Developing good investment habits
Investing is quite similar to how we lead our life – we need discipline to control our behaviour and reduce the chance of committing mistakes. Developing good habits does not guarantee return, but it can help control risks.
Follow these good investment habits at all times and turn them into your second nature. You too will be able to handle your investments as intended.
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Calculate your capital
Use the "remainder formula" to calculate how much you have to spare.
The less money you have to spare, the more conservative your investments should be. Set a ceiling on all investments you make.
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Establish your objectives
Your investment objectives must be clear and achievable.
Ask yourself: How much time do you need to achieve the objectives? What annual return are you aiming for?
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Diversify your portfolio
Hold assets that are unrelated to each other or even those that move in opposite directions.
No single investment should take up a high proportion of your overall portfolio, for example, over 50%.
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Choose the right product
Avoid products that are complicated in structure and operation; avoid leveraged investments.
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Limit loss
The key to setting a stop-loss order is execution. You need to act on it.
There is no standard level for setting stop-loss price; it depends on the amount of loss that you are prepared to bear.
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Mind your investments
Read trading documents issued by financial institutions as soon as you receive them and keep them safe.
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Maintain a contingency fund
Set aside an amount equivalent to 6 to 12 months of living expenses. The fund must be highly liquid, and must not be used for investment.
