I would not call myself an expert but I would rather say I am seasoned in matters of investing particularly on the Zimbabwe Stock Exchange. One of the things I find hard to do is advising newcomers to investment circles. I sometimes skip things that should be treated as fundamental because I assume they are tacit knowledge in everyone who has come to the markets. To overcome this I talked to some of our community members who are engaged in stock market investing. What follows are the pieces of advice as given by the members with explanation and emphasis from me.
There is risk in investing but there is more risk in not investing
When investing in something like stocks remember your money is at risk. That said not investing in your financial future is taking a bigger risk.
Investing should be a consistent habit, every month invest in your future
I love this one because it is consistent with many of the best teachings on investing. You are better off investing a set percentage of your monthly income than hoping to invest your year-end bonus and winning big.
The size of a stock is not important, the returns it provides are what is important
People seem to spend a lot of time worrying about the prices of stocks they buy, but what is more important to you is your return. $1000 of high priced stocks with 5% return is not as good as $1000 of low priced stocks with 40% return.
Investing is a field of its own and educating yourself will do you a world of good
It’s important to understand the terrain. Reading books and periodicals that deal with issues of stock market investing will make you a better investor. One or the other is good but reading both is best.
Time is your friend and patience is your best tool
The rewards in stock market investing generally come and improve over time. As you invest realise that those who started before you may boast huge returns but yours will come in time.
You can be both a trader and an investor
I love this one because it’s a somewhat unpopular opinion that I have and am willing to stand by. People will waste time trying to define if they are short term (traders) or long term (investors) when both positions make money. Do what works for you and if you can do both, go for it.
A bad company doesn’t mean its a bad share
The company is not the stock and the stock is not the company. While the shares are units of ownership in the company, their valuation on the market is not only about business factors but may include other issues.
Associate with those doing the same things. Take advice but make your own decisions.
Communities are very important in helping us grow and exposing us to new ideas and points of view. So finding communities all about investing will help you greatly.
Investing requires many different skills so reading widely helps
When investing in listed companies, we must remember there are businesses behind the companies. Our ability to understand these companies comes from more than understanding the markets but our greater exposure to the business.
The moment after you sell a stock it will go up. Sell for your reasons otherwise you are certain to regret it
It’s funny but you will find it true most of the time. When you sell for the wrong reasons you will likely regret selling.
Don’t forget why you started. Rather remember why you started investing because it will help filter the noise
There is a lot of noise in the market. Opinions are given for free and you need to remember your reasons for being there to choose what to take heed of and what to ignore.
Emotional awareness will help you navigate the markets better
It is very important to understand the relationship between money and your emotions. You have money at risk here and any times your emotions can cloud your judgement. Emotional awareness will help you separate facts from opinions.
You are investing for you so do what makes you happy
You will get many people telling you to do this, that or the next. Sometimes it is good advice and sometimes it is not. Evaluate all information and in the end, choose what works for you.
Understand what drives the share price
In a perfect world, the only thing that drives share prices would be company profit (earnings or earnings per share). However, that is not always the case as there are many moving parts in these businesses and markets. Your goal to gain as much of an understanding of these factors as is possible.
If you’ve been involved in investment markets and particularly the ZSE we would love to hear your tips and advice in the comments section. If you like the advice you see here you should consider joining our wonderful WhatsApp community for ZSE investors.