Your first investment – do you still recall what it is?
When it comes to investment – everyone has his or her own preference. It does not matter what investment vehicle you prefer, but the most important thing is to start somewhere.
Rather than hearing it all from me, I approached a diverse group of over 20 (yes, Twenty) personal finance personalities who are experts in their own field….. to bring you this series so that you are:
- Inspired to take action
- Able to evaluate which investment option tickles your fancy
- Reminded of the mistakes they might have made and avoid from making the same mistakes yourself.
Let’s hear it from them, shall we?
When my wife and I got back to Malaysia from US in 2002, we bought a fully furnished single-storey terrace house in Penang island. The price was RM250,000. We pay RM35,000 for the down payment and about RM10,000 for the transaction cost and some minor touch-up like new painting.
It was renovated and luxuriously furnished by the previous owner. So we didn’t get to spend a lot of money. If we had bought an empty house, we wouldn’t have made it such a comfortable cozy home to stay in. We stayed there for a couple of years and move to a new house. The market value had appreciated to about RM400,000 now. But we didn’t sell it yet. Instead we rent it out with positive cash flow and giving us passive income every month.
KCLau from KCLau.com, top personal finance blog, website and resources for Malaysians. KC is also the best selling author of Top Money Tips for Malaysians, co-authored many personal finance books, and the creator of PropertyMethod.com, real estate investment online course for Malaysians.
My very first profitable investment was on investing in some blue chip counters in middle 2009 when the market was recovering from the crash. At that time I didn’t know much about stock market i.e how to get a remisier, open a CDS account etc. I just drop in a securities and that how I get started. Amount invested was about RM5K & manage to double it in less than 2 years.
I know the frustation every new stock investor have to go thru. That why my third upcoming book(expected publication by November 2012) is on how to guide beginner to get started and investing in stock market. It’ll contain A-Z info to get started in one book.
Alan Tan from AlanTanBlog.com – Discover the Road to Financial Freedom.
[Note from LCF]
People say that to invest, you must start big (need big money to make bigger money). I’d say, start small, but start early. How about saving money to buy 1 lot (100 shares) of shares at KLSE? Do-able right? If you just started working, risk-averse and begins to learn about investment, you can consider REIT (online course at REITMethod.com) or dividend stocks- which could yield annual return of twice the returns of fixed deposit.
I started investing in Unit Trust in year 2003, walking into a bank and asked the banker some questions and decided to place my savings there. I made quite a small profit after the first year ~ 8%.
Later in year 2005, I started investing in KLSE shares, BJTOTO and made a small profit there.
In year 2008, I was introduced to a seminar organized by OSK and listen to a speaker that talks about Hong Kong Shares and stuff … So, I decided to place RM 10,000 into Put Warrant. By the way, I didn’t know what a Put was at that time, just blurly listen to the speaker and put my money there. A few days later, the world economy collapsed, so I thought my RM 10,000 will be gone but to my surprise, the counter that I bought went up 300% … I called the broker and told her that something went wrong, how come my counter went up while the share market is collapsing ?
Well, that was my major first profitable investment, because a few hundred percent in a few days. Haha, it’s just blur luck.
From that day onwards, only I knew what is a “Put” …
… i bought without knowing what it was … and it was major market crash … in year 2008, financial crisis …
Evanna Phoon, founder and CEO of MalaysiaWills.com, the only and No. 1 Malaysia Online Will Writing Service to cater for Busy Malaysians.
[Note from LCF]
I think the key takeaway here is never invest in things you don’t fully understand 🙂 Evanna is one lucky lady.
Options or warrants are high risk, high return financial instrument. Buying put options during a falling market can reap huge returns – read my previous article on There is Profit to be Made in Falling Market.
You also might want to read on how I use put options to recoup the losses in my holdings of Research In Motion (Blackberry Maker) stock (NASDAQ: RIMM) when the stock price fell 20 percent in one day.
I still remember I cycle to the bank and told the banker that I want to invest RM1,000 into a unit trust fund when I were only 18 years old. Why 18? Because that was the minimum age for an individual to invest and I live it up to the earliest as I can to do my first investment. Stubbornly, I told the banker that I already make up my mind and I don’t need any advise on when or which fund to invest.
How about the performance? Just like many first time investor, I learn from mistakes that I made then. It took me 3 years to make a net profit of 10% only. If you benchmark it with 3.8% p.a fixed deposit rate back then, I would have been losing (opportunity cost + the risk taking). Anyway, I’m better off compare with many new investors out there. At least, I make a profit from my first investment.
Indeed, what I learn from it turns me to be a much better investor today. Because of that tiny investment, I monitor the performance of the fund, comparing it with peers, understanding the process of unit trust, how share price react to certain events or news, income distributions, type and nature of the funds. Can I learn them so effectively with jumping into the ship? I don’t think so. I’m fortunate that I have experienced it when I were so young. Then, I apply the concept when I were 21 years old on share investment and it turns out to be a better result.
Owner of FinanceMalaysia
[Note from LCF]
Key takeaway: Start early, because you WILL make big mistakes in the beginning. When you are young, you can afford to make mistakes, and it is less costly.