I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!

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Saturday 12 November 2011

Will you dump more than 50% of your capital at one go into your investment?

Read? Average Down or Average Up. Know Your Maths!

Will you dump more than 50% of your capital at one go into you investment?

Generally, what is your expected answer from those retail investors around you?

Investing in one property???

It is likely to be yes for investing in property as most people will agree that property over long term will not crash to zero and people dare to invest a large sum of their capital at one go.

Investing in one stock when it is already low???

Likely the answer is No as nobody is gullible enough to dump more than 50% of their capital into one stock at one go even when they believe the stock price is at its low. It is just too risky to do that. However, when a stock price starts coming down and become cheaper. It can give an illusion of "safety of margin"??? in that one stock. Investors can have no problem in accumulating it to more than 50% by averaging it down.

This is how an investor's mind works? Quite amazing. Right?






Posted by Createwealth8888 at 14:54
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4 comments:

  1. Anonymous12 November 2011 at 16:02:00 GMT+8

    Hi,
    Many years ago, while attending a free OCBC in house investing seminar, i came across one fellow attendee, who claimed he invested all his money in local banks. If what he said was true and if he has been doing it until today, i think he is very blessed or lucky. All the banks are still doing pretty O. K. right?
    This is a belief or not is up to you story.

    ReplyDelete
  2. Createwealth888812 November 2011 at 16:14:00 GMT+8

    I also heard one ex-secondary school principal who average down DBS by leveraging on his landed property until he was bankrupted during Asian Financial crisis 1997/1998.

    He refused to believe how low can DBS crash and he also believed that Govt would step in to halt its fall. But, the market can be too powerful for govt to stop it.

    Leverage is double edged sword. It can kill too.

    ReplyDelete
  3. Anonymous12 November 2011 at 16:45:00 GMT+8

    Yes, whoever use a lever should knows that he must have the muscle to do it properly. Or else, not only he will break his muscle, his bones may be broken too.
    Cantonese saying: "KWAT DI MO TAK CHENG"

    ReplyDelete
  4. Anonymous15 November 2011 at 15:09:00 GMT+8

    It's a super gamble. You can win big but it's not a risk worth taking (you can crash and burn also).
    Even Warren Buffet will spread his risks and build a portfolio (though it started as small and focused one).

    ReplyDelete

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