Sheng Shi Chiam, Personal Finance Lead of Endowus and Sudhan P., Content Strategist (Investment Lead) of Seedly, talk about some of the common investment mistakes made across different financial products, and how we can avoid those pitfalls.
4:26 Speculating during market volatility
24:40 Common investment questions on Seedly
38:50 Pursuing instant gratification when investing
41:33 How lack of patience is a mistake
49:09 Introduction to Endowus
1:00:18 Panic selling during financial crises
1) How can we avoid seeking instant gratification and not time the market?
Sheng Shi: Using a platform that automatically executes the trade for you in a consistent manner helps prevent us from decision paralysis and placing buy orders that are too low to be executed. Even if we use a digital or roboadvisor platform, we are still inclined to look at the market and try to do something about it.
Understanding that investment is a long-term endeavor and that market timing is ultimately futile effort can prevent us from trying to get instant gratification through our investments.
We can also try to meaningfully spend our time instead of overanalysing market trends.
Sudhan: A more practical way is to get your partner to change your brokerage account password!
2) What is a good strategy to deploy capital in a volatile market? Are weekly investments the way to go in February and March?
Sheng Shi: As much as possible, we should avoid this. Monthly income, net of personal expenses, should be invested consistently so that there is no accumulation of wealth. As the market tends to trend upward over a 1-year period, it is generally better to invest as a lump sum rather than spreading your investments over a longer period of time. You may want to invest 50% of your capital at the start, then split up the rest of the investments over 3 months, investing it in a monthly or weekly basis.
3) China halts US farm imports, threatening trade deals - it seems like tension between the 2 superpowers are escalating again. How will investors be affected?
Sheng Shi: As a passive investor that believes in the efficiency of the market, I do not think it is wise to act upon this kind of news. Equity prices should also have reflected the sentiments regarding trade wars. I do not believe that trade tensions like these impact a long-term investor.
Sudhan: I also do not have a view on how macroeconomic policies affect my investments. I believe that believing in quality stocks over the long term is not affected by short term trade tensions. Based on my investment experience, I have not met cases where my investment decisions are affected by macroeconomic views. Also, it is important to stay diversified across sectors and geography so that you have a wide exposure and spread out your risk.