I was scared to lose my money.
1) If I put the money back in to buy Bitcoin, and if it crashed again, I would lose a big amount of money.
2) If I stayed out and Bitcoin kept going up, I would beat myself over inaction and missed opportunities.
As you can see, I was a miserable person at that time whichever way the price of Bitcoin went. I would feel unhappy, and would beat myself up either way.
You see my point? If you know what you want, you will not feel too bad if you miss the rise of a stock, and you won't feel too bad if the stock you invested in goes down in price, either (because you have already mentally prepared to lose money).
For example, if you buy a stock at $10, and you want to sell it at $15, you won't feel too bad if after the sale, it goes up to $18. After all, you have already realized your goal.
You also need to visualize what you enjoy doing when it comes to the stock market too. Do you visualize yourself getting in and getting out everyday, trying to scalp money here and there being a day trader? Do you enjoy the thrill of investing in a penny stock to see it rises 50% per day (but you would have to keep a constant watch on it)? Or maybe you just want to put the money in, forget about it, just to someday open your brokerage account to see a nice surprise rise in your stocks' value.
Now I don't know what you want, but I want a good night sleep. I don't want to constantly worry about something that is not there. I want to feel happy and confident in myself and have conviction in what I am doing. I want the feeling of peace and freedom in this life, and I want to live in the moment and appreciate the time I spend with my friends and my loved ones. Lastly, I see myself sitting in the park with my dearest without a care or any worldly worries. These are the guiding values that determine my trading style and strategy.
What are your core values?
The more insecure you are about what you do, the more you worry. So know yourself, and know what you want, so you have conviction in the stock market, as well as in whatever other things you do in life..
I personally think that the stock market teaches me a lot more than just about money. It teaches me to understand myself, understand what I want, understand my greed, and what my limitations are. The stock market also gave me of a lot of life lessons. The more I dwell in it, the more I realize more universal rules, or maybe just some common sense in life.
Maybe my next post will be about stock and philosophy :P
Now that I have a mentee, I have more motivation to write educational posts about investing haha. Like I have always said, I am still in the learning process and am still a lousy investor, but I am happy that somebody insisted me to be his/her mentor.
Anyways, chit-chatting aside, time for some "lectures."
Just like any other things in life, you also need a goal when it comes to investing.
What are your goals exactly? Why do you need to grow your money? Are you looking to invest so that 5 years from now, you can put down a down payment on a house? Or do you just want to make some money on the side to buy dinner for this weekend? Or will you be happy just looking for 20% gains this year?
I remember during the Bitcoin craze earlier this year in May, I put in $1000, and withdrew into cash for an almost 100% return. After that, Bitcoin just kept going banana. The crypto-currency just couldn't stop rising. I was really in a bind back then. I was scared to lose my money.
1) If I put the money back in to buy Bitcoin, and if it crashed again, I would lose a big amount of money.
2) If I stayed out and Bitcoin kept going up, I would beat myself over inaction and missed opportunities.
As you can see, I was a miserable person at that time whichever way the price of Bitcoin went. I would feel unhappy, and would beat myself up either way.
You see my point? If you know what you want, you will not feel too bad if you miss the rise of a stock, and you won't feel too bad if the stock you invested in goes down in price, either (because you have already mentally prepared to lose money).
For example, if you buy a stock at $10, and you want to sell it at $15, you won't feel too bad if after the sale, it goes up to $18. After all, you have already realized your goal.
You also need to visualize what you enjoy doing when it comes to the stock market too. Do you visualize yourself getting in and getting out everyday, trying to scalp money here and there being a day trader? Do you enjoy the thrill of investing in a penny stock to see it rises 50% per day (but you would have to keep a constant watch on it)? Or maybe you just want to put the money in, forget about it, just to someday open your brokerage account to see a nice surprise rise in your stocks' value.
Now I don't know what you want, but I want a good night sleep. I don't want to constantly worry about something that is not there. I want to feel happy and confident in myself and have conviction in what I am doing. I want the feeling of peace and freedom in this life, and I want to live in the moment and appreciate the time I spend with my friends and my loved ones. Lastly, I see myself sitting in the park with my dearest without a care or any worldly worries. These are the guiding values that determine my trading style and strategy.
What are your core values?
The more insecure you are about what you do, the more you worry. So know yourself, and know what you want, so you have conviction in the stock market, as well as in whatever other things you do in life..
I personally think that the stock market teaches me a lot more than just about money. It teaches me to understand myself, understand what I want, understand my greed, and what my limitations are. The stock market also gave me of a lot of life lessons. The more I dwell in it, the more I realize more universal rules, or maybe just some common sense in life.
Maybe my next post will be about stock and philosophy :P
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