[Investing for Beginners] Overcome investophobia with these 5 tips

Investing with your own money for the first time is nerve-wrecking — what if the market goes down? When do you stay on-course and when do you cut your losses? What if you end up losing money?

News flash: these fears are normal. Even the most seasoned investors were once just as anxious as you are now.

The five principles below will get you started on the trade:

1. Define your goals (short, medium or long)

Investment should not be an aimless game for bigger numbers but a tool to get what you want in life. Know your objectives well, so you can plan your investment strategy accordingly. How much you invest and the risk you are willing to take should fit your goals, not the other way round.

This is called your "time-horizon" and it's probably one of the most important factors when deciding what to invest in.

First, an example of a short term goal: a travel trip or a new phone within a year. The riskier way to go about is short-term or day trading in the stock market; the safer way is a fixed term deposit with a high interest rate or a money market fund.

The mid and long term goals are the life-changing ones — your first home’s down payment, emigration plan, children’s college fund, etc. These require — and deserve — more time and thoughts in planning. Putting your life goals on hold is no good so make sure you're building a diversified portfolio and investing regularly to mitigate your own risk.

One more thing: review often how achievable your goal is. Chasing unrealistic riches like a conquistador looking for El Dorado will get you nowhere.

2. Watch your daily balance

You end up with what you have not spent. The less expensive your lifestyle is, the more you have to add to your investment fund every month.

Today onwards, try to record your daily expenses to understand your spending behaviour. You may find that the daily $30 coffee for the past year could have been one lot of China Construction Bank (00939) shares in your portfolio. Of course, living a life you don't enjoy wouldn't be healthy or sustainable either, so don’t go overboard with cutting costs and pruning your lifestyle.

3. Always be learning

Many beginners hesitate in fear of failure, missing chances upon chances; others enter the market without a proper strategy or mentality and overreact to irrelevant market fluctuations. Investing is not rocket science, but it’s not child’s play either. Start reading financial news and books, and get familiar with common jargons like “blue chip stocks”, “utility stocks”, “index fund”, “price-to-earning ratio”, etc. Analyses and commentaries are also a great resource to gain a deeper understanding on the movements of markets and individual stocks.

With knowledge comes the ability to identify right investment decisions and the confidence to make them.

4. Keep calm

Unless you are an AI investment bot, be prepared for moments of impulse, waver and doubt.. especially when the market appears to be going down!

In case you are looking for an AI investment bot...

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Your rationality must prevail. A part of you will want unrealistic gains but it's important to be realistic and think about your goals first. As long as you have a diversified portfolio and are taking your goal's time horizon into account, you'll be fine!

5. Prepare for rainy days

Not everything goes according to plan. Unanticipated unemployment and medical expenses will cost you. Without an emergency fund, you may need to prematurely cash out on the investment you have made, taking a toll on your lifestyle and the grander plan for the future. It is highly recommended to reserve at least six months’ worth of living expenses in cash, and top it off with accident, medical and other insurances as you see fit. Remember to always keep a card up your sleeve as you can't be sure what the future holds.

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HK Market

US Market

Robo Advisors

Futubull

Other Fee

N/A

Avg. Trade Cost

HKD 15

Welcome Offer: Welcome Offer: Enjoy up to HK$1,800 welcome offer Register a new account on or before 30th November 2024 by using Planto exclusive promo code “PLANTO” can enjoy the below rewards: 1) Planto exclusive offer : Enter promo code “PLANTO” BEFORE account opening can enjoy HK$200 cash coupon 2) Lifetime commission-free for HK stocks and US stock LV2 real-time streaming quotation services 3) Open an account, deposit a total of HK$10,000 or above into the Futu HK account. Maintain 60 days daily average asset* of HK$10,000 or above to receive : Nvidia (NYSE:NVDA) - 0.5 share or HK$600-equivalent BTC or HK$400 supermarket e-voucher 4) Open an account, deposit a total of HK$80,000 or above into the Futu HK account. Maintain 60 days daily average asset* of HK$80,000 or above to receive : Nvidia (NYSE:NVDA) – 1 share or HK$1,000 equivalent BTC Redemption procedures : Download Futu app; Register an account and go to Activity Centre; Enter “PLANTO” in redemption centre before account opening. Detailed procedures can refer to review article All rewards can be stacked. As of the closing price on 14 Oct 2024, Nvidia (NYSE: NVDA) stock price was US$138.07/share Asset calculation method: Sum of the everyday assets/60 days; Including Cash/ Stocks/ Funds/ Options/ Futures Investment involves risks. The fund price may move up or down. Investor should thoroughly study the funds' offering documents and other related documents (including risk disclosure statements). Terms and Conditions apply

Pros & Cons

Basic Info

Transaction Fees: Commission-free for HK stocks and Cryptocurrency. HKD 15 / trade as a platform fee only. For a HKD 10,000 trade, that's: HKD 15 per transaction (excl. mandatory costs by the HK Exchange, etc.). Tiered pricing also available for people with larger number of trades (min. HKD 1 / trade)
Futu will provide users with free LV1 real-time streaming quotation services (including Hong Kong stocks, options, and futures)
Products Available:: HK, US and China stocks, ETFs and Crypto Currency. Selected funds available via Futu MoneyPlus.
Crypto Currency Trading : : support direct trade with HKD and USD without USDT exchange before trading
Margin Trading: Annual interest rate as low as 3.98% (for advanced investors)
License: Registered member of the HKEX and licensed by the SFC (Type 1, 2, 4, 5, 7, 9)

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Tiger Brokers

Other Fee

Avg. Trade Cost

HKD 0

Welcome Offer: Successfully open an account through Planto’s exclusive link then complete certain tasks from 12th October 2024 to enjoy up to HK$2,700 worth of reward: - Exclusive HK$400 supermarket vouchers from Planto after depositing HK$10,000 , plus: 1. Time-limited Commission-Free Rewards - Permanent 0 commission on Hong Kong stock trades - 0 platform fee for Hong Kong stock trades (until December 31, 2024) - 0 Commission on US Stock Options Trading (until December 31, 2024) - 0 Commission on Crypto Trading (until December 31, 2024) - 0 Platform Fees on Crypto Trading until December 31, 2024) - NYSE Arca Level 2 Deep Quote streaming for US stocks (valid until December 31, 2024) - US stock options Level 1 real-time quotes (until December 31, 2024) - 365-day A-share commission-free coupon (available if you open an account before December 31, 2024) 2. New clients account opening awards, fund more for 60 consecutive days to get more (please refer to T&Cs for detailed qualifications) - Net deposit* HK$10,000 or US$1,500 or above : to activate HK$300 stock voucher (3x HK$100 vouchers) - Net deposit* HK$100,000 or above : to activate HK$600 stock vouchers (6x HK$100 vouchers) 3. New Client Trading Rewards - Complete 5 U.S. stock purchases (excluding fractional shares) within 60 days of account opening : Activate total worth HK$300 Trading Cash Vouchers (3 x HK$100 vouchers) - Complete 10 U.S. stock purchases (excluding fractional shares) within 60 days of account opening : Activate total accumulated worth HK$600 Trading Cash Vouchers (6x HK$100 vouchers) - Complete 20 U.S. stock purchases (excluding fractional shares) within 60 days of account opening : Activate total accumulated worth HK$1,200 Trading Cash Vouchers(12x HK$100 vouchers) 4. Crypto Trading Rewards Complete 5 cryptocurrency purchases within 60 days of account opening : Activate total worth HK$500 Crypto trading vouchers (5x HK$100 vouchers) * Offers are subject to terms and conditions

Welcome Offer: On or before 31 October 2024, apply via Planto by using promo code「614701」, successfully open an account and deposit HK$10,000 to receive : 1) Planto exclusive HK$200 supermarket coupon 2) Extra HK$100 cash rebate 3) Life-time commission free for HK and US stock 4) APR 6% offer for deposit 5) Deposit HK$10,000 for 60 days with 4 tradings : NVDA.US - 1 share OR deposit HK$60,000 for 60 days with 4 tradings : AAPL.US - 1 share New customers who transfer the stock to LongBridge and meet designated requirement can get either 1) AirPods 4 ; or 2) an iPad mini 6 ; or 3) iPhone 16 Pro Max Terms and conditions apply

Pros & Cons

Basic Info

- Transaction Fee: For US stocks, commissions of US$0.0049 per share (min. US$0.99), and platform fees of US$0.005 per share (min. US$1) - 0 commission during promotion period. - For a US$1,000 trade with 5 shares, that's about: US$2 (excl. mandatory costs by the SEC, etc.). - Product available: HK and US stocks and ETFs - Margin trading: Annual interest rate of 4.8% - License: Licensed by the SFC (Type 1, 4, 9)

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Interactive Brokers

Other Fee

Avg. Trade Cost

Welcome Offer: Earn up to 4.83% annual interest rate on positive settled cash balance for accounts with total NAV of US$100,000 or higher. (Accounts with NAV of less than US$100,000 receive interest at rates proportional to the size of the account. Interest rate if for reference only, it may change any time according to market condition)

Pros & Cons

Basic Info

- Transaction Fees: For US stocks, commission fee of US$0.005 / share to US$0.0005 / share - Product available: Stocks, options, futures, currencies, bonds from 150 exchanges in 34 regions including the U.S., Canada, Mexico, Israel, Germany, Netherlands, Japan, Hong Kong, Taiwan, Singapore and India - Margin Trading: as Low as 5.3% - Hong Kong SFC license: SFC license Type 1,2,3

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