035. How to rid your fear to start investing?

This piece of survey appeared in the newspaper about a month back. I think we hear the similar results over the past years. It is worrisome to know my fellow Malaysians worries about their retirement needs.

I have met many people over the last few years when doing roadshows to promote the habit of savings or investing. Below is my observation on why people do not want to invest:-
1.) They have contribute to EPF;
2.) They have saved through insurance;
3.) Not familiar with investing;
4.) Bad experience of family members
5.) Investing is unsafe;
6.) Timing the market;
7.) No money;

Reasons 3) to 7) are telling he has fear about investing. I have been thinking how an investor can kick start and stay on course. I reflect back my first experience of investing. I had made the same mistakes. Anyhow, the persistence of going on with regular savings plan opened my eyes years later how it had saved me quite a sum of money.

I invite to-be investors to start now. I think you can do these things to rid your fears. But before this, let's stressed on we are talking about investing for the long-term, with a purpose in mind. An investment is based on sound planning and analysis; takes time to grow fruit; with the least worry.

(We are not talking about punting on the market for quick profit. You may not have the time or knowledge yet; and the most important is we don't want the investment tactics to disrupt your daily job.)

Read a book on investing
Reading a book of investing is the best way to start on. The best book should be "The Intelligent Investor" by Benjamin Graham or Berkshire-Hathaway letter to shareholders, written by Warren Buffett. Learn how the greatest investment icon Warren Buffett, Benjamin Graham's student, had successfully generated his wealth through value investing. Read as many as you can to open your eyes and mind. Challenge our mind on what investment is all about, how it can be safe, how others had got it wrong etc.

Talk to family members / friends
Many a time, our friends and family have many successful or failure in investment experience. I know many potential investors are scared by those failure stories. Probe the actual reasons to fail. Was it on sound analysis? Solely based on friend's tips? Buy the wrong share / fund? Punting instead on investing? A car accident does not conclude driving is unsafe. It could be unsafe road conditions or driving attitude. Compare their experience with what you have read; write down how many mistakes are against Benjamin Graham or Warren Buffett's teaching?

Start Small
The least you can do to start is to start small; an amount you are comfortable with. If 10% of your salary seems to much; start with 5%. You may spread the amount into a few investment targets, e.g. unit trust funds, savings account, insurance etc. As we get more familiar with investment and with salary increment, we can gradually increase our investment amount.

Use a regular savings plan
If regular savings is possible, commit a regular savings plan to deduct the investment amount the date just after you receive your salary. Let's say you get your salary on 7th of the month, deduction on 8th or 15th should be ideal. By doing this, you know you can use the balance salary happily. And you start to form the habit if savings.

Regular monitoring
No matter how investment savvy you are, regular monitoring is a must. I know new investor like to monitor on daily or weekly basis. They like to look at the price published in newspaper. I would not recommend this because it will affect your feelings and you may start to imagine things. Instead, if you are new, quarterly monitoring should be fine. As you get more experience, you may change to half yearly or yearly monitoring.

Talk to experts / consultants
In any time of your investment period, talk to your consultants or other experts if you come across any confusion or fear. Newspaper heading always like to scare investors. Warren Buffett like to remind his investors to welcome bad news because that give his company to start buying new investment opportunity at cheaper price; and thus guaranteed higher return. So, if your consultant advise you to do ad hoc top up, you know you will have a higher return.

Have the long-term purpose in mind
Set a long term goal for each of your investment targets, it can be for retirement or children education, or vacation. With that goal in mind, do not stop invest until goal is reached. If goal is met, you may channel the money to other goal.

To start an investment, to me, is like to start a career with a company. We trust the company to continue employment and paying salary based on their past record, although past record is no guarantee. Likewise, a fund's or company's past record served our guideline to decide investment or not. In both cases, we will see how the company's or fund's management carry out their duties, from time to time, and adjust our investment accordingly. If the fund or company management has strayed from its original style, we know we need to act diligently. Else, we grow with the company or fund.

Hope we all success in our financial goals.