10 years of SHARE investing: here’s what we've learned
Sep 16, 2024
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Kate, an author focusing on the link between finance and happiness, and Owen, a share investing expert running a free Value Investor Program, dive deep into their 10-year investing journey. They share valuable lessons learned from their experiences, including the importance of diversification and a long-term mindset. Discover their insights on the emotional challenges of investing versus gambling and why understanding fundamentals beats focusing on share prices. Their strategies emphasize starting small and the power of ongoing education in achieving financial success.
Diversification through low-cost, broad-based ETFs is essential for managing risks and promoting long-term wealth growth in investments.
Emotional control is crucial when investing in individual shares due to their volatility, contrasted with the stability of ETFs.
Informed decision-making and continuous education in investing lead to better outcomes, emphasizing strategic over impulsive trading actions.
Deep dives
The Importance of Diversification in Investing
Diversification is crucial for managing investment risks and growing wealth effectively. Utilizing low-cost, broad-based ETFs serves as foundational building blocks for creating a diversified investment portfolio. Core ETFs like AAA, A200, and NDQ cater to various investment strategies by providing access to high-interest cash, a selection of Australian shares, and NASDAQ 100, respectively. By maintaining a diversified portfolio, investors can mitigate the potential negative impacts of a single investment's poor performance.
The Emotional Rollercoaster of Share Investing
Investing in individual shares can create more pronounced emotional highs and lows than investing in ETFs, as share prices fluctuate significantly based on news and market sentiment. The hosts reflect on their early experiences, sharing initial investments where they learned the hard way about transaction fees and the unpredictable nature of small-cap stocks. As individual companies can yield substantial profits or complete losses, emotional control becomes vital in navigating the volatility of share investments. This emotional aspect is less troubling when investing in a diversified ETF portfolio, leading to more stable long-term performance.
Lessons from Past Experiences with Stock Picks
Personal investment histories reveal that early stock picks can lead to both successes and mistakes, with lessons learned along the way. One host shares about investing in firms like Adacel and National Australia Bank, highlighting the importance of informed decision-making over random trading strategies. Furthermore, recognizing the long-term potential of companies and reinvesting profits can yield significant benefits compared to short-term speculative buying and selling. The key takeaway is the vital role informed research plays in investment decisions, emphasizing the need for strategic rather than impulsive actions.
The Challenge of Staying Invested
Staying invested during market fluctuations presents a significant challenge for investors, particularly when observing market highs and potential downturns. Many new investors express concern during peaks, prompting decisions to withdraw from the market prematurely. The hosts acknowledge that investing in ETFs requires a similar level of commitment and patience as investing in individual stocks, where emotional investing can lead to detrimental decisions. Building a core portfolio of ETFs can simplify investment strategies and reduce the stress associated with individual stock performance.
The Importance of Continuous Learning in Investing
Investing is an ongoing journey of education and self-improvement, requiring patience and commitment to develop skills over time. The hosts stress that beginning with small investments and learning through experience is essential for any investor's growth. Considering their numerous resources, including free courses, the hosts encourage listeners to approach investing with curiosity, enabling them to understand market dynamics better. Ultimately, viewing investing not just as a means to wealth but as an opportunity to learn about the world and its workings enriches the investment experience.
DISCLAIMER: This podcast contains general financial information only. That means the information does not take into account your objectives, financial situation, or needs. Because of that, you should consider if the information is appropriate to you and your needs before acting on it. If you’re confused about what that means or what your needs are, you should always consult a licensed and trusted financial planner. Unfortunately, we cannot guarantee the accuracy of the information in this podcast, including any financial, taxation, and/or legal information. Remember, past performance is not a reliable indicator of future performance. The Rask Group is NOT a qualified tax accountant, financial (tax) adviser, or financial adviser.
