Experts share the best financial advice they've received, and the worst mistakes they've made.

Experts share the best financial advice and worst mistakes they’ve made

Financial experts share the best financial advice they’ve received, as well as their worst financial mistakes and what we can learn from it. (Image: Getty Creative)

SINGAPORE – From failed investments to not making smart decisions, we all make quite a few financial mistakes. Thankfully, we have the help of those who have traveled this path in the past to guide us back on the right track.

This is part of a series Yahoo Finance Singapore There will be a focus on millennials and different aspects of their finances. In Part Seven, we hear from various financial experts who share with us the best financial advice they’ve received, as well as their worst financial mistakes and what we can learn from them.

1. Always make informed decisions

When it comes to financial decisions like investing, millennials in their 20s are sometimes less disciplined when it comes to reading and better understanding fundamentals.

For example, some people choose to put their money into stocks or investment products because of the hype, or because it looks like a good investment. While they may not be wrong decisions, financial experts hope more preliminary analysis can be done.

“It’s easy to follow trends, but real alpha is often made before you hear about it through your own research,” said Salim Dhanani, CEO and co-founder of financial mobile app BigPay. Say.

“It’s always better to do some due diligence, and maybe you’ll make the same decision, but you’re taking some unnecessary risk,” he added.

2. Never underestimate the benefits of compounding

Millennials generally believe that no matter how small the amount, they need to start investing at a certain stage in their life or at a certain age. This is because you can benefit from long-term growth trends and compounding interest, depending on your investment product.

Therefore, Saleem also believes that it is good for young people to start investing at an early age and never underestimate the benefits of compound interest.

“It’s very difficult to time the market. You may be completely right, but probabilistically, you won’t. To reduce your timing risk, always remember that you can usually do this by averaging into market positions when the trend is up, and when the trend is down. Average exits to gain more upside, or limit downside risks,” he said.

While the rule isn’t without exceptions, Salim assures it’s a piece of advice that has helped him over the years.

3. Understand the difference between investing and speculating

Profiting from an investment in a few days seems like a great option for quick cash, but financial experts also warn of the dangers of speculating on the market from there.

Gregory Van, CEO of Singapore-based fintech firm Endowus, made his first investment in Amazon and made a 7% profit in three days. However, he soon began to speculate, leading to disparities in returns. From an initial 30% profit, he ended up losing 95% due to the global financial crisis.

Therefore, Fan suggests that it is crucial to distinguish between investment and speculation. It is certainly possible for someone to make money through active trading, but it can be difficult to make money consistently through speculation.

“Personally, this whole experience has been very humbling. It put me on the path to an academic, responsible and evidence-based approach to investing that will allow investors to see good returns over the long term,” he said. shared.

4. Some decisions can be a gamble

As a young financial professional, Gavin Chia, Head of Managed Investments and Investment Advisory at Standard Chartered Bank in Singapore, dabbled in many different vehicles.

Like most young people, Chia started trading options with implied leverage in instruments to make money faster. However, he failed to understand the liquidity issue, and as the option value fell to zero over time, the tool quickly went against the time in the market adage.

So he learned the valuable lesson of not taking options positions until they were worthless. Millennials may want to make the most of their money, but figuring out the right time to exit is also important.

“I’ve learned that hoping the market moves in your favor at the last minute is a gamble, not an investment decision,” he warned.

5. Money should be a tool, not a love

Millennials need to plan financially for their future, but they should never lose sight of the fact that money is not an end in itself, but a means to support our goals in life.

Therefore, the famous saying “greed for money is the root of all evil” is the firm belief of Chuin Ting Weber, CEO of Bionic Financial Advisor MoneyOwl.

“If we keep in mind that our financial planning is ultimately about supporting the things that really matter in our lives, we will focus on the adequacy and reliability of our financial planning rather than maximizing and chasing the wind,” Weber shared.

She added: “I believe it will lead to better outcomes, happier and less stressful lives, both now and in the future.”

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