Beginner Investment Guide - Fear of Loss

Fear of loss is the main reason why most people want to invest but stagnate. Compared with stable fixed deposits, although the return on investment may be much higher, there is a risk of loss. Why not put it in the bank safely? Interest is not risky.

It’s just that the potential risks of fixed deposits are also ignored by everyone . Inflation will swallow the value of money bit by bit , and the purchasing power will gradually decline every year. The profit from interest cannot offset the loss of principal, especially in the current low interest rate. Times, fixed deposit can only be regarded as the next best policy.

Since there is definitely a problem of inflation, there is a possibility of loss in investment, then if you reduce the risk of investment, do not expect too much profit, just flatten the speed of inflation , and even have a little extra profit, then everyone will be happy. .

Based on the historical trend, the ETF of the large market index may be able to meet this standard.

But there is no such thing in the world, and no one knows. It is true that investment cannot guarantee absolute profits. ETFs that track the market index are not guaranteed to be successful if they are bought. There is still the possibility of losing money. However, if the investment time is prolonged, the market will continue to rise in the long run. After all, it is easy for large companies to monopolize the market and expand their scale, which increases the possibility of stable profits.

Therefore, novice investors who are afraid of losing money are advised to try to focus on large-cap index ETFs and hold them for a long time.

Here are the detailed guidelines:

funds

The monthly salary is limited. After planning the living expenses, use the remaining funds to invest. You can use different bank accounts to separate the investment-specific money to avoid confusion with living expenses.

You don't have to wait until you've saved enough principal to get started , as long as you arrange for an automatic transfer to an investment account when you get your salary every month, you won't have the problem of forgetting.

mentality

Many people who have not yet entered the stock market, or even have been in the stock market, will think that stocks are a spread game of buying low and selling high, but they forget that the company has shareholder rights for allotment and dividends.

ETFs that track the large market index allow you to hold stocks of large companies for a long time at the same time, and can diversify risks to different industries, and have a perfect screening mechanism , which can filter out low-quality stocks, so you don’t have to worry about choosing a ward that goes out of the market. company.

The point is, you can still get the due allotment and dividends, plus the capital gains from the rising stock price.

target & action

If you consider Taiwan ETFs, you can choose 0050, 006208

If you choose the ETF of US stocks, it is IVV, VOO, SPY

As for the differences between various ETFs, there are very detailed table comparisons on Internet searches, so I won't list them here.

In fact, the operation method is not very complicated. You only need to buy a fixed amount on a regular basis , set an amount you can afford, deduct the money on time every month, and hold it patiently.

If you happen to encounter a bull market (the stock market continues to rise), of course you will be happy to see the funds in your account gradually accumulating, but in the unfortunate event that the general market trend is down and a bear market comes, don’t panic, and continue to keep deducting money, because when the stock price falls, you will The deduction amount remains the same, so the number of shares that can be purchased will increase, and when the trend reverses, you can get more rewards.

Epilogue

Everyone is more or less afraid of losing. This is normal. It is also possible that because of losing money, you can’t sleep in the middle of the night and worry all night. So we choose a safe investment method , no matter how big or small, from now on Start to implement the investment plan, and then ignore it like forgetting (of course not completely), and wait for the compound interest effect caused by time to ferment .

If you are not satisfied with this investment strategy, or you still have the energy and curiosity, you can further study other investment methods to find the most suitable way for you.