A little more than half a year's review of investment experience

Taiwan stock market has introduced fractional share trading since October 2020. In 2020, due to the continuous rise of the market index due to the epidemic, a group of investment novices have emerged to join the market, and I am one of them. However, I have a personal reason. I originally wanted to go abroad to be a poor doctoral student, but because of the epidemic, I cancelled my plan to stay in Taiwan and continue to work. I also began to think and plan the use of funds at the critical time of 30 years old.

After I started to understand investment, I regretted how good it would have been if I started earlier, but it is better to start later than never, and some people don’t know it until they are in their 50s, so everyone has their own “investment starting point”, and no one is needed. The most important thing is to grasp the current needs of yourself.

As I have also stepped into the vast world of investment for more than half a year, I may be able to share some rookie experiences with others, so that rookies who are interested in investing can have multiple reference channels.

First of all, at the beginning, I have to say that my performance since investing for more than half a year is "very ordinary". Since I started investing from TSMC about 500 or so, I also put the main force on the market and the weight king TSMC, so recently TSMC has all fallen at 580. Consolidation between –600, my performance has not made much up and down, but it has not lost money, so there is no performance to show off.

OK, so let's get to the point.

1. mentality building

The first point of investing is to establish the right mindset. This is actually the most difficult thing. Why do you want to invest and what is the purpose of investing? Think about this first. Start with the right mindset. My mentality is to learn and invest in the long term, so most of them are allocated in large-cap ETFs.

The second mentality is that "investment" is not the same as "speculation". My introduction to investing was reading a book by Que Youshang, a Taiwanese fund trader in the United States. He said that investing is to grow with high-quality companies, and if you enter and exit in the short term, it is not investment but speculation. Bezos, who laughs very magically, also wrote in his shareholder letter that if you only hold the stock for a short time and sell it, then you are just "renting" the stock, not really holding it.

The third best advice for beginners is that the basic principle of investing is that you need to sleep well. If you buy a stock that makes you worry about being unable to sleep day and night, chances are you shouldn't buy it. The purpose of investment wealth growth is only superficial, the important thing is to give you time to do other more meaningful things. If you spend too much time focusing on short-term ups and downs, if you are not a full-time investor or trader, it will become a waste of time. I have a friend who buys some things in the east and west, but it doesn't make much money, but spends too much effort.

The fourth is to keep in mind Buffett's golden words: "The first key to investing is not to lose money, and the second is not to forget the first point." For non-professional investors, the best investment target is the broader market, which will be explained in more detail below.

2. Configuration

Finished talking about the state of mind. The second most important thing in investing is allocation, how much money to allocate to where. This of course varies from person to person. As an ordinary office worker around the age of 30, I first ensure a safe life in terms of capital allocation. Li Baifeng, the founder of ETF Academy, suggested that the standard of living expenses should be reserved for at least half a year for reference. In addition, I would personally advise novices to avoid Europe and India. This has two effects. One is to keep the green hills so that they are not afraid of running out of firewood. The second is that if the stock market falls sharply, there are still funds on hand that can be picked up when the price is low. Cheap.

The second configuration is also from the suggestion of Mr. Que Youshang, investing part of the funds in US stocks. Investing in U.S. stocks is, after all, a threshold for overseas markets, but it is not difficult. Here are some tips for getting started.

The role of investing in U.S. stocks is to diversify risks. You don't have to put all your eggs in the cage of Taiwan. The second is that the U.S. stock market is actually the best and most efficient market in the world, and the best companies in the world are listed in the United States. Therefore, if you want to learn "investment", the best thing is to understand the world's leading companies. Another point is that most companies in Taiwan are supply chains. It is not easy for ordinary people to understand the operating conditions of these companies. However, the services of many large companies in the United States appear in our lives, making it easier to understand, such as McDonald's and Coca-Cola. , Apple, Microsoft, Facebook, etc. We all use their products in our lives, and therefore better understand this company.

As for the ratio, according to Mr. Que Youshang's suggestion of 50% and 50% allocation, half of Taiwan stocks and half of US stocks.

Many people will ask which is better to open an account with Fuentrust or overseas brokerage. The advantage of the former is convenience. Now more and more brokers in Taiwan provide services for buying US stocks, and people can be found if something goes wrong. All fee. The advantage of the latter is that the money is directly in the United States, and now all US brokers do not charge fees for buying and selling stocks, so the operation is more flexible.

Personally, I open an account with an overseas securities merchant (First Securities), and use Cathay Bank to receive NT$800 at one time. This is the easiest combination for beginners, and I recommend it to everyone. There are other services such as TD, which are introduced by many people on the Internet, so I will not repeat them here.

If it is too troublesome, it is also possible to use re-entrustment. The so-called re-entrustment is to ask a bank in Taiwan to help you place an order with an American broker. Now banks are also launching regular fixed US stocks, if you want to try it, you can also consider it.

3. 0050 vs 0056

Novices like me have also adopted a "relatively conservative" approach since entering the stock market for more than half a year, putting at least half of the funds on the market/TSMC, and picking some stocks by myself but not many.

Many people often ask which is better, 0050 or 0056. 0050 is Taiwan 50, and the index selects the 50 largest companies by market capitalization in Taiwan. 0056 is to select the 30 companies with the best yields in Taiwan in the coming year.

Here, I personally choose 0050 (there is also a same but cheaper version of 006208), because if you are about 30 years old like me, and hope that assets will grow relatively quickly, then the market value of 0050 has grown in the past five years. , 70 in 2016 has now doubled, but 0056 has only changed from 24 to 34. And if you don't have tens of millions of funds on hand, the yield rate of about 5% of 0056 is actually not very effective.

Of course, some people will say that if the petty bourgeoisie wants to double their assets, it will not be faster for Europe and India to block the soaring stocks. It is here to say that this also takes more risk. Almost no decent investment influencer would advise you to do this, because no one can tell the direction of the market. I'm a little timid, so I didn't do it.

In addition, in fact, you don't need to invest all of it on 0050, because 0050 is unpretentious and super boring. My own practice is to leave 10-20% of the funds to play with individual stocks. For example, play One Piece, but even if you invest very little, losing all your money will not affect yourself.

In addition, I didn’t “leverage” for financing. Amplifying my gains would also amplify my losses. I am not sure about the market direction, and I am a novice. Even if I lose money, I will lose myself.

4. Learning

The fourth experience is that while investing, you can learn about investment-related matters, and you should spend more time on it, instead of reading the market every day (although reading the market is often more interesting). The principle of learning investment is very simple. If you can study the specifications for a long time when you usually buy things, why do you buy stocks blindly?

The second benefit of studying is knowing the industry and the world's best companies. There are many ways to learn. My main way is to buy books. Books are the cheapest option for learning. In comparison, online courses are more expensive. I would read the story of the company, get to know the industry, get to know the leaders of the company (usually world-renowned companies), and read the company's earnings report (so I've started learning about it over the past few months).

In addition to giving me a reference for investing, these can also help me understand how different companies and industries operate. As mentioned above, investment is to grow with first-class companies, and you can often learn a lot in the process of understanding how first-class companies become first-class.

5. Make mistakes

As an investment novice, I naturally make mistakes, and I also make mistakes. For example, when I first entered the U.S. stock market, I was too excited to buy a travel ETF by mistake. As a result, the global tourism industry will not recover until the end of 2021, and this ETF has been in a state of loss since I bought it.

But all mistakes are the nutrient for learning (fortunately, other targets are made up for it), I will write down the record of each transaction and why I made such a choice, just within 30 words, so that I can look back on myself decision process. For example, I bought Apple today because I expected good earnings, or I bought Tesla because I saw new car sales or something.

I personally only have a record of the decision-making history on the US stock market, because most of the Taiwan stocks are buying 0050 and buying a bit of weight stocks on dips, so there is nothing to write about.

The above is shared here, I hope it can be a reference for you who are also newbies. The following are some channels I recommend for newbies. In fact, most of them are very famous and should be known to everyone. If you are interested, you can refer to them.

(PS: I always feel that matter is a place to talk about issues between the two sides of the Taiwan Strait and the three places. This kind of article is a bit out of place. Anyway, just put it and take a look. The original text is here )

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