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How To Invest

How minimalist investing can make you a better investor

Investing can be pretty overwhelming.

There are simply too many stocks, bonds, ETFs, mutual funds, and robo-advisors to choose from. And even after you’ve decided on your investments, it can be a daily chore to check your portfolio every day, even past midnight if you live in Asia when the U.S. market is open.

9:30 p.m. to 4 a.m. gang please rise.

The first few years of my investing journey weren’t enjoyable. Besides losing sleep, I also lost quality time with my friends and family. I was always on my phone, refreshing the app to check my portfolio balance and to see the latest and hottest assets to invest my hard-earned money.

That sucked.

To make things worse, I also lost money. A lot of money. What I didn’t realise at that time was that I wasn’t really investing but, instead, hoping to make quick money (my wedding was coming up). I made irrational and emotional decisions by overthinking and overreacting to market movements. Ultimately, together with bad investment decisions and wedding costs, I had to dive deep into my limited hard-earned savings and was back at square one.

After crying over spilt milk for many months, I regarded the financial loss as ‘tuition fees’ and decided to look forward. I deleted several finance apps from my phone, consolidated my remaining assets, and asked myself: ‘What do I really want from my investment journey?’

Chasing a hundred rabbits

Ask 10 investors why they invest and you’ll get 10 different answers. Ask the same 10 investors what assets or securities to put your money into and you might get 100 different options.

Thinking back, there was too much advice that I took and applied without knowing what investments were most suitable for me. I was chasing 100 rabbits and did not catch a single one. With limited funds, I jumped from stock to stock and tried to time the market by buying the dips.

Oh boy…

Today, I am clearer and more aware of what I want from my investment journey, the amount of risk I should take at different stages in life, and a timeline for me to achieve my financial goals along the way. With this clarity, I now sleep better by not chasing ‘the latest and hottest meme stock’ or ‘the next outperforming mutual fund’. I simply hold and focus on the assets that I truly believe in for the long term.

What is minimalist investing?

When it comes to minimalism, the same mantra holds true: Less is more.

As a minimalist investor…

  • I stick to asset classes that I’m comfortable with; if I don’t understand it (for now), I don’t touch it.
  • I own a small number of ETFs and stocks that I understand.
  • I monitor business fundamentals, but not daily prices; I am investing for the long term.
  • I trade only occasionally; if the market doesn’t present an opportunity for me, I simply wait.

Along with that, I also make sure I have enough emergency funds in case of a rainy day, and I contribute regularly to my CPF account.

Instead of chasing 100 rabbits, I now keep an eye on a few golden geese.

Being a minimalist investor will help you save time and give you better clarity. I know what I want in terms of returns (income vs growth) and the risks that I’m comfortable and willing to take.

This clarity also helps to remove the emotional aspect of investing. As seen in early 2020, stock markets around the world crashed when COVID-19 reared its ugly head. Many who were ‘chasing rabbits’ would have been caught in the panic, but investors who were tending to their golden geese would have recognised that the pandemic was a once-in-a-decade opportunity to grow their flock.

Warren Buffett once said: ‘Be fearful when others are greedy, and greedy when others are fearful.’

It’s simple advice, but almost impossible to follow if you have no idea what you’re doing.

The fifth perspective

Today, I look forward to the 15th of every month to update and track my net worth. Because I only possess a few ETFs, stocks, and asset classes, it takes me only five minutes for me to complete this on a spreadsheet. Doing this exercise also strengthens my focus and reminds me that, by sticking to plan, I’m on my way to my version of financial independence.

Your time in the market does not have to be a stressful one; ups and downs are part of the journey as an investor. Keep things simple. After all, your money should be working hard for you, and you should not be losing sleep over your investments.

Russell Kua

Russell Kua is the firstborn to a stock broker who lost it all in the 1997 Asian Financial Crisis. Learning from those lessons since his preteen years, he is now debt free, a homeowner, and happily married with a son before his 30th birthday. Follow him as he writes about his journey to financial independence.

4 Comments

  1. I could add another rule for passive/minimalist investing:

    Limit yourself to a fixed number of trades per month. Ideally not more than one buy and one sell. A lot of beginners kid themselves that they going to be ninja traders, buying and selling like crazy. I guess it can work sometimes for obsessive and disciplined technical traders, but most people don’t actually do very well, and most “traders” actually lose money. I think I might even classify myself as a “failed trader”, but a successful investor.

    Of course, trading is fun, but it’s not the same as investing. There’s also an old saying that “it’s never wrong to take a profit”. If one holding in your portfolio gets to be worth a disproportionately large percentage of your whole portfolio or net worth, then it makes sense to take some profit and reduce the number of shares you hold, you can re-invest the money elsewhere. Even the minimalists can consider re-balancing their portfolios every 3 months.

    1. Yup rebalancing one’s portfolio is important for everyone – even minimalists.

      Oh, I’m definitely “failed trader” too. Fun while it lasted! Glad I lost money and learned my lessons the hard way.

    1. Hey K,

      Try to craft one on your own without referring to templates (many out there include too much information like pie charts, graphs and projections, etc).

      Don’t overcomplicate it; every row should be your bank account/exchange/ asset and every column is your snapshot date (15th of every month for me). That’s it! A “live tracker” is unnecessary in my opinion as investing is like baking a cake; no point checking every second or minute

      This will make your net worth your “own” and will be unique. You’ll find yourself coming back to this sheet often too 😉

      Pro-tip: if your assets are in USD/GBP or other currencies, use *today’s* exchange rate. This will not only simplify conversion but also, you’ll be able to see how your assets depreciate/appreciate with fluctuating FX rates across the years.

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