Rogue One: Is Demo/Paper Trading a Mistake?

Imagine yourself being the manager of an airline company.

Would you allow a junior flight school student to fly a real plane for you, even though this student may have read and understood the theories on how to operate a plane?

By now, you may be thinking:

“Ridiculous, of course no!”

Hey, I figured the same too.

I’d throw this fella into multiple flight simulations and make sure that this flight school student is able to follow standards & procedures for a flight.

More importantly, I’d not want this soon-to-be pilot crashing my real planes if he/she can’t even handle landing the plane safely in a simulated environment.

Make sense, right?

I hope I have made my point of this article by now, but if not, here it goes:

Putting a junior flight school student into simulations is exactly the same as you going through the demo or paper trading phase when you first started investing or trading.

Essentially, you are doing yourself a HUGE favor by making sure that you can follow the rules and strategies consistently in a risk-free environment.

Here’s the thing:

At the beginning of your investing or trading journey, it’s not about making a lot of money. It’s not even about having a ‘feel’ with putting in real money into the market.

It’s about you having the discipline to follow the rules and processes and learn the foundation properly without additional emotional baggage.

Honestly, if you can’t land a plane safely in a simulated environment, what makes you think that you can land a real plane in reality – before crashing a few costly planes and hurting yourself (and others) badly in between?

I believe I’ve made my point clear.


p.s. Related Read: Here's What I’d Do if I Had to Start My Investing Journey All Over Again

Rogue One is a new weekly 1-min article series where I share my random thoughts and ideas.


How I 5x My Investing/Trading Experience with Every Trade I Take

Huge Warning: If you are here thinking of looking for a shortcut to milk money out of the market, this article is NOT for you.

However, if you are looking for mini-routine hacks to help deepen and internalize your learning, I think you will find this post surprisingly helpful.


Regardless if you want to improve as a long-term investor or a short-term trader, it will require skill development. Skill development though, demand for our time and experience. 

For most investors and traders, one trade* typically transpires into a single moment of experience.

What if there is a way for you to turn a single trade into 5 times worth the experience. Interested?

*The verb ‘trade’ is used in this article to reflect a position that you take in the market, regardless if you are investing for the long-term, or trading for the short-term.


You will be surprised that there is no secret recipe here. 

The key to amplifying your experience from every single trade you take is through a systematic post-trade learning routine, all of which I will share with you below:


You did your pre-trade preparation and took a trade – that was 1x experience.

As a long-term investor, you placed a trade after doing your overall research on the fundamentals of a company.

As a short-term trade, you spotted this breakout pattern and placed the trade.

Either way, these transpired into ONE experience.

For most people, their journey ended right there – time to go and enjoy a good movie time, right?

What else is there for you to do?

There's more to do after you take your first trade.

Make detailed notes in your journal – that’s 2x experience

For me, I will write down WHY I took a particular trade.

As an investor, what are the characteristics and risks involved in the company that I’ve just invested in?

As a trader, what is the if-then context and price action setup that made me took that trade?

Putting my trades down into a journal makes doubled my experience with that particular trade.

You'd be surprised to find that there's a lot that you can learn from yourself through journaling.

Discuss trades with like-minded people/community – that’s 3x experience 

One thing that I like doing is to discuss the trades that I took with like-minded traders and investors.

These are the people and communities that, to a certain extent, understand how I make trading/investing decisions.

As an example, they might notice a certain part of the company’s fundamentals that I’ve missed out on in a financial report.

As a result, I can receive feedback on what I’ve missed or maybe a certain perspective that I’ve not considered in that trade – which is extremely helpful.

Discussing your trades with a like-minded community is super helpful in your growth as an investor/trader. (pic: My mini REIT income investing community - let me know if you are curious to know more!)

Visualize your trades – that’s 4x

I can’t emphasize how powerful this routine is to your experience accumulation.

Replaying a particular trade in my mind – what happened, what went right and what could’ve been done better, contributed to my growth tremendously.

Visualization helps in reinforcing the right habit & execution in my subconscious. 

In return, this will make my execution better if there are any similar opportunities in the future.

Visualization helps in reinforcing good trade executions and habits.

End-Of-Month Review – that’s 5x

Many investors and traders have the impression that once a trade is taken then there’s nothing left to learn for the trade.

However, that’s clearly not the case.

For me, reviewing my past trades every end of the month/quarter has been extremely beneficial. 

Reason being, it helped me to again reinforce the good trades that I’ve executed and how I can do better moving forward. 

Now, I know what I can do better with my breakout trades.

Monthly + Quarterly review is a must.

No Money Lah’s Verdict – Multiply Your Growth with Systematic & Mindful Learning Routine  

Now, I want to end this conversation by pointing out the obvious:

Investing and trading are not easy to master. More often than not, it involves a deep learning curve that’ll take time to develop.

Hence, you will need all the feedback from the market to help you deepen your learning experience.

Good or bad, winning or losing, every trade is a learning opportunity. 

In fact, every trade can be more than ONE learning opportunity. Using the methods above, and you can 5x your experience for every trade you take. 

All you need to do is to just tweak your routine a little. For a 5x growth of experience per trade, I’d say the effort is pretty worth it. 


Part of this article is inspired by the book One Good Trade by Mike Bellafiore. Bella is the founder of SMB Capital, a proprietary trading firm in New York. 

He is one of my favorite trading coaches that I follow online which has been giving back tremendous value to the online trading community.

I found that some of his approaches to trading improvement, which has inspired me to implement and write this article, are equally useful in one’s investing journey as well.

 

This is What I’d Do if I Had to Start My Investing Journey All Over Again

I started to expose myself to the world of investing as a university student 5 to 6 years ago.

Well, my ultimate masterplan back then was to crush the market like peanuts and make hell lot of money with it.

(p.s. Obviously, that intention did not end up well for me.)

It took me a long, long time before I eventually discover my sweet spot and investing style (more on this in future articles).

Looking back, I always wonder if I could have been much better with investing (and with money) if I were to put every piece of the puzzle in the right place – one by one, step by step.

Depending on how you look at it, this article can be more like hindsight, or more of a reflection.

But my goal for this article is simple:

If you are totally new and are thinking about getting started, I hope this post will be of great guidance & insight for you.

With that, this is what I would do if I were to start over my investing journey from zero:


Step 1: First, I'd learn about personal finance & build a strong habit around money

New investors be like:

Harr… but I just want to find the best stocks to buy wor…

Yes, boring, I know.

But this is exactly what I would do FIRST if I were to start over my journey, because honestly:

Who cares if you can spot the best stocks to invest in when you have no savings to invest?

Who cares if you have attended the best investing course when you still struggle to pay off your credit card debt every month?

Looking back, instead of splurging on food & entertainment in university, I would start tracking my finances and have a more consistent savings habit (regardless of how little it could be).

I’d also build a stronger foundation & understanding around money (ie. Financial independence, compounding effect, asset & liability) by reading more personal finance (not purely investing) related books.

With all these financial knowledge and habits in place, I am sure that I’d be in a better position to start learning how to invest at the age 21 years old.

Strong financial habits are CRUCIAL to sustainable investing.

Step 2: Instead of asking “What Stocks to Buy?”, ask “What Skills Do I Need?”

“Which company should I invest during this crisis ah?”

“Is now the right time to buy into the shares of XXX yaa?”

These are without a doubt the most asked questions by investors on investing forums, telegram chat & FB groups.

Looking back, I wasted my fair share of time indulging in discussions like these.

If I were to start again, I’d definitely spend NONE of my time consuming any content like this.

Instead, after building a sound financial habit, the next thing I’d do is to learn the skills needed for me to build a solid foundation in investing – be it from books or a mentor/coach.

Some crucial fundamental skills include, but not limited to:

  • How to extract important data and information from a financial report?
  • How to develop a set of investment rules on when to buy & sell?
  • How to construct a decision-making framework & thought process?
  • How to make independent investment decisions without succumbing to headlines and unnecessary news & content?

Can you see how these skills above, once mastered, will be able to answer your ‘What stocks to buy’ question?

Nowadays, most new investors yearn for shortcuts and/or the easy way to make money from the ‘exciting’ stock market – all without considering putting effort into building their foundational skills.

But hey, I get it. That was me once upon a time too.

Just telling you that, if you are new, you might really wanna consider building a solid foundation first before risking your hard-earned money.

The only short cut in sustainable and successful investing is effort and hardwork.

Focus on the skills that you need before even thinking about the returns - read books, get a mentor and get hands on.

Step 3: Setting my initial vision with investing

If I were to start my journey from zero again, I’d want to spend some time constructing a vision for my investing journey: a sort of picture-like vision of the outcome of investing in my life.

This is the stage where I would learn more about different financial stages in life (eg. financial independence, abundance) and set a vision to motivate me to keep honing my skills.

Now, you may disagree with me, but I would not set a fixed goal at this stage (eg. Financial independence by 30 years old).

Reason being, as a university student, there is simply no way for me to know what kind of circumstances I would be upon graduation. Hence, any form of fixed estimation is really inaccurate at best.

That said, as a start, having a conceptual understanding of what’s possible (eg. vision towards financial independence) is important and should not be overlooked.

However, it should also be noted that our lives will change as we move on to different stages in life – hence it is essential to be flexible with the vision and ultimately discovering our goal along the way.

Setting an initial vision of what's possible with investing is crucial in our investing journey.

Step 4: Hone my skills in a simulated environment

Learning the fundamental investment skills & knowledge is a thing, but it doesn’t mean that it is the end of the journey.

In fact, it is only the beginning of the journey.

So, what I would do is I will set up a simulated investing account via platforms like Bursa Marketplace so I can test what I’ve learned in a risk-free environment.

Now, this could be a very boring stage for many. I used to do it (and gave up) too back then as there is no fun at all buying stocks in a simulated environment.

But if I were to start again, I would spend at least 6 months to a year in a simulated environment so I am sure that I can follow my entry and exit rules consistently whenever needed.

No fun, I know. But I’d cut short a lot of my learning curve if I persisted with the practice 5 years ago.

Grow and practice in a simulated environment before using your hard-earned savings & money.

Step 5: Opening a Live Account (Finally!)

Now’s the time to finally worry about which brokerage account to open!

Or better, time to make some big money! *wink* *wink*

But is it so?

In the hindsight, what I would do as a beginner (regardless of my initial capital) is to set my intention right when opening a live account.

Instead of treating my initial few hundred bucks account as my immediate runway to become a millionaire, I would work on my ability to execute my plan/rules consistently without worrying about the returns as much.

By doing so in a small live account, it would build a very solid psychology foundation for me to handle my live account as it grows in the future.

Simply put, I would take my initial years of live investing journey to make mistakes and gain experience – not so much on making huge gains.

Honestly, what brokerage account to open is your least concerning issue when you first started.

Step 6: Continuous Reflection & Self-Discovery + Receive feedback

Remember that I talked about setting an initial vision in Step 3?

Now, with more experience in the market (and assuming I already graduated and started my career), I’d start to find a more solid goal and focus in investing.

This is because, by this stage, I would be more familiar with my financial commitment. Hence, it is easier to calculate and come out with a proper financial goal and action plan.

It is also time for me to start reflecting and discovering my own investing style to accommodate my other commitments in life.

At this stage, joining a community of like-minded investors (not a general Facebook/Telegram group) is hugely beneficial. It serves as a great & efficient way to leverage on great investors' insights and receive feedback to accelerate learning.

At the start, focus on the process of learning, not the outcome.

No Money Lah’s Verdict

As I write this article, I am fully aware of my own investing style – income investing (article coming soon).

That said, I honestly think that if I were to follow the above steps diligently when I first started investing, I’d be discovering my preferred style much sooner.

But the journey of investing doesn’t end at Step 6.

As both life and market are dynamic, it is a must for me to keep refining my skills and goals as I continue in my investing journey.

Anyone that says that they’ve known and learned everything is just another egomaniac with little time left in the market.

Ultimately, while I may not be able to time-travel to change my journey, there is one thing that I can do:

Focus on the right mindset, strive to keep improving, and most importantly, stay humble.


Rogue One: Why You'll Not Make Money From that Hot Headline Stock?

Excited about the latest & hottest stock in town that everyone is talking about on Facebook groups, investing forums, and live webinars?

“Argh! I could’ve made 15% if I bought into that stock a few weeks ago when it was at RM1.00!”

Then, you either have a good whole day of self-blaming for not buying into that stock ‘a few weeks ago’ OR you rush in to chase the price in hope that you can catch the remaining up move of the stock.

Isn’t this familiar, kind of like a Déjà vu?

Because you have likely experienced it last week, and even the previous month too – how did that turn out for you?

Stocks or news that make it to the headline & social media, well, takes time to appear on the headline.

By then:

Skilled day-traders that know how to read price action & order flow have taken advantage of the move.

Experienced investors with foresight about the value of the stock have already secured their positions months before this headline.

When everyone in town is crazy and talking about a stock, you are probably too late - timing, mindset and skill-wise -  into the party. 


Rogue One is a new weekly 1-min article series where I share my random thoughts and ideas.


The Hard Truth: Why You Shouldn’t Care About What Stock Investment ‘Influencers’ are Buying on Social Media (Especially at Times Like This)

So, the inevitable has happened.

With the fear and pressure from Covid-19 pandemic and drop in oil price, the market has gone real bad.

As an example, Dow Jones has just dropped by 20% from its previous peak and entered a technical bear market earlier today.

At the same time, for the first time since 2008/09, the VIX (Market Volatility) Index had a daily close above $53. Also known as the Fear Index, this means that the market is generally in fear and expects huge volatility moving forward.

In short, just like the story of ‘The Boy Who Cried Wolf’, the wolf has, in fact, arrived at our doorsteps.

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The VIX Index

At times like this, it is not rare to see (more and more) social media stock investment gurus/influencers posting about the stocks that they are accumulating at low for ‘long-term investment’.

However, I am of the opinion that these posts, if not conveyed properly (as discussed below) are deeply irresponsible and you SHOULD NOT be taking 99% of these posts seriously.

If you have been consuming the content from these stock investment gurus/influencers for tips to get over times like this, this is the cold, hard truth that you need to hear:

  1. 99% of These Posts DO NOT Tell You the Whole Picture

Yup, I know that this stock investment guru has posted about accumulating Tesla at low. Perhaps, this guru even shared about why and how he entered the trade.

But this post only covered 1/3 of the whole investment plan.

Do you know their exit plan? Do you know the If/Then statement that the guru has in mind should certain changes in fundamentals happen? And more…

  1. Do You Know How Long is this ‘Long-Term Investment’ Going to Be?

“I am holding this long-term.”

But how long is ‘long-term’ for this guru? Did he/she mention the timeframe at all? How long is this guru going to hold this investment?

Weeks? Months? Years?

Even so, without knowing the basis of the investment plan, do you have the courage to hold these investments if the price keeps tumbling after you follow this guru’s entry?

  1. YES, You are Going to have a Different Risk Tolerance Compared to this Guru

This guru/influencer that posted this stock that he/she just got in may have the patience and risk tolerance to hold through a 20 – 30% further drop in price.

But can you do so? Can you handle the mental pressure of price going against your favor for even, say, 10%?

Know your investment plan: Do Your Homework and Due Diligence.

  1. Heck, Some of These People May Not Even Know What They are Doing

The irony is, it is much easier to write and spread bullshit investing ideas and concepts nowadays via social media platforms.

Spot for Facebook and IG pages that ONLY show off about how much they’ve earned – this is the biggest red flag that you should stay away from these pages or individuals.


Instead, What Should You Do?

  1. Formulate Your Own Investment Plan

If you have any prior (proper) experience in the market, learn to be independent and formulate your own investing plan.

What’s your entry plan? What’s your exit strategy? What’s your If/Then statements if X or Y happens?

Having all of these processes done properly will give you the confidence on when (and when not) to take action and stick through your investments at tough times.

Shameless Plug: For those who are not familiar, I share about how to formulate your own investment plan and processes in my upcoming REIT Investing Workshop. Details HERE.

  1. Focus on Reliable Passive Investing Solutions

If you are not familiar with how to manage your investment actively, definitely check out reliable passive investing platforms like StashAway and Wahed.

These platforms use financial algorithms to invest on your behalf and rebalance your investments according to the market situation.

(p.s. I highly recommend StashAway for the general public, and Wahed for those who are looking specifically for Shariah-compliant passive investment.)

  1. Focus on Wealth Preservation

Of all, make sure you have enough cash flow while not simply pouring them into the market based on tips!

Once you learned how to formulate your investment plan, this cash will act like bullets for you to take advantage of when the time is right.

No Money Lah’s Verdict

Stay calm, stay rational, and be healthy.



3 MUST-BUILD Mindsets to become a Better Investor & Person in 2020

Hey everyone!

First of all, I would like to take this opportunity to wish all of you Happy New Year! 2019 has been challenging yet really amazing for me. What’s more, the year was even better as I get to know everyone of you – your support and feedbacks have been tremendously motivating to me.

As I gather my takeaways as a developing trader, investor and, well, a person, I would like to share with you 3 MOST IMPORTANT mindsets that you must work on or cultivate in 2020.

From my personal experience and studies, these 3 mindsets are crucial for a person to develop and master in order to achieve any kind of significant breakthrough in his or her life & investing endeavors.

Now, it must be mentioned beforehand that building these mindsets would not promise immediate monetary returns. However, I am confident that having them will make your 2020 an extremely empowering year to live in.


#1 Mindset: Focus on Process over Outcome

A mistake that many beginning investors do is to anchor their investing performance to the return of their investments.

This mindset is what I call the ‘Outcome-based Mindset’, and it is THE BIGGEST mindset hurdle that an investor must overcome to stand a chance in the market.

Reason being, there is no 100% certainty that the market is going to give us what we want. When that happens, the confidence of a beginner investor will get shaken to the extent they may eventually develop a pessimistic view towards investing.

Hence, in 2020, focus on getting the process right. Aim to build a ‘Process-based Mindset’.

Focus on the process of learning. Focus on the process of executing your investing plan properly. Focus on the process of growing.

Amateur investors aim for the outcome, the successful ones focus on the process.

Focus on getting the process right in 2020 and the outcome will come.

#2 Mindset: Consistency is the Key

Now, when I mention consistency, I am not talking about the %/year that you can make consistently.

Rather, I am referring to one’s consistency in the execution of his or her processes.

You cannot control the market movement (external factor), but you can certainly take charge of how consistent you are in your process and effort (internal factor).

Be consistent in your routine to study financial reports & charts. Be consistent in your process to filter for quality investments. Be consistent in your risk management.

Ultimately, be consistent in your pursuit of mastery.

As cliché as it sounds, the consistency of ‘outcome’ that amateur investors dream of – they come from the consistency of ‘process’ that successful investors practice to heart.

Consistency in execution leads to consistency in outcome over the long run.

#3 Mindset: Relate to Challenges with Positivity

As the year goes by, it is for sure that there’ll be challenges in your life and investing journey.

In times like this, people with a mediocre attitude will look for someone or something to blame for their encounter.

On the other hand, people with a growth mindset will take charge of their life challenges and take it as an opportunity to improve.

Fear and challenges consume the people with a fixed mindset, but lift the people with a growth mindset.

Lady luck favors the positives.

Verdict

2020 is an exciting year. For the year and the decade ahead, things will evolve. The market will change. Some skillsets will become obsolete, and some will become high on demand.

However, a healthy mindset is timeless. No era of time will ever make a growth mindset irrelevant.

With that, I wish you the very best in your life and investing journey in 2020, and have a great, great year ahead! :) 

-Yi Xuan


Get Your 2020 Financial Goals Mapped-Out Strategically with Practical Action Steps!

Stepping into the new year (and decade) and still have ABSOLUTELY no clue about how you can achieve your ideal financial lifestyle & goals?

Or rather, you have some idea about your financials but are still 'kind-of' miserable about HOW TO REALLY ACHIEVE YOUR FINANCIAL GOALS?

Personally, I had a fair share of these experiences in 2019, until I finally consulted my first ever Personal Financial Planner to get my 2020 financials properly planned - and it is the BEST thing that I've done for myself in preparation for the new year and decade!

Hey wait - I DON'T WANT YOU TO PAY for your Personal Financial Planner if you are not convinced that they are not able to add value to your financials.

Hence, as a No Money Lah's supporter & reader, I am throwing in a FREE Financial Consultation just for YOU!

Find out HOW and CHECK OUT my personal experience working alongside my first personal financial planner BELOW!


Are the Newly Listed Leveraged & Inverse ETFs for You?

TradePlus by Affin Hwang Asset Management has recently listed their highly anticipated Leveraged & Inverse ETF (FANG+ 2x Leveraged, FANG+ Inverse, HSCEI 2x Leveraged, HSCEI Inverse) on Bursa – the first in Malaysia.

Essentially, this means that local traders now have the opportunity to be exposed to the foreign market (US Tech sector & Hong Kong’s listed Chinese companies) via local platform. In addition, local traders also have more versatility when it comes to trading the market – with the advantage of leveraging and the ability to profit with inverse ETF when the market goes south.

That said, are these ETF products for you? Let’s find out:

First of all, what is an ETF?

Exchange-Traded Fund, or ETF, is a fund that tracks a collective of specific securities that is traded on stock exchanges.

Simply put, instead of a single stock, look at ETF as a basket of stocks that are being sold in the stock market – tracking the collective performance of stocks within the basket.

A great illustration of ETF, credit to Investors.com

So…What are the newly listed Leveraged and Inverse ETFs?

For a typical ETF or stock investment, you earn 1% when the investment moves up by 1%.

Technical details (boring stuffs) aside, the newly listed FANG+ and HSCEI 2x Leveraged ETF allows one to double his or her return when the trade moves in one’s favor. Generally, it means that when the ETF moves up by 1%, your return would be 2%, which is twice (2x) the price movement.

On the other hand, the newly listed FANG+ and HSCEI Inverse ETF would allow a trader to profit when the price of the ETF goes down instead. Simply put, think of it as you are buying an Inverse ETF with the outlook that the price of the ETF is going to drop.

An illustration of Leveraged & Inverse ETF, courtesy of Equities Tracker and TradePlus

What are the stocks that the FANG+ and HSCEI ETFs track?

FANG+ 2x Leveraged & Inverse ETF tracks a basket of 10 US highly-renowned tech stocks, which is great if you have a specific trade idea on the US tech sector and is wondering how to trade the sector. (Interesting fact: FANG+ stands for Facebook, Amazon, Netflix, Google & Others)

An illustration of Leveraged & Inverse ETF, courtesy of Equities Tracker and TradePlus

On the other hand, HSCEI 2x Leveraged & Inverse ETF tracks a basket of the 50 largest Chinese companies that are listed in the Hong Kong’s stock exchange. Some of the notable companies include Tencent (tahu Wechat?) and Ping An insurance.

HSCEI ETFs are a great choice for traders with trade ideas towards Chinese companies.

An illustration of Leveraged & Inverse ETF, courtesy of Equities Tracker and TradePlus

Related Fees

Just like investing in a stock market via your broker, you’ll be charged your normal brokerage fee when buying the FANG+ and HSCEI 2x Leveraged & Inverse ETF.

Also, certain annual charges will be imposed too, kind of like mutual funds.

More details HERE

Is it For You? (and the Risks Involved)

Now, it is super clear that these ETF products are very niche and is NOT for everyone. Even in the product page itself, it has been stated specifically that Leveraged and Inverse ETFs are more suited to be traded short term instead of long term investing.

In particular, 2x Leveraged ETFs, while could deliver 2x the return, could also deliver a loss that is twice as much to traders when a trade goes wrong – hence should be carefully approached.

That said, this product is superb specifically for experienced traders with large capital. As such, these are traders that would like to profit from their short-term view of the US tech sector or from the thriving HK-listed Chinese companies via leveraged and inverse products.

That aside, Leveraged & Inverse ETFs are NOT for people who:

  1. Have little to no experience in trading.
  2. Do not understand the risk of leverage.
  3. Have small capital (because your brokerage fees alone could screw you up)

How to Trade?

For traders that are interested to trade these newly listed ETF products, you can do so today via your Malaysian stockbrokers - just search for the respective ETF names/stock code and you will be able to start trading them!

FANG+ 2x Leveraged (E830EA), FANG+ Inverse (E831EA), HSCEI 2x Leveraged (E832EA), HSCEI Inverse (E833EA)


No Money Lah’s Verdict

In short, it is very interesting that we are starting to see more interesting investment alternatives that are coming up in the local scene. While clearly not designed for most everyday investors, TradePlus’ Leveraged & Inverse ETF products are definitely there to fulfill the niche for certain traders in the market that are looking to profit from their view of the foreign market.

For the general everyday investors though, my recommendation to check out the normal (and equally exciting) locally listed ETFs or stocks like REITs to invest for the longer term.

Side note: For the niche group of traders who are interested in the Leveraged & Inverse ETFs, I will be trading them for a bit – and will write about my experience real soon – so stay tuned!


Real Estate Investment Trusts (REITs) is one of my favorites to invest in the stock market, as they provide relatively stable dividends – hence making them a great passive income source.


Disclaimer: This article is written based on my best research as of the time of writing, and should not be considered as a buy/sell recommendation. Please do your own due diligence and/or seek professional advice when making your investment decision.


Malaysians' Guide to Gold Investment

Gold is an asset that has been universally recognized as a store of wealth since ancient times. Despite not being a legal tender form of exchange (read: currency) these days, gold is still widely accumulated by the society and countries alike.

In this article, let’s look at some interesting (and lesser-known) facts about gold, WHY invest in them, and HOW to invest in gold as a Malaysian.

What Makes Gold So Attractive?

(1) Gold is uniquely beautiful

Gold is stunning on its own. As such, gold’s shinny and elegant nature make it an attractive choice for jewelry and life accessories alike.  

(2) Gold is scarce

Gold is a type of commodity. This means it is a rare metal and the amount of gold available to mankind is limited.

Not only that, the mining process of gold is also painstaking and expensive, making gold an even more valuable asset to own.

(3) Gold is durable and useful

Gold does not decay or rust – and it is almost indestructible. All the gold ever mined is still around in one form or another.

In addition, gold is a good reflector of light and an excellent electric conductor. This contributes to the extensive usage of gold in electronics such as circuits, dental fillings and more.

(4) Gold is homogeneous

One pure gram of gold is similar in value to the next gram. This makes it easy for people to ascertain gold’s value and utilizing it in trade and commerce.

Having understood the characteristics of gold, it is useful for us to understand WHERE gold is being supplied and HOW gold is being used in the world.

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Characteristics that make gold such a special commodity.

Supply & Demand of Gold

Have you ever wonder how is gold being supplied all around the world?

According to the World Gold Council (WGC), around 75% of the world’s gold demand is contributed by gold mining. Unlike paper money which can be printed with relative ease, the only known way to produced gold is to mine them.

That said, gold that is mined is usually not enough to meet the demand for gold. Hence, the remaining 25% of gold demand is met by the recycling of gold. These recycled gold supplies come mainly from jewelry (~90%) and gold extracted from technological hardware.

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Gold supplies all around the world

If that’s the case, WHO is buying gold around the world?

There has been 4 main use of gold worldwide.

The first use of gold, which takes up around 50% of the total demand, comes from (you’ve guessed it)jewelry.

This is followed by investment-related purposes (eg. Gold-backed ETFs), which contribute to around 25% of total gold demand. In addition, gold is also accumulated by central banks all around the world. This takes up around 13% of total gold demand.

Lastly, gold usage for industrial production takes up the rest of the demand.

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Gold demand around the world

Which country holds the most gold?

Now, as mentioned, gold is highly accumulated by the central banks of many countries. Gold is being held as part of a nation’s reserves, mainly due to gold’s nature as a safe haven asset and an effective diversification of their portfolio.

The role of gold to central banks (Source: World Gold Council)

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With that in mind, let’s make a smart guess before you proceed – which are the countries that hold the most gold?

As of October 2019, the United States holds the most gold in its national reserves (8133.5 tonnes!) – which takes up near to 78% of the total reserves. The far second is Germany with a total gold reserve of 3366.8 tonnes, making up 72.9% of the country’s total reserves.

Countries like China and India have a gold reserve of 1942.4 tonnes and 618.2 tonnes respectively, making up less than 8% of these countries’ total reserves.

Back in Malaysia, we are placed at 53rd (out of 100 countries) when it comes to our total gold holdings. This translates to a total gold holding of 38.9 tonnes – which is 1.8% of Malaysia’s total reserves.

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Malaysia is ranked #53 in global gold reserves.

Why invest in gold?

(a) Hedge against the drop in interest rate & geopolitical uncertainties

With global powerhouses like the US reducing its interest rate, it is inevitable that there will be a drop in return (or yield) of major bonds in the market. This will cause the return of bonds less attractive in the eyes of investors.

Adding on to various geopolitical uncertainties, this makes gold especially appealing as a safe-haven asset for institutions and retail investors alike in search of protection against uncertainties.

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(b) Portfolio Diversification 

Gold is also an effective instrument for you to diversify your investment portfolio. This is because, for the past 10 years, gold has almost no correlation (0.04) with the stock market movement.

In short, this means that gold price is generally not affected by the ups and downs in the stock market, making it a good wealth diversification vehicle.

Useful link: S&P 500 vs Gold price movement for the past 10 years

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There are many solid reasons to have gold as part of your portfolio

How can Malaysians Invest in Gold?

#1 Recommended – HelloGold 

HelloGold is a mobile app that allows you to buy and sell gold for as little as RM1. This is really a big plus point, considering that the other offerings in the market have a barrier of entry of a minimum of 1 gram of gold (~RM200). Some of the advantages of HelloGold are:

  • Low barrier of entry - Invest in gold starting at just RM1!
  • No-hassle account opening - The easiest way to get started in gold investing. Open your account via HelloGold's mobile app - no need to be physically present at counters to do so. 
  • Shariah-Compliant
  • Automated investment - If needed, you can automate your monthly gold investment via HelloGold’s SmartSaver plan.
  • Flexibility in managing your gold holdings - With HelloGold, you can buy and sell gold via the app anytime, and even send gold to your family and friends via the app.

This flexibility is a huge thumbs up considering that I used to have to visit the Maybank counter myself to withdraw my gold investment as a Maybank Gold Investment Account holder.

In terms of security, every gold bought is yours and is held at HelloGold’s vault provider in Singapore (which, you can redeem them if needed), and is well-insured by insurance company.

With that in mind, unless you really need to hold solid gold, I definitely recommend HelloGold to most people that are keen to invest in gold. 

 

#2 Physical Gold

Should you fancy physical gold bars and coins, you can also get them via sites like BuySilverMalaysia. That said, I personally feel that unless one has specific needs for physical gold, I do not recommend them due to safety and storage hassles. 

#3 Gold-backed Exchange Traded Fund (ETF)

TradePlus Shariah Gold Tracker (Code: 0828EA) is Malaysia’s first shariah-compliant commodity ETF that tracks the performance of gold. Essentially, think of it as investing in a fund that goes up and down with the price movement of gold.

With some fees, you can invest in gold without having to take care of physical gold. 

#4 Banks’ Gold Investment Accounts (GIA)

Alternatively, you can also purchase gold through banks’ gold investment account (eg. Maybank, CIMB). That said, GIAs usually charge a spread when you buy and sell gold.

Also, just a personal experience from using Maybank’s GIA: while I could purchase my gold online, I have to visit the counter should I wish to sell my gold holdings, which is a real hassle by today’s standard.

Note: (1) **Refer HERE (2) CIMB GIA has an annual fee of RM5 if year-end gold balance <5g (3) Details about Gold-backed ETF HERE

No Money Lah Verdict

With gold being an effective portfolio diversifier for your wealth, there is no doubt that one should accumulate gold as part of his or her portfolio.

However, the million-dollar question has yet to be answered: Is now a good time to buy gold?

In the next article, I will discuss about the price of gold and if it is a good time to invest in gold - Stay tuned!

Meanwhile if you like this article and would like to open a HelloGold account (and get RM5 off when you invest a min. of RM50, be sure to click HERE and use my referral code ‘CHIN012W’!)


Real Estate Investment Trusts (REITs) is one of my favorites to invest in, as they provide relatively stable dividends hence making them a great passive income source.

Click HERE to find out HOW you can pick and invest in quality REITs!


Disclaimer: This article is written based on my best research as of the time of writing, and should not be considered as a buy/sell recommendation. Please do your own due diligence and/or seek professional advice when making your investment decision.

 


If/Then Mindset: How this Hugely Overlooked Mental Skill will Transform Your Investing Performance

Have you ever been in a situation, where you were looking at a stock that you think you should buy, yet did not pull the trigger and ended up regretting your inaction?

How about the times when you think you should get out of an investment, yet too clouded by emotions to do so and ended up taking a huge loss?

When I first started in the market, I faced the similar problem over and over again. Not only it was frustrating, the huge emotional swings involved were also extremely tiring.

As times went by, I have learned an important, yet hugely overlooked mental skill by many that have since helped me improve my investing and trading performance alike.


What is the If/Then Mindset?

If/Then mindset is a simple, yet critical mental skill that is hugely overlooked by new investors and traders in the market.

In essence, the If/Then mindset is a mental simulation of the possible outcomes given a particular set of scenarios, and the actions that you will take should any of these outcomes happen:

“If A happens, I will do X. If B happens, I will do Y.”


Okay, So How Will the If/Then Mindset Improve My Investing Performance?

Let’s look at a simple ranging chart pattern, and how the If/Then mindset could help improve your performance:

What we are looking above is a stock price in a ranging (or zig-zag) pattern. For an inexperienced investor or trader, it is easy to conclude that there is no trend going on with this particular stock and hence no ‘excitement’ in the price.

This chart would be super boring to untrained minds.

However, using the If/Then mindset, one could easily simulate the potential price movements of the stock (scenarios A, B, C). With that, various interesting opportunities could be identified prior to any price movement at all.

Different possibilities can be simulated with If/Then mindset.

As an example, if scenario A happens, then one could buy at the pullback upon a small retracement. However, should scenario B happen, then one could look to buy at the support level. That said, if scenario C plays out, then one could look to sell upon a mini retracement.

Investors can plan ahead and respond to price movement accordingly with If/Then mindset.

Benefits of If/Then mindset

Believe it or not, there are many benefits if you are able to build up your If/Then mental skill:

(1) Early Anticipation of Price Movement

Training your If/Then mental skill will help you to anticipate price movement effectively.

We can never predict with absolute certainty where the price of a stock will move. However, we can use the If/Then mindset to anticipate the different possibilities of price movement, and devise our actions should any of the scenarios play out.

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(2) Reduce Mental Stress & Emotions in Decision-Making

By simulating the possible outcomes prior to price movement, an investor could plan ahead of what could be done should different scenarios play out.

This might look like a simple thing, yet it is extremely helpful in reducing any form of emotional bias (eg. Fear of losing, Ego) and mental stress in comparison to the times when you have to make an immediate investment decision on your feet.

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(3) Improve Consistency in Investing Performance

As you make progress in developing your If/Then mental skill, you can expect consistency in your performance.

Reason being, a strong If/Then mental skill will provide you with a consistent execution process (eg. If A happens, then I will do X) by filtering out a lot of unnecessary biases involved.

We can never predict with 100% certainty what will happen, but we can always anticipate the possible outcomes and respond accordingly.


How to Apply If/Then Mindset in Investing & Trading

By now, it should be obvious that If/Then mindset is a mental skill that is applied prior to making any investment decisions.

As such, most application of the If/Then mindset should be done during the preparation phase of your investing workflow:

If you are a fundamental investor (read: Value Investing), your If/Then mindset could be “I will only invest in a company IF it has a consistent profit growth over a 5-year period”.

If you are a technical trader, your If/Then mindset could be applied in a way IF price movement A happens, THEN I will do X”.

In short, practice and apply the If/Then mindset BEFORE you have to make any investment or trading decision live.

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"If A, then X. If B, then Y. If C, then Z."

No Money Lah’s Verdict:

If/Then mindset is a mental skill that is crucial for an investor or trader’s development to perform better and more consistent in the market.

That said, many tend to undermine the practice of this skill as it seems to be simple. However, ask yourself: How many times have you ever go through the If/Then thought process before making an investment decision?

If any, the If/Then mindset does not require one to be right at predicting the direction of a price. Rather, it trains a person’s mind to anticipate and be open to different possibilities of outcome and respond accordingly.

Personally, I think this is an important skill to develop, and one that I strive to improve on a daily basis.

I certainly hope you do, too.


Read my articles on REIT Investing HERE.

Every now and then, I organize sharing sessions to share insights on how I invest in the market. Book your slot for my upcoming session HERE!

 


Why Are You Still Suck with Investing after Paying Thousands for Courses?

Have you ever attended any of those investing or trading courses out there, and yet not getting the returns you expected?

Even worse, you paid thousands, and sometimes millions for those damn courses!

Hey wait, if this is not hurtful already, those experts even promised you a ‘consistent’ return if you learn their strategies!

If that’s the case, why are you – in spite of the hope and promises (not to mention an initial burn to your pocket) – still not making any money out of what you’ve learned?


Yup, You Are not Alone

I was there.

Sometime before graduating from university, I enrolled in my first ever 3-days investing course (in thousands). Just like many paying for these courses, I thought I will be able to make damn a lot of money (read: immediately) with my initial investment into my investing education.

You bet I was wrong. Super, duper wrong.

Instead of starting to make money from the stock market, I lost money instead. What the hell?


Can you relate?

Then, after losing money with the strategies that we paid thousands to learn, we embark on the journey to look for another course that could promise us a strategy that could provide us consistent and high returns.

Sounds familiar?

The irony is, for most of us, the cycle will continue to roll, and yet we will never find the one holy grail strategy that will make us huge and consistent returns.

Seriously, why is it so? Why do we pay that bloody money and yet not getting the returns we are promised?


‘Experts’ Overpromising Is Real

If you resonate with what I’ve written so far, I bet you will find what I am going share next even more relatable:

Firstly, there will be testimonies of students making X% within 3 months after attending the course. This gives people hope (the most important element in marketing courses).

Then, there will be a pitch to for you eventually quit your job through your returns from the market. This touches the soft spot of most people nowadays.

Wait, there’s more.

How about for everything above, you only need to ‘spend 5 minutes in front of the chart every week/month’? Or ‘get a sure-win stock-pick with a click of a button’ with their trademarked proprietary investing system (or some premium strategy with macam yes bombastic name)?

“Holy sh*t, this looks like something that I could sign up to I fire my boss sometime soon!”

Sounds like something that has slipped through your mind before? Well, it certainly did for me.


Marketers Tell Stories their Customers Want to Listen

Give what you’ll be reading up next a thought:

A weight management company will NEVER market their product as something that’ll produce results slow.

A hair-loss control company will NEVER market their services as something that’ll take a long time to see any effect.

However, we all know that both weight management and hair growth doesn’t happen overnight! In fact, it takes a grueling commitment and dedication to really get the results that you want (depending on your condition too, of course).

In short, a lot of marketing materials are likely not a reflection of the real deal. Rather, those are stories that leverage consumers’ emotions and desires in order to convert them.

It could be a ‘true story’ though. But it is likely not the WHOLE story.

Now, think about how an investment ‘expert’ that is real good in marketing would market his/her expensive courses:

Would you rather sign up for a course that claims that their students make 30% return consistently?

Or would you rather sign up for a course that claims that their students make 30% return consistently, BUT you will need to put a lot of practice and time into the system?

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"Earn quick and guaranteed profit by using our system and strategy!"

‘Experts’ Marketing Stories is NOT the most important reason WHY you still lose money in investing/trading

Humans are naturally born to the desire for instant gratification.

If any, I am willing to bet that 95% of the people sign up for investment/trading courses as a means to learn how to earn money – fast.

And again, I was there as well. The idea of seeing the ‘experts’ flashing their Ferraris, luxury houses and cash is simply too irresistible in a time where most people hate or dislike their jobs.

As a result, people are more inclined to succumb to too-good-to-be-true money games and overpromising marketing ads for investment courses.

The idea of earning money easy and fast from the market touches all our desire for an easy way out.

You may not like what you have been reading so far, but you know there is certain truth to these words.

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Humans, are unfortunately born with the tendency for instant gratification - especially when it comes to quick bucks.

Investing & Trading is a Skill That Needs to be Built Over Time and Practices

Now, think about one of your biggest achievement in life thus far.

It could be your piano grades, your career in consulting or a sports achievement. Did you achieve them by just spending ‘5 minutes’ honing your skills everyday?

Hell no!

The skills that you have today, is a result of the time and effort that you put into building that particular skill. It is the practices that you’ve poured whole-heartedly into your work that led to your mastery in that particular skill.

Becoming good in piano is a skill. Mastering the art of consulting is a skill. Becoming a pro in football is a skill.

If that’s the case, what makes investing and trading any different?

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Investing & trading are both skills that need to be developed over time and effort.

There is no Holy Grail in Investing & Trading

It took me a long time, but it eventually hits on me that there is no shortcut to investing and trading mastery.

They are skills that need time, discipline and practices to develop. They require passion so that you can persevere through the steep learning curves and losing streaks.

More importantly, no one strategies taught by courses out there will bring you results unless you are patient enough to allow for your skills to catch up to what you want to achieve.

If you haven’t got it by now, there is no holy grail to quick wealth in investing or trading.

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Can you become a world-class footballer by practicing 5 minutes everyday? Now relate this back to investing & trading.

The Takeaways

There are many factors that led to us not making any money from the market, even after signing up for expensive investing or trading courses.

If there is one key problem, though, then I would say that it is unfortunate that most of us that signed up for investing or trading courses started off with a wrong mindset.

We wanted to profit from the market quickly, and we thought it was easy. Then, course marketers make it seems like it is really that easy with stories we want to listen to.

But here’s the thing:

Investing and trading are skills that need to be developed over time, practices, consistency, and discipline.

Until we can accept this fact, chances are we will still see people jumping over courses and strategies, in hope to look for the quickest way to well, lose their fortune.


Disclaimer: The article above is not by any means a suggestion to sign up (or to not sign up) for any investment courses out there. It is just a personal opinion on the stated topic and does not reflect any interest in any particular party.