Newbie's Blog: Strategies for the year ahead 2
As this year ends, I am struggling (yes, struggling) to reflect on what to do on the year ahead. I'm a middle class guy (not born with a silver spoon or anything) with a mortgage loan but a stable job (just middle level). Of course, I'm always thinking about investing because like almost everyone, I want to break out of the rat race. Although this is my 3rd article under this topic, I'm constantly thinking about how I can improve my strategy for new year, yet reinforcing some principles so that I have some guidelines to invest by. In my situation, se of the primary things intend to do are:
1. Having a mortgage to pay and a family to feed, prior to investing, it is important for me to allocate a certain amount for savings. I have to take into account the higher cost of living next year, especially for basic food items and transport (I take a BMW, bus-MRT-walk). I have decreased my frequency of private hire transport as I want to save more to invest more. As taxes are rising next year (by 1%), I will also spend less in restaurants, save for special occasions like CNY, etc. This may mean eating at home more.
Oh yes, I also have to prepare for higher interest rates on my mortgage, which could mean a little less for investing.
2. With the basic set aside, comes investing. Like what I learnt mid last year, I intend to continue holding my stocks for the long term. I sold off some of my stocks this year so as to take advantage of the fall in stocks. I know, I know, that I shouldnt time the market but I sense the fall coming. This has worked for some of my portfolio. Now, as I buy them back, I am also waiting for the correct entry price. This will allow me to hold them for the longer term and prepare for any fluctuations (psychologically, I mean, when it drops).
3. I also plan to DCA a bit more and to time the market less. Look at next year, while the frequency of rate hikes will still be periodic, instead of selling off my stocks, I feel it is better to accumulate them when the prices fall. I anticipate that the market could improve towards the end of the year but again, this is only a forecast. Likewise, I only plan to buy in small lots. While this may cost me more in admin costs, I find this better to weather again large drops. You can see that I would rather adopt a slow but steady pace as opposed to an "All-in" mindset.
4. Buy red, not green. I am learning to hold off the temptation to buy when a stock is rising and purchase it only when I think it's low enough. Of course, this is only if I think that the stock has room to grow. I have in mind $Grab Holdings(GRAB)$
5. Change is constant and we need to learn to adapt. This is an oxymoron because I'm learning to hold on to stocks for the long term. Related to point 1, I have learnt that investing in stocks requires a long term perspective over the years. This may mean being steadfast in holding on but adapting by choosing different stocks when macro conditions change. This year was an eye opener when covid struck and the war hit but this all means that it's important to choose when to buy and what type of stocks to buy (this year has been a good year to buy defensive stocks like $DBS GROUP HOLDINGS LTD(D05.SI)$ , I feel). Therefore, be steadfast but adaptable and ready for change!
6. Lastly, to continue learning. I honestly hope I will be able to control my risks so as not to be disappointed if my fundamentals are wrong. This year, I almost quit once when I lost a lot of money in June-July ($800 in Tesla, sigh). Investing is a journey and you can only learn along the way and if you apply. I keep telling myself I shouldn't quit (even if I'm down 3k today), otherwise it would not be worth it. This means only investing in what I can lose and being ready to cut loss when it is necessary. Again, this is something I am continuously learning.
In summary, I hope to be able to give a review next year end again to see if my strategy needs tweaking. Thank you for reading!
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Note there is something call momentum trade or buy when a stock break out of a trend line. just another point of view for your consideration. :)