Investing with purpose and conviction

I cannot stress enough the importance of investing with purpose; to know what you are doing with your funds and the risk you are willing to take with them.

How willing are you to lose a year's worth of salary (or whatever amount you are investing)? How willing are you to see and hang onto unrealised losses amounting to large amounts of your net worth? When will you need the funds? What is the opportunity cost of not investing or investing in alternatives? These are just some of the questions you should have answered before sending your money into the market.

It is especially important in times like these (down-market for electric vehicles and many high growth stocks) to know what your final goal is.

Have an investment strategy for each trade placed and stick to it or learn from it. I have made a lot of mistakes with exiting prematurely when I was not clear on whether I entered the trade for the short or long term, often selling at a loss because of short term fluctuations when I would have gained greatly had I held for longer.

Personally, during this time I am researching stocks which have recently done well and understanding why they are moving up, and I am buying into more shares which are discounted. At the peak of Jan 2021, I was up 170% for the year (since 01JUL20), and now I am up 70% for the year, I try to not play out dreamy 'what-if' scenarios and instead just stick to my strategy.

An investment strategy should include an emotional strategy. Writing down your ideal response to what would happen in various scenarios like a crash or bull run can act as a compass during times when it is difficult to think clearly. There had been many times when I aimlessly invested my money again after an emotional and financial high in the hopes of replicating the same result.

Times like these can be mentally taxing, if you know you are holding for the term, I suggest you blank out your current returns and focus on opportunities if possible.

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