Make your money work

Make your money work

You don't have to be an adult to invest, but be careful

The word "investing" is usually associated with boring, besuited businessmen, colourful yet confusing charts, and a chunk of incomprehensible numbers.

But those are just stereotypes. If you actually take the initiative, and learn about investing, you may well find it an interesting and useful subject.

Another misconception is that investing is a game only for the "big boys". But while it should not be excessively glorified among youngsters, it certainly doesn't hurt to learn something that you don't already know.

I am 13, and I have already had some experience in investing, which I would like to share.

Let's start with the two golden rules.

First, when talking about investment, we're talking about real money. Investing, therefore, requires a lot of detailed research, rather than betting your money on rumours.

Second, under-18s cannot trade stocks by themselves. So most students will have to strike deals through adults, which normally means your parents.

To put "investing in the stock market" in simple English, it actually means buying a part of a healthy company because you believe it has potential for growth or sells quality products.

If a lot of people also believe in that company and purchase its stock, the company's market value then goes up.

Conversely, if people lose confidence in the company and sell their shares, the value of the company goes down.

Investment adviser Michael Nock has more than 30 years' experience investing in Asia.

Nock advises long-term investing over short-term trading, and likes to compare sailing and investing.

"When sailing, my dad advised me to look for a distant point like a far-off lighthouse and aim for that, not for a closer target," he says.

That's because by doing so, the boat will sail a steadier and smoother course, and sailors will feel less stressed.

"Funnily enough, the same concept applies to long-term investing."

What Nock is saying is that there are impatient investors who are always worrying about how much money they can make by buying and selling stocks quickly.

This not only causes stress, but also greatly increases the risk for your portfolio (blocks of shares).

You should only buy stocks in a company which you think has the potential to grow in the long run - not one that you think can make a quick profit in three days.

Nock adds: "Avoid fashion. If everyone is talking about a particular stock, avoid it."

This is because this stock could be trading at an unfairly high price. When people find this out, they could sell their stocks, causing the company's value to plunge.

Always try to buy stocks in a company you know, and don't get involved in complex businesses you don't understand.

After learning all these things, I prepared a presentation and annoyed my parents for days to persuade them that I was capable of investing. Finally, they said "yes" ... and gave me some money to invest.

When I invest, I always keep Nock's advice in mind: "The best investors are avid readers, not only of books, but also of magazines."

So I keep up to date with current affairs, and read books about investment.

Remember, it takes more than sufficient capital and some hot rumours to be a wise investor.

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