Investing Advice

 

One of the worst things you can do in the investing is go in with large amount of money. Most retail newbie investors want to come in the market when they have accumulated significant amount of money and ask their friends - what should I buy? That significant amount usually is around 10,000$. Second mistake that they do is - buy something which is usually in the news. It could be Tesla or Apple or Nvidia (in today’s time). 

You dont start investing with big amount and you certainly dont put that in one or 2-3 big names that you know. You start investing with extremely small amount. And you invest it on every week - month basis. Thanks to Robinhood - now we can invest in fraction stocks - so you can jump in the market in the very first 5$ you make. Put 1$ (20% of your 5$) in the market. And Observe what that 1$ is doing. If it is growing to 1.10$ in a week - you are in the right track - invest a next 1$ in it. If it goes down - wait - you could be wrong - Find some other stock and so on. 

“Time” in the market is more important than timing the market. Grow iteratively but consistently. Make investing like a habit - just like you brush your teeth in the morning - same way - for every 5$ you earn - put 1 in the market. Diversify to 20-30 good companies. Give time for your dollar to do the work. In 5-10 years - market will reward you handsomely. 

Dont wait till you have 1000$ or 10000$ or 50000$ - Do it from the very first paycheck you get. 

When you are picking a stock - Dont think you are smart or someone you are talking to or giving advice is smart (including me). Top 10 companies in 2000 were Microsoft, GE, Cisco, Walmart, Exxon, Intel, Lucent, IBM, Citigroup and AOL…..Apart from Microsoft, all others are underperformed, so whatever 10 companies that are top and trending such as Tesla, Meta, NVDA, Apple etc, may not be top 10 companies 20 years from today. 

Let me give couple of examples: A friend had 5000$ to invest, at that time, Amazon stock price was 2400$….so he bought two shares….Guess what happened? Amazon tanked after that, went to 1200$…and it took 2 and half year plus, when it came back to 2400….a friend was frustrated enough to hold it for no gain, when Amazon went to 2600$ …he sold for cheap gain…only to see Amazon keep going higher….Again same two mistakes…Go all in (not realizing you are probably buying at the top)….

Second example: A friend bought his first stock - Tesla - thinking Tesla is the future…before Split (after split price of 440$ now)….Its been 3 plus years, Tesla is still trading at half the value. Whenever I meet him, I talk about him and his ego says to me “I am Diamond Hands”….sure …I have seen that movie too many times.