INTRODUCTION

I have been investing and trading since 2008 and I believe prudent investing is vital for everyone to achieve happiness and personal goals in life. Why? This simple quote by Warren Buffett will suffice:

If you don’t make money while you sleep, you will work until you die. — Warren Buffett

I understand many people do not have any experience, knowledge, or trust for stocks. So I have compiled a simple beginner’s guide to investing to change your mindset and make you at ease to start your investment journey and gradually/exponentially grow your net wealth through patience and prudent stock investing.

What asset type do I buy?
What platform do I use to buy?
What stocks do I buy?
When do I make my first investment?
How do I manage & grow my investments?
When do I sell?

1. WHAT ASSET TYPE DO I BUY?

The first step is knowing yourself and your options. This article will discuss Stocks (aka Shares aka Equities) as the main investment option. Why? Stocks provide several benefits: Wide variety of choices, highly liquid (most medium and large company shares are easy and instantaneous to buy and sell, funds returned to your account in a couple working days), relatively low risk, and can achieve outsized gains.

Of course you can always consider alternatives: Young investors should avoid Bonds as that asset class cannot achieve great outsized gains. Cryptocurrency is a speculative and volatile asset class, but some investors who want exposure to crypto can invest in Bitcoin and Ethereum as a small part of your portfolio. Other crypto coins (such as alternative or altcoins/memecoins) are highly speculative and only suitable for high risk-takers.

Your investment strategy also differs depending on age and risk appetite. Young peoples’ aim should be to grow wealth (higher risk, higher gain assets). Older folks should be for wealth preservation, low volatility, and to beat inflation (lower risk, lower gain OR dividend-yielding assets).

2. WHAT PLATFORM DO I USE?

There are now several free online brokers in every part of the world to let you invest easily and safely.

Singapore: Tiger Brokers, Moomoo
USA: Robinhood, eToro

3. WHAT STOCKS DO I BUY?

Some invest based on emotions, as in they buy company shares because they use and love its products. Examples are MacDonald’s and Lululemon.

A more analytical method is to study the company’s financials and their future potential. Stock are generally ~6 months forward looking, as in the current share price is pricing in all potential known scenarios till 6 months down the road, or about two earnings results (most companies report earnings results every quarter). Therefore, forecasting a company’s future potential earnings is a very important barometer for its share price performance.

If you’re risk averse, consider a diversified basket of safe stocks (Macdonald’s, Nike, P&G, US/SG bank stocks, or US ETFs). Bank stocks, including the big 3 Singapore bank stocks, are very low risk and give a decent dividend yield every year (5+% as of 2025, this dividend is income tax-free for Singaporeans).

Another reliable and safe method is investing in Exchange Traded Funds (ETFs). These ETFs are made up of a basket of stocks and are traded like a stock too. One popular ETF is the S&P ETF (Ticker: SPY) which holds shares of the top 500 US companies in the S&P500 index. This S&P500 index is one of the main indices in the US stock market, alongside the Dow Jones (Big 30 Companies in the US comprising of various industries) and the NASDAQ (a collection of 100 US companies, mainly tech focused).

For those with greater risk appetite, consider growth or tech stocks, especially mid-sized or small companies. Much research and analysis is required to unearth hidden gems, one example you can look at is my analysis on Xpeng, a tech-focused EV/e-mobility maker. However, such growth stocks commonly experience bouts of extreme volatility (e.g. ±10% or more per day), usually during their quarterly earnings releases, major corporate news, or times of global crisis.

4. WHEN TO MAKE MY FIRST INVESTMENT?

If you are afraid to invest you will always find a reason to procrastinate, and you will never invest. There is never a perfect time to start investing, you can only do it when you are 80% sure.

I believe the best time to start investing is during or close to a recession/stock crash, as you can be quite certain you are not over-paying for stocks. Then you may ask, what if the company goes bust, or the share price drops another 10% or 20%? That’s all your hard-earned money melting away!?

Here are my reasons to dispel your fears — Buy very safe, evergreen stocks like JP Morgan or DBS Bank (or S&P500 ETF) if you’re fearful. Why? Because history has proven that the stock market (especially USA) never fails to recover from a recession and push even higher. So even if it drops more, you know it will eventually recover, and it’s just a matter of how much you earn in the long run (e.g. years or decades), not if.

Investment is mainly about time in the market, not timing the market. Since almost nobody can time the market exactly (except insiders and market makers sometimes), it is wise to always be a bit invested, and continuously buy quality shares through ups and downs. That means buying a significant amount of shares and/or investing regularly using DCA (See 5). If your investment cannot give you a life-changing profit, I feel it is pointless to invest.

Beware these mindsets:

The stock has gone down, but I’ll wait for it to go lower. When it goes up, I won’t want to buy it. I’m not going to buy it near its All Time High price — Yes, buy low and sell high is good, but buy high and sell higher is also acceptable. You won’t be able to get quality stocks at prices from pre-covid. Price is relative, high can go way higher. Buying high means less profit only in this scenario.
Conversely, the notion that a stock trading at a high price must mean it’s a quality company and a “better buy” is a fallacy — Markets are often times inefficient, especially day to day. You must do your research, study analyst reports, and find out more about the company and possible reasons for its valuation.

5. HOW DO I MANAGE & GROW MY INVESTMENTS?

PASSIVE & ACTIVE PORTFOLIOS

You can have two portfolios, one passive and another active investment portfolio.

The Passive should be a majority of your total portfolio, comprising blue-chip stocks, DCA strategy, with an evaluation once or twice a month.
The Active should be a smaller portion of your total portfolio with more speculative growth stocks. Have a strict stop-loss for certain Active stocks (e.g. sell the stock the moment it drops more than 10% below your buy price). This helps to limit your losses and reduce stress, and you can always use the remaining 90% of funds to recoup back your losses (If you sell the stock at a 50% loss, you need to double your money aka +100% just to break even instead of +10%, which is much, much harder).

Follow Your Company(s) Performance

It’s imperative to know your invested company’s financials and performance. Read the company’s website, balance sheet and financial statements, understand its products, and listen to their online earnings call. Company guidance (forecast for the coming quarter) often matters more than previous or current performance as stocks are forward looking (~6 months) as mentioned above.

Don’t fight the Fed!

The Fed refers to the US Federal Reserve, which controls U.S. interest rates (which influences global interest rates and basically the entire global economy). Lower interest rates tend to boost stocks, especially tech stocks, while bonds will fall out of favor.

We are currently heading toward a lower interest rate environment into 2026, but that may change anytime depending on the volatile Trump administration.

Understand Global Trends

Also study and understand global trends to see if company has a bright future (frontier tech like AI, robots), or is it in a stagnating or sunset industry (traditional news media?). Is it getting less competitive? Are regulatory or macroeconomic events (e.g. climate change, tariffs) weighing on its ability to make money?

Watch out for Black Swan events, which are highly unexpected and very impactful global events, such as a major war, pandemic, financial crisis, major terrorist attack, or oil shock.

Ultimately, stocks climb a wall of worry. But stocks are generally biased to the upside, because the world economy will grow in the long run, and governments always want to boost the economy. In the face of extreme adversity, like the Covid pandemic, they will usually band together to try to stimulate and backstop the economy and stocks (e.g. Fed QE and zero interest rate policy).

The Power of Dollar-Cost Averaging (DCA)

Example: You buy 100 cans of Coke shares at $1 each at $100 total. Coke share drops to 50 cents the next month. With another $100, you can now buy 200 Coke shares. So you now have 300 Coke shares, but your average cost is $200/300=66 cents. And that is the power of DCA.

This is how DCA works in your favor, through the stock’s ups and downs, especially dividend paying stocks/ETFs. The famous investor Warren Buffett is so happy when the quality stock he owns drops so much, it means he can buy more stock at a much cheaper price.

The Power of Compounding

Set aside 10–20% of salary every month to invest in quality/growth stocks. Then reinvest all dividends, if possible, to achieve compounded growth, which will lead to an exponential growth of your portfolio in the years and decades to come, leading to an early or comfortable retirement!

The first rule of compounding is don’t interrupt it. — Charlie Munger

Patience is Key

Once you buy a stock, sometimes you need to wait a long time for it to bear fruit. One example is Apple stock, which stayed at US$1–10 for years before it shot up to the stars.

The stock market is a device for transferring money from the impatient to the patient. — Warren Buffett

Active Investing Tips & Strategies

May and October are historically poor months for the stock market. So some traders adopt this mantras:

Sell in end April/early May and buy back cheaper in end May.
Sell in end September/early October and buy back cheaper in end October.

Another strategy is to sell immediately (following a knee jerk reaction around the world) when a Black Swan event occurs (e.g. Covid pandemic, Ukraine invasion) and buy back slightly or much cheaper when the crisis subsides.

6. WHEN DO I SELL?

Personally, I never fall in love with my stocks. Never get too complacent, a 100% gain can disappear in a few months. Tech is risky, even behemoths can fall, such as Nokia and Canon. Some pandemic winners have become mega losers.

Feel free to sell at your target price or at a good profit and move on to the next better thing. Avoid the mindset of Sunk Cost Fallacy, where you only sell your winners and keep your losers.

Of course, passive investors can keep their quality stocks forever (Bank stocks, ETFs), especially if it continues to grow and/or give good dividends.

SUMMARY

I firmly believe investing is a rewarding journey which should be done as early as possible. Give it a try and dip into it. For those with not much spare time to research and analyze companies, simply stick to the Passive Investment route with just bank stocks and ETFs.

Investment 101