I spent five years learning to invest and I regret waiting so long

Date: December 28, 2022

First published in Straits Times on 25 December 2022

Around the end of every month, I do a review of my stock portfolio, which I started building this year.

I still remember the joy I felt when I bought my first stock – in cryptocurrency exchange Coinbase for US$70 (S$94), which I thought was a huge discount on its 52-week high of US$281.99.

The shares have since fallen to US$36.60, just above the 52-week low of US$34.71.

Sometimes when I check my portfolio, I find myself wishing I had timed the market better, buying stocks before they appreciated in value or selling them while they were on a rally.

I have perfectionist tendencies, and that is why, despite learning how to invest since I was 21, I started exploring the stock market only after I turned 25, when I felt I finally knew enough.

When I think about all the missed opportunities I could have profited from if I had begun my journey earlier, I feel disappointed. For instance, I often wish I had bought Bitcoin in 2010 when it was less than 40 US cents. Even now, amid the crypto winter, one Bitcoin would still be worth about US$16,700.

Troubled by my thoughts, I turned to some financial literacy experts to reassure me that I did not start too late. I was also hoping they would share some tips on how to invest even with imperfect information.

The importance of starting early

Ms Lorna Tan, head of financial planning literacy at DBS Bank, said: “It is better to have time in the market, which means investing as early as you can in your life and staying invested to reap the benefits of compounding over time.”

Assistant Professor of Finance Aurobindo Ghosh from Singapore Management University (SMU) noted that young people have a significantly longer runway until retirement and do not have the same financial and medical needs older people face.

Said the director of the Citi Foundation-SMU Financial Literacy Programme for Young Adults: “Young investors can invest more in risky assets, can afford to make mistakes and withstand downturns early in life, learn from them, and hence become better and more resilient as investors.”

While I already knew about these benefits, I wish I had known exactly how much more returns I could have earned had I started a few years earlier.

Mr Kelvin Tan, who runs YouTube channel Kelvin Learns Investing, said those who invest earlier will benefit from compound interest.

“Let’s say Person A invested $2,000 a year from age 19 to 25 – he has invested $14,000. Person B invested $2,000 a year from age 26 to 65 – he has invested $80,000.

“Assuming the portfolios generate a 10 per cent annual return, at 65 years old, Person A’s portfolio has $944,651 while Person B’s has $973,704. Their portfolios are almost equal, despite Person A having invested a much lower amount.”

How to invest when there is so much information

Although I wish I had started investing during university, I do not entirely blame myself for having taken years to build a foundation before diving in.

Mr Tan noted that it is normal for new investors to feel totally lost, given the sheer amount of information available.

He said: “There are a lot of investment vehicles to choose from, such as dividend stocks, growth stocks, cryptocurrency, options, bonds and forex trading.

“Then for each investment, there are tons of details to look into, such as a company’s financial statements, how bonds work and cryptocurrency white papers.”

Mr David Gerald, president of the Securities Investors Association (Singapore), the largest organised investor group in Asia, said: “You have to do your own homework, read widely, attend investor education courses. Always take into account the potential risks as well as returns when evaluating investments.”

When I heard this, I felt better about myself for having procrastinated for years.

Although I had acquired a baseline level of knowledge about the different asset classes and had set up a Central Depository account for storing shares, I dragged my feet over choosing a brokerage firm.

I wanted to take my time to research the pros and cons of various companies before signing up, since I was aware that they offer different commission fees and assets.

Unfortunately, I ended up taking months to decide, as other, more pressing commitments took priority.

To choose a brokerage firm, you can consider watching YouTube videos on the topic or asking friends in the know for advice.

I personally use Tiger Brokers because I like how the application recommends bite-sized articles about various stocks on my watch list, which allows me to do research easily.

Is there a shortcut?

I am fairly new to investing, but after five years of experimenting, I would like to believe that I have found some sources of information that I trust.

Before the Covid-19 pandemic, I attended in-person workshops organised by the Singapore Exchange (SGX) Academy that taught me the basics of the different asset classes and investing principles such as dollar-cost averaging.

There are two core tracks under SGX Academy’s financial literacy programme. The first focuses on investment skills such as understanding financial reports, conducting fundamental and technical analysis and constructing a portfolio.

The second is thematic, with a focus on how macroeconomic factors and geopolitics impact global and Singapore markets.

Prof Ghosh said: “Typically, public or government sources including universities and institutes of higher learning are reliable as they have nothing to gain from citizens losing money.”

I also find it convenient to access information about stocks through the same brokerage account or financial platform that I use.

For instance, investors who use DBS’ brokerage arm DBS Vickers can use the mobile app to find out which stocks are best rated by analysts or trending on Wall Street, Ms Tan said.

But the best shortcut I have found is talking to my friends who invest to exchange information so that I can consider different perspectives.

For instance, a friend posted on Instagram earlier this year about how she was going to go on a shopping spree for exchange-traded funds (ETFs) offered by The Vanguard Group.

I had not heard of the firm before but was curious enough to do a Google search.

I then talked to another friend who told me about his ETF portfolio, which included funds offered by American investor Cathie Wood’s ARK Invest.

Although I still have not bought ETFs due to an aversion to buying products I do not understand, I at least have some knowledge of the popular offerings available.

Different people also have different industries or assets they are interested in, and I have found it helpful to talk to friends who like different products.

For instance, although I was sceptical about non-fungible tokens (NFTs) given the hype certain collections have inspired, a friend shared how some projects, such as those offered by charities, can support meaningful causes.

After our conversation, I am more open-minded towards NFTs as an asset class and may buy one if the artwork is nice, affordable and supports the artists who designed them.

All these conversations did not take place overnight, however. Many of my friends have also begun investing only recently.

DBS’ Ms Tan said: “First-time investors should understand that they will need to be patient with themselves as investing is more of a marathon than a sprint. It requires discipline and time.”

Having spoken to various experts, maybe I can be kinder to myself.

The knowledge I spent years acquiring was not wasted, although in hindsight, I really did not need to do so much research before buying my first stocks, which were all mega-cap technology stocks from blue-chip companies.

Thankfully, the time I put in to learn how to read financial statements may come in handy in 2023. Next year, I plan to buy stocks from tech companies I am aware of but do not know too well, such as Palantir and Logitech.

While it is better to start early, it is never too late.

  • The writer is Jessie Lim