10 Investment Mistakes I made
A thread...
A thread...
1. Tried to time the market
When the stock market was rising, I waited for it to fall (but it kept rising).
When the market was falling, I kept buying thinking this is the bottom (but it kept falling).
More than money, I lost my peace!
When the stock market was rising, I waited for it to fall (but it kept rising).
When the market was falling, I kept buying thinking this is the bottom (but it kept falling).
More than money, I lost my peace!
Keep investing in a disciplined fashion.
Same date, every month, with your regular income.
And whenever you get a lumpsum.
Over a long term, everything balances out.
Same date, every month, with your regular income.
And whenever you get a lumpsum.
Over a long term, everything balances out.
2. Thought that buying more is "diversifying"
I invested more in the same space (be it startups, or real estate or same industry stocks), thinking that I am diversifying.
But no!
When you buy more of the same risk profile, that is establishing the risk. Not mitigating it.
I invested more in the same space (be it startups, or real estate or same industry stocks), thinking that I am diversifying.
But no!
When you buy more of the same risk profile, that is establishing the risk. Not mitigating it.
Invest across different risk profiles, if you care about diversifying.
Buy stocks across industries.
Invest in smallcases/mutual funds with different risk profiles
Buy (digital) gold
Buy stocks across industries.
Invest in smallcases/mutual funds with different risk profiles
Buy (digital) gold
3. Did not have liquidity
I continued to invest in startups and real estate, both of which you cannot sell when you need the money.
So when I needed the money, I did not have the money.
My wealth was notional!
I continued to invest in startups and real estate, both of which you cannot sell when you need the money.
So when I needed the money, I did not have the money.
My wealth was notional!
Always keep some part of your investments in liquid assets (stocks, MFs, smallcases, digital cold, high vol crypto coins).
Always have an emergency fund (invested in debt MFs or FDs) for 6 months
Always have insurance (Term+Health)
Always have an emergency fund (invested in debt MFs or FDs) for 6 months
Always have insurance (Term+Health)
4. Invested in penny stocks
A friend told me about a stock worth Rs 1.4 - and said it would go upto Rs2 in a week.
I bought it.
And it went upto Rs.2 (50% return)
I sold.
It fell to Rs.1
I bought again.
It never rose back!
I bought it.
And it went upto Rs.2 (50% return)
I sold.
It fell to Rs.1
I bought again.
It never rose back!
Just because something is cheap doesn't make it attractive to buy.
It is cheap for a reason!
It is cheap for a reason!
5. Invested with hope as a strategy
When Jet Airways went bankrupt, it's stock was still trading.
Everyday it used to fall and everyday I used to buy.
Because I was convinced that Jet Airways cannot shut down!
Someone or something will save it.
It ultimately shut down!
When Jet Airways went bankrupt, it's stock was still trading.
Everyday it used to fall and everyday I used to buy.
Because I was convinced that Jet Airways cannot shut down!
Someone or something will save it.
It ultimately shut down!
When investing for the long term, hope should be no more than 10% of your portfolio.
The rest 90% is belief, based by data.
And common sense!
The rest 90% is belief, based by data.
And common sense!
6. Did not cut my losses
I bought a stock because of an investment thesis.
But it did not work out.
And the stock kept falling.
I still did not sell.
I did not stop my loss!
But it did not work out.
And the stock kept falling.
I still did not sell.
I did not stop my loss!
Sell when your value goes below your tolerance.
Even if you still believe in it.
If it sells further, you can buy it at that lower price.
Even if you still believe in it.
If it sells further, you can buy it at that lower price.
7. Invested instead of clearing my loans
I had loans where I was paying 14% interest.
But when I got any surplus money, I did not pay off that loan.
Instead I invested.
Thinking I would easily make more than 14% return.
It is not easy!
I had loans where I was paying 14% interest.
But when I got any surplus money, I did not pay off that loan.
Instead I invested.
Thinking I would easily make more than 14% return.
It is not easy!
Ideally pay off your loans, before investing.
If not possible, then any extra money you get, pay off the principle loan amount instead of investing that amount.
(Unless the loan interest rate is really low or you get some tax benefits ex: home loan)
If not possible, then any extra money you get, pay off the principle loan amount instead of investing that amount.
(Unless the loan interest rate is really low or you get some tax benefits ex: home loan)
8. Applied my risk profile to my parents!
I am comfortable with a lot of risk in life.
So when I began to manage my parent's money, I treated it with the same risk appetite.
For me it was important to grow their money.
For them it was important to protect their money.
I failed!
I am comfortable with a lot of risk in life.
So when I began to manage my parent's money, I treated it with the same risk appetite.
For me it was important to grow their money.
For them it was important to protect their money.
I failed!
Assess your risk profile, before investing.
The worse thing you can do is to pick assets that do not match your risk profile.
Or to impose your risk profile on your family!
The worse thing you can do is to pick assets that do not match your risk profile.
Or to impose your risk profile on your family!
9. Disregarded transaction costs
When investing in real estate, I ignored the associated costs. The loan interest amount, the registration amount, the brokerage, the capital gain tax on selling.
All of which reduced the actual return I made.
All of which reduced the actual return I made.
Taxes are real.
Expense ratio (in MFs) are real.
Brokerage fees are real.
Inflation is real.
Always calculate your expenses/inflation-adjusted return to know what you have truly made.
Expense ratio (in MFs) are real.
Brokerage fees are real.
Inflation is real.
Always calculate your expenses/inflation-adjusted return to know what you have truly made.
10. Did not have fun while investing
I panicked when markets tanked.
I stressed when I couldn't find buyers.
I felt FOMO when everyone else was buying.
I felt stupid when people shared their year-to-date returns.
It felt I was working for investing. And not the other way round.
I panicked when markets tanked.
I stressed when I couldn't find buyers.
I felt FOMO when everyone else was buying.
I felt stupid when people shared their year-to-date returns.
It felt I was working for investing. And not the other way round.
Invest in a way that you do not lose your sleep.
If you are temperamentally not the person who can sustain a 10% single-day drop, don't buy that asset.
Nothing is worth your peace.
If you are temperamentally not the person who can sustain a 10% single-day drop, don't buy that asset.
Nothing is worth your peace.
There is a lot of talk about investment strategies and principles.
But one rarely focuses on how one's personality is tied to the investing choices they make.
Realizing you are a certain type of person, when it comes to money, is a very important step towards right investing.
But one rarely focuses on how one's personality is tied to the investing choices they make.
Realizing you are a certain type of person, when it comes to money, is a very important step towards right investing.
I realized that rather late in life.
I was a disaster with money for the longest time I know.
I share these investing suggestions, not as an expert, but as someone who has learnt from the mistakes he made.
I was a disaster with money for the longest time I know.
I share these investing suggestions, not as an expert, but as someone who has learnt from the mistakes he made.
Investing your money, once done right, can be one of the most fulfilling things you do.
Because, money, in the hands of the right people, is a good thing!
Here is a thread on my money mistakes
https://twitter.com/warikoo/status/1309359160077750272?s=20
Also converted into an illustrated eBook (that you can download for free)
ankurwarikoo.com/books/mistakes…
ankurwarikoo.com/books/mistakes…
• • •
Missing some Tweet in this thread? You can try to
force a refresh
