Do you not invest because of fear? of what?

I come through an article about How to Get Over Your Fear of Investing. I'm personally a newbie in investment. I started stock investment last year 2013. Well if talk about investment, what is it actually? Is FD (Fixed Deposit) an investment? Property is an investment? If talk about FD, I had started to place FD since 10 years ago. It is because FD is safer and lower risk compare to others investment. In year 2009, property bloom happens in Malaysia. Ever since then, a lot of the properties spike almost double in less than 3 years. No doubt those invested/purchase few properties before 2009 will earn a big lump sum.

I started to do business since year 2004. I was only age 20 at that time. I started small business related to broadband (Streamyx) registration, installation, PC services and etc. I was still studying in University at that moment. The work and business is tough. The return is too little and I'm looking for fast money. I stop this and move towards multi-level network marketing (MLM) in year 2007. Started tough but going good. A lot of things happens since then. MLM company goes bankrupt, and I join on another MLM, direct sales, and eventually go back to business (online business). After years of trying, I gave up. I back to normal job which require me to work from 8am-5pm Monday to Friday.

I never stop looking for alternative source of income until finally I come to encounter stock investment. I never even think of getting into stock investment due to couple of reason. Mainly due to fear. My dad use to told me that stock investment can kill a person. In year 1997, a lot people goes bankrupt and many commit suicide. I was told stock investment is just like gamble. Sure lose. From then, it built up fear within myself towards investment.

Before I started investment, I begin to read a book "Intelligent Investor" by Benjamin Graham. I started to open a brokerage account. I started with RM1000. I earn about 5% in the 1st month. It was so happy and I started to forget the teaching of Graham. I begin to speculate and trade via tips/news from financial firm. I increase my capital from RM1000 to RM10,000. The greed started from within myself. I aim for high speculation and fast turnaround counter until I got my hand burn. I lost almost 20% within a month. I was so scare at that moment. The fear started to develop. A phobia of investment. I did a lot cut loss at that moment (which was lucky as those counter I cut loss, it turn worst when I refer back the current price). If I have not cut loss, I estimate to loss about 50% of my capital by now.

How to return the 20%? Most people will just stop investing and get back to normal life. Fear of losing more money. Investment is all about knowledge which not follow blindly and not by feeling. Investment also all about emotional control that we need to control the greed and not fear of enter when people is selling. Not fear of cost averaging.

It took me 2 months time to recover the 10%. I then slowly learn of cost averaging, and control the fear of investment. I learn to be patient and wait for good price. I back to the fundamental analysis. Then use technical analysis for me to enter at good price for a counter. My return eventually flips fold. I begin to gain confident and start earning just like the 1st time. I put away my fear and my greed. Be rational at all time. If you could return with 5% per month consistently, you could return a 60% per annum. Do not aim for 5% per day or per week. Look for consistency of 5% return per month of overall investment.

Just remember:

  • Don't Follow Investing "Tips".
  • Prepare in Advance.
  • Learn the Basics.
  • Control your greed and fear.
  • Be patient and rational.
  • Avoid speculation.

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