Last Updated on May 7, 2023
When I started working, I was privileged enough to learn the basics of personal finance and investing even before my first paycheck.
I know a lot of people who earn enough to get by and support their families. I also met people who had no obligations.
Through these people, I learned that it doesn’t matter how much or how little your salary is. As long as you don’t have the proper mindset, it will be challenging to obtain financial freedom.
As the saying goes, it is not how much we earn but how much we keep.
Here are eleven of the most important investment and personal finance lessons I learned during my first three working years.
Table of Contents
1. Never start investing unless you have an emergency fund.
During my first month at work, I was so excited to try investing. In my mind, I need an emergency fund first before I start, but I want to start building my portfolio immediately.
As soon as I received my first paycheck, I opened another bank account, which was different from my payroll bank. After this, I subscribed to its Unit Investment Trust Fund (UITF) Equity Fund.
Note: UITF is a pooled fund that collects funds from multiple investors and is then invested by a fund manager. Equity Fund is invested primarily in the stock market.
Unfortunately, when an emergency came, and I needed money, I was forced to withdraw my investment. However, the good thing was that the stock market was “up” during that time, and I did not lose any money.
The downside is my portfolio could have grown more if only I had left it invested.
It was a big lesson for me to be a successful investor. I should know how to follow the correct order and not jump blindly into investing because everyone is doing it.
2. Have an investment plan and stick to it.
Are you a long-term investor or a trader? Are you conservative, aggressive, or a little of both when investing?
What do I intend to do with my investment? Is it for retirement, buying a house or car, or education?
These are the first questions to be answered before choosing an investment vehicle.
Carefully consider where and when you need the money to maximize your profit.
3. Never stop learning.
In the past three years, I learned a lot from different media. I read books, watched videos, listened to podcasts, attended seminars, and subscribed to blogs.
And each time, I learn a little more or refresh my memory. Besides what I learned from reading, listening, and watching, finding a mentor or talking to someone who has been investing longer is also essential.
They can share their experiences and mistakes. Through them, you can skip a lot of heartaches, losses, and sleepless nights.
As the saying goes, we must learn from our mistakes, but learning from the mistakes of others is a better and less expensive alternative.
Always remember that there is still room to grow. Don’t let pride get the better of you because learning will be difficult as soon as pride creeps in.
4. There will always be ups and downs.
Unless you are invested in real estate or just parked your money in the bank, you should be prepared to see its ups and downs.
It is the natural behavior of the stock market, so other investments directly connected to it are also affected.
A significant driving factor of the frequent swing of the stock market prices is its investors’ emotions and current events.
5. Opportunities are everywhere; you just have to look.
Investing is not only in the stock market, mutual funds, VUL, or UITF. There are also MP2, real estate, Forex, and businesses. Many people became millionaires using different investment vehicles.
6. Live below your means.
When I was starting to earn, it was challenging to create a budget. I had to get my priorities straight.
It was challenging to have some extra to invest in. That is how I applied the principle of living below my means.
Some people may say that I was depriving myself, but I don’t want to deny my future self in my head.
It is better to sacrifice a little bit now because things will get easier eventually.
7. Time is more important than money.
Three years have passed, and I can say that time and patience are crucial when investing.
Even if I started with a small amount, it slowly increased as time went by. Yes, there are ups and downs, but you will see that the general trend is always up if you look at the bigger picture.
The stock market is the best example of time being an investor’s best ally. The market may show some ups and downs, but if you look at the 10-year historical table, you will know that it keeps going up.
8. Control your emotions.
If time is our greatest ally in investing, then our emotion is our greatest enemy. When emotion kicks in, it can alter your carefully well-thought-of investing strategy.
Many people lose money in the stock market because they succumb to their emotions. As soon as they see their portfolio is red, they can quickly withdraw their funds and never touch the market again.
The worst part is that they give negative feedback to others wanting to start in the stock market based solely on their failure.
If you can only block any emotional bias in investing, it will make things easier. You will not panic when the market correction happens.
As the saying goes, do not put all your eggs into one basket. The same is true in investing. It is best to invest in different vehicles so that if the market is down in one category, it will not pull your whole portfolio.
10. Pay yourself first.
If you still don’t have a budget plan, please create one. It will be easier to put your finances in order.
The idea is as soon as your payslip arrives, put a portion (usually about 10 to 20%) of your income into your savings/investment fund.
Because if you don’t, you will ask yourself why you cannot save anything even though you earn a significant amount.
Paying yourself first will allow you to budget because you have to admit, our expenses are unlimited.
11. Learn to give back.
It is good that we are starting to earn, save, and invest, but we also need to know that our portfolio is unimportant.
We should learn to give back and share our blessings with others, especially our family and the less privileged.
Let us always remember that money is only a tool, and we should use it to better ourselves and others.
Update: I’ve been working for seven years, and these 11 lessons are still valid and helpful for anyone who wants to invest.
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