How I Started Investing

Going to share how I started my investing journey last year in this blog post. Before I started investing, most of my savings were kept in fixed deposits, which as all of us know, gives quite pitiful returns that is lower than the long-term inflation rate. So, I was actually losing the real value of my savings, which is definitely a very bad incentive to save for the future.

I've heard of the stock market before this, but I've never really went to find out more about it. I just had vague ideas of shares being parts of companies, but no idea how they were traded or dividends or rights issues. Over last year, I've also been reading some articles on Business Insider, which cover many topics, but shares was one of them, and I got to know that investing in shares provided good long term returns that on average beat inflation.

The turning point was one day when walking through a bookstore, I came across "The Five Rules for Successful Stock Investing" by Pat Dorsey. This gave me a lot more insight into companies and analyzing financial statements, economic moats, etc. and got me more interested in investing in shares.

So, I started looking up online about trading shares and how they work as well as asking other people. Then I started learning about brokerages, dividends, rights issues and much more. I also brainstormed about some companies that I could think of which I thought had economic moats and made good investments, following the rules in the above book. The first one I thought of was Comfortdelgro, safe in my opinion as a public transport operator and also able to benefit from the government's move to the contracting model. I decided to test the waters first by buying 1 lot (back then 1000 shares) of the company, around $2.60

Things didn't go too well at first, with the share price dropping to $2.44 (as far as I remember). But I still held on to my decision. Within a month, the falling oil prices boosted the share price to $2.76 and as I started re-analyzing my decision, I started losing faith in my decision as I kept re-thinking the share, the values I gave in the DCF model I came up with and used information that I was just starting to learn, which gave it much lower values than the current share price (or even the share price I bought it at).

So I sold out, not expecting that within the next week the share price would have continued going up, but I still booked a small 2+% profit on this short stint so I was inspired and so I continued looking at other company's steadily putting in more of my savings and learning more about different companies and also different instruments such as bonds, index funds, etc.

I think investing in shares can be enjoyable at times, especially when finding good undervalued companies to invest in. While the current downturn in the market may seem like a negative development, it is actually more exciting for me as more shares are being sold at prices below their intrinsic value. But one of the more difficult parts I've found is reading sentiments of people, which usually leads to me picking not so good times to buy shares, where they usually drop within a few weeks of me buying them, but so far have seemed to work themselves out except for this current downturn.

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