"An investment in knowledge pays the best interest" Benjamin Franklin
Before you start the investment journey, spend time investing on your knowledge. In today’s environment, there is no shortage of educational materials. All you need is spend the time to find out. I normally get up early in the morning and spend at least 30 minutes enriching myself on investment and personal growth via reading books, financial magazines and watching YouTube. It is not a lot but if you do it over many months, you will equip yourself a lot better than others. By taking an interest in different subjects, it will also give you a better idea the type of investment vehicle that best suits you.
An Obsessive Learner
A few self-development suggestions for you to follow:
Read extensively particularly the famous investment books of gurus and successful fund managers. Some immediate names come to mind includes Warren Buffet, Charlie Munger, Peter Lynch, Benjamin Graham, Ray Dalio, George Soros etc.
Each of these investors has their unique investment style. It is best you find the style that suits you most.
Subscribe to investment journals and websites on investment subjects you are interested. These subscriptions can be a bit expensive. However, investing on learning will always give you a bigger return.
Talk to trusted friends who are knowledgeable. Create opportunities to meet them to bounce ideas. Use them as ideas for further research.
If you are investing on equities, make sure you know the company background you are investing. Understand their business model i.e. how they generate their income and their business dynamics. Do their business have a competitive advantage? Do you have a clear idea why you want to invest in them?
Study their annual reports and attend their shareholders’ meetings. It can be difficult to understand the full context of the corporate’s annual reports without some financial background. However, this knowledge can be learnt if you want to be a serious investor.
Let me give you an analogy. Say you are buying a property for the first time. What actions will you take? Will you research and do the site inspection? Will you find out if it is a good neighbourhood or environment? Will you research which units have the better view? Is the price attractive? Use this same diligent approach for your investment and you will not go astray.
The classic book whereby Warren Buffet said this is the only book you need to read on investment.
“The Intelligent Investor” by Benjamin Graham
If you are willing to put in the time and efforts to learn and digest his teachings, this is an invaluable book to read. However, this book can be heavy reading for someone who is new to investment. There are plenty of YouTube videos which highlight the key learning points that you can use as a starting point.
To find good companies, research on the composition of the very successful funds by Warren Buffet, Bill Gates, Cathie Wood and Ray Dalio etc.
Find out which stocks represent their biggest holding and start from there.
To identify industry market leaders, you can also go through the detailed composition of some of the ETF funds. Normally the market leaders in the growing industries are good choices. Some actively managed ETFs will inform you of their recent trading activities after you register to their website subscription. This can be useful information to know which companies they are investing and exiting.
Keep abreast of the macro- economic trend through reading magazines, newspapers and online articles. Study the latest trend regarding the countries and industries that are doing well.
This is particularly useful if you are investing on ETFs (Exchange Trade Funds). This is an investment vehicle I like very much which is most suited for people who do not have time to do detail research. Spend time to understand the subject as there are plenty of materials on the internet.
The Importance Of Journaling
There are major benefits in journaling. Whenever you identify a useful investment quote or advice, immediately write them down in your note book.
After you have researched a company, write down your thoughts and the research opinions. They will become very useful as future investment tips.
Review your journal periodically and identify how your investment style and approach have changed over the years. This is a good opportunity to soul search whether you are progressing in the right direction.