12 Investing Tips

I bought my first stock in 2010. I joined investment banking in 2012. I worked as an analyst for six years. I quit the rat race in 2018. I wrote my financial blog dividendtitan.com in 2020. And yes, along the way I made a bit of money.

Here are 12 investing tips I’ve learnt after having invested for 16 years, including my previous career as a research analyst. These tips can help you invest safely and profitably for years to come.

1. When you need to cut loss, you cut loss. No one enjoys taking losses when a stock’s fundamentals go bad. However, the great fund managers I’ve observed know when to cut losses and move on. This frees up mental energy from worrying. This frees up capital otherwise otherwise stuck in lousy investments. This frees up mental space to look for new, profitable ideas.
   
   
2. People act strange when they start making profits on their investments – a small piece of advice that serves me well as I continue to manage my own money.
   
   
3. I rather own 100 stocks than just 4 stocks.
   
   
4. Cheap leverage is dangerous. Because what kills you is when the “spread difference” between what you earn on an income-generating asset versus the interest cost you pay rapidly shrinks – example borrowing money to bet on Singapore REITs when margin was cheap, before this sector crashed during the COVID-19 pandemic.
   
   
5. Don’t need to be perfect in investing. You really only need to be right 60% of the time.
   
   
6. Riding big, popular trends looks easy – but you never know when the tide will turn. When it does, it unravels faster than most investors expect. Recall Singapore’s oil & gas bond defaults, China property debt bubble, 2022 tech stock boom and so on.
   
   
7. Unfixed income (dividends) beat fixed income (bonds).
   
   
8. Saving creates discipline. When I first started working, I saved at least 42% of my gross pay. I continued to increase my savings rate, while maintaining my personal expenses. This habit mattered more than any single investment decision I made.
   
   
9. I don’t understand how most investors pay excessively high PE ratios for a stock. This “pay for growth at any price” rarely works out – eventually leading to disappointment. How often do you get the next Amazon, or the next Facebook? It’s one in 10,000. Spotting them requires exceptional judgement. Buying high-quality assets can still be a bad investment if you overpay.
   
   
10. You can invest well without technical charts. But you cannot invest without first understanding a stock’s underlying business – aka fundamental analysis.
    
    
11. I rather own a portfolio of bonds than buy a bond ETF. When you own a bond directly, you know the coupons you’ll receive. More importantly, you’re legally guaranteed to get your principal back. Bond ETFs don’t work the same. You’ve no control how ETFs buy and sell bonds – missing out on the benefit of a bond maturity.
    
    
12. No one looks after your money better than yourself

Which investing tip resonates with you? Write to me by hitting “reply” to this email willie@dividendtitan.com. Even better, send me your own list too!