You will be able to recognise common first-time investor mistakes and the habit that prevents each.
Six months after his first ETF purchase, Wei Jie had made eleven trades. He'd sold his US fund after a bad week, bought a technology fund a friend recommended, sold that when it dipped, and bought back into the US fund a few weeks later at a higher price than he'd sold it for, paying commission each time. If he'd done nothing after his first order, he'd have had more.
None of his decisions was crazy on its own. Each one felt sensible at the time. Together they cost him money, and they're the same handful of mistakes that first-time investors make everywhere. Each has a simple habit that stops it.
The first mistake is watching too closely. With the app on your phone you can check your balance on the MRT, at lunch and again before bed, and almost everything you see is noise: a broad fund can swing a percent or two in a day for reasons nobody will remember next year.
Each look is a chance to react. A red number nags at you to do something, and the something is usually a trade, with its commission, its spread and a decision made on one day's mood. Wei Jie sold after five red days in a row.
The habit that stops it: decide in advance how often you'll look, such as once a month on the day you invest, and turn off price alerts for your long-term holdings. Keep the trade notifications from lesson 3.3 on, since those are about security. Price alerts are just temptation.
The second mistake is buying whatever went up most recently. When a fund or theme has had a big year, you see it in articles, group chats and ads, and wanting some is a normal reaction.
But by the time a fund tops last year's tables, the gains have already happened, to the people who owned it before. Buying after a big run means buying at a higher price, often just as enthusiasm peaks. Themes that were hot one year are frequently among the weakest the next. Wei Jie bought his technology fund after it had already had a very strong year, and sold it in the first dip.
The habit that stops it: go back to your written reason from lesson 5.4, Shortlist three ETFs and choose one. If a new fund doesn't meet your must-have list, it doesn't get bought, however good its last year looks. If it does meet the list, judge it against your current fund on cost, size and listing, and leave recent returns out of the comparison.
The third mistake looks like prudence. Prices fall, so people pause their monthly investing to "wait until things settle", and they restart once the recovery is under way and the headlines have calmed down.
That pattern turns dollar-cost averaging upside down. It skips the months when your fixed amount buys the most units and resumes when it buys the fewest, so you keep buying high and missing the low. In lesson 7.3, What a market fall looks like in your own account, Nadia's quarterly S$1,500 bought 600 units after a fall instead of 400, and pausing gives up exactly those extra units.
The habit that stops it: make your plan automatic where you can, and write a rule now that says you keep investing through falls. You'll write that rule in lesson 7.5.
The fourth mistake can cost far more than the others. Once you start investing, you become a target. Ads, messages and "mentors" offer platforms with guaranteed returns, high monthly payouts, or a chance to copy a successful trader. Some use fake news articles or videos of well-known people.
A guaranteed high return with no risk doesn't exist in real investing. An offer that promises one is a warning sign in itself. So is a platform that isn't licensed by MAS, pressure to decide quickly, or a request to move your money onto an unfamiliar app.
The habit that stops it: check every firm against the MAS Financial Institutions Directory and the MAS Investor Alert List before sending a dollar, exactly as you did for your broker in lesson 1.3, Check a broker is licensed and what happens if it fails. Never move money because of a message you didn't ask for. Scam-proof your money covers these offers in depth in lesson 4.1, Fake platforms show profits you can never withdraw, and lesson 4.3, Fake celebrity ads, insider groups and trading mentors.
Few people are equally prone to all four. Restless types trade too much, cautious ones freeze in a fall, and trusting ones click on the wrong ad. Nadia knew which she was. Careful to a fault, she'd be the one to stop investing the moment things looked frightening.
Be honest about which two you're most likely to make. For each, write down one habit that would stop it, specific enough that you'd know whether you'd kept it.
Write down the two mistakes you are most likely to make and one habit that would stop each.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).