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Top 4 Reasons You Should Not Panic As An Investor (Guest Post)

Top 4 Reasons You Should Not Panic As An Investor (Guest Post)

I know your portfolio is in a deep sea of red, but what I want to tell you is this – you’re not alone. Many investors are also suffering from a huge unrealised loss in their portfolio, myself included (as at time of writing, my long-term investment portfolio is down by 20.0%.) And in case you might be thinking I am a “veteran” in investing, I only have about 2+ years of experience as a full-time retail investor, and is my first time I’m experiencing a stock market decline like this.

This post was originally posted here. The writer, Jun Yuan Lim is a veteran community member and blogger on InvestingNote, with username known as ljunyuan and has 736 followers.

 

On Monday evening (16 March 2020), Malaysia’s Prime Minister Muhyiddin Yassin announced the lockdown of Malaysia for a period of 14 days (from 18 March to 31 March) in a bid to stem the further spread of Covid-19 in the country.

Almost immediately, I read about news of fellow Singaporeans rushing to the supermarkets (even though its already late into the evening) to sweep them clean of fresh produces out of panic that supplies in Singapore may be cut as a result of the lockdown in Malaysia (as many of our fresh produces are imported from the country.)

I see some parallels happening in the stock market as well, especially over the past two weeks, where I see many investors emptying their portfolios and rushing for the exit doors out of fear.

I know your portfolio is in a deep sea of red, but what I want to tell you is this – you’re not alone. Many investors are also suffering from a huge unrealised loss in their portfolio, myself included (as at time of writing, my long-term investment portfolio is down by 20.0%.) And in case you might be thinking I am a “veteran” in investing, I only have about 2+ years of experience as a full-time retail investor, and this is the first time I’m experiencing a stock market decline like this (I hope that after hearing this, it makes you feel better.)

Before you make any rash decisions, I suggest you calm yourself down, and ask yourself the following 4 questions:

1. Why are You Investing in the First Place?

Image result for investing

I’d like you to recall the moment you make the commitment to invest – why did you make the decision?

Some may decide to invest because they want to build a high yielding portfolio (with yields higher than their CPF Special Account), some may be more focused on the eventual capital gain they could possibly get from their investments, while for some, it may be a mixture of both.

So, which group do you belong to?

 

2. Why did You Choose to Invest in those Companies in Your Current Portfolio?

I certainly hope your answer to this question is not, “because of hearsay.”

Prior to investing your hard-earned money in a company, I really hope that you have done a thorough research about it, and have a good knowledge of the company’s businesses, financials, debt profile, dividend payouts, etc. well enough before you make the eventual decision to invest in it.

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