A guide to investing.
Shenzhen Translation Bureau is its compilation team, focusing on technology, business, workplace, life and other fields, focusing on introducing new foreign technologies, new perspectives and new trends.
Editor’s note: Novices are always at a loss when they first enter the investment field and pay a painful price. Based on his rich experience, the author of this article gives four suggestions on how to get started with investment. Whether you are a student or have just entered the workplace, you can learn without any savings. After reading this article, I believe you will look farther. Article translated from Medium by Jeremiah Lam, original title 4 Important Resolutions for New Investors.
When we enter a new decade, it is easy to be dazzled by the optimism brought by the New Year. We have sketched out all our determinations and what we want to achieve within 12 months.
However, we all know that many determinations will soon be half-way (look at my fitness membership card), mainly because we have not set clear goals to tell ourselves that we are getting closer.
If you can’t measure it, you can’t improve it. ——Peter Drucker
So, in this article, in addition to sharing solutions on how to become a better investor in 2020, I will set some simple goals that you can follow to help you move forward.
If you are new to the stock market, these simple methods may be the most useful, but for more experienced investors, they can also be a timely reminder.
So here are five important answers to make you a better investor in 2020.
1. Save money, save a lot of money
Although investing always requires a lot of research and analysis to succeed, we often overlook the first step of investing-your ability to save money.
When you do n’t have the money to invest at all, reading all books, delving into charts, or major financial ratios really does n’t make much sense.
If you have problems saving money, then it may be time to re-examine your spending habits and see where the money is being spent.
YesIs it because you spend too much money on shopping and entertainment? Is it because you still pay sky-high interest for credit card debt?
Or because you are not very good at playing Candy Saga, but you have been buying life extensions, colored bombs and lollipop hammers? (Note: “Sweet Saga” is a gem cube developed by British online game company King Digital Game.)
What makes you rich is not your salary, but your consumption habits—Charles A. Jaffe
If you run out of money and hamper your ability to save money every month, maybe it’s time for you to step back and ask yourself if it’s worth it to affect your financial security.
Of course, if your budget is currently tight due to health issues or other emergencies, that’s another matter entirely. But if not, the first step to becoming a successful investor is to start saving.
2. Choose an investment framework and stick to it
Once you have investable funds, it is important to know how to use them and how to make a long-term investment safely. Although not saving money is bad, losing all your hard-earned money after saving money will make you feel worse!
So be sure to learn how to research and analyze large companies, read financial statements, calculate the intrinsic value of stocks, and manage risk.
To do this, you need an investment framework, a step-by-step process you can follow to help you find the best stock investment for your portfolio. Without a clear and reasonable investment framework, you can easily fall into the trap of making your own decisions.
For example, if you buy a stock just because you are afraid of missing out on the potential price rise of the stock, then what happens behind you is that you obey your greed.
If you sell a stock just because you are worried that its price will continue to fall, and you just act on your fear. This is why many investors end up buying high and selling low.
So, in order to avoid situations where you may be influenced by emotions, it is important to have an investment process that relies on facts and data to help you make informed decisions.
3. Read the annual report
Before you invest in any stock, it is important to read the annual report to conduct a comprehensive assessment of the company. It will explain to you the company’s business operations, risks, corporate governance, financial performance and more.
However, reading the annual report should not stop at the moment you buy your stock. It is important to keep reading each published annual report to track your investment.
Key sections to read and follow include:
Chairman / CEO information: Lets you have a general understanding of the company ’s performance and prospects
Business-related information: Provide you with detailed descriptions and updates for each business unit
Risk factors: The main potential risks that may affect the company in the future
Financial data: Includes an income or cash flow statement and a balance sheet. In addition to assessing financial performance, pay attention to any significant changes in any project (such as a surge in debt) and the reasons behind them
Salaries of executives or directors: Understanding how much directors and key management are paid
In addition to reading the annual report, keeping an eye on the news and quarterly results can also help you stay on top of the latest developments. So if you haven’t done so already, read the latest annual report for each stock in your portfolio and insist on doing so every year.
4. Read a new book on investment
Investment is a skill you can never really stop learning.
Although the principles of value investment (for example, staying within your ability, or long-term attention) can withstand the test of time, the business environment is constantly changing. As investors, we must follow the development of the new economy And adapt to the rules of the new economy.
For example, the largest companies of the 20th century came from the oil, steel, utilities, telecommunications, and automotive industries. Today, this list is dominated by technology, and companies such as Apple, Microsoft, Alphabet, Amazon, and Facebook have reshaped the way businesses do business in the 21st century.
It can even be said that the greatest investor of all time-Warren Buffett, who is nearly 80 years old-is still an active learner.
Reading 500 pages a day like this, this is how knowledge works, just like the compound interest effect. All of you can do it, but I promise not many people can really do it. ——Warren Buffett
Warren Buffett is known for avoiding technology stocks for a long time. But if you look at his Berkshire stock portfolio, you’ll see that it holds the most stock is Apple Stock. Berkshire also holds stakes in Amazon and global domain name provider VeriSign.
While reading 500 pages a day may be a bit difficult for those of us who are not full-time investors, we should still regularly increase our investment knowledge. First, you canCommitted to reading at least three new books on investment this year.
If you are looking for ways to further improve your investment ability, I hope that these methods can give you a certain incentive and provide you with some directions.
Translator: Yoyo_J