Stocks are the best type of investment tool for anyone looking in terms of performance. Of course, real estate has delivered some strong returns too and over short periods, these returns are even stronger than the ones obtained by stock investing. However, everyone agrees that over the long term, stock investing is the most efficient engine to drive investor’s money. Stock markets are even more important to young people than to other types of investors. The key when investing in stocks is time. If you are patient enough while diversifying you will make money in the stock markets. You have to give it long enough to do so and you should never fall in the trap of trading too much. This is the main trap with stock investing without any doubt. If you start to trade too often you are quickly going to underperform the markets. You might do so without noticing it at first. Why? Simply because most not experienced investors only look at their performance without caring much about the stock market’s performance in general. This is a great mistake. It is easy to make money when the markets are rising. Actually, it is more than easy, it is the norm. Even a kid cherry picking stocks might be able to do that. As soon as you see some gains, you can sell your stocks and buy new ones. As long as the markets will rise, you should be fine and keep making money. The problem is that if you’d stop for a minute and take the time to calculate (yes this is a real calculation that that takes time because a multitude of factors need to be taken into account) the chance is extremely high that you would realise that your gains have been lower than the stock market’s gains and that you would have also been better off not to sell your stocks and buy new ones (there are transaction costs involved in this, this is definitely not free or even cheap, and this is how your stockbroker makes money!) Things get even clearer when the stock markets go into a down spiral or even stay stable. Under these two scenarios, you will quickly find out that your strategy of high frequency trading is not working and that instead of increasing your returns it increases your costs. The best way to make money on the stock markets is to stay invested all the way and you would eve do much better if you re-invest the dividends that you will receive overt time. Keep in mind that, as we have mentioned several times on our blogs, the dividends are extremely high in Vietnam. If you are interested in investing in Vietnamese stocks just contact us at info@anhthomas.com.
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