A financially independent 36-year-old says these mistakes are preventing investors from being successful – Business Insider (press release) (registration) (blog)

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Options investor Teng Kenyuan’s life was far from smooth-sailing but he now has a portfolio which generates a six-figure sum every year.
The Straits Times

If you’re an investor, you may have already read about Teng Kenyuan.

At 36, Teng has made a name for himself being financially independent and probably ready to retire, if not for a self-born mission to help others reach their financial goals as well.

The options investor, who designed his own linear regression option strategy, has a portfolio which generates a six-figure sum every year. According to him, it is a strategy that takes only 15 minutes a month to generate healthy returns.

But instead of taking a backseat and whiling away his days, he continues to give financial talks and runs several businesses, including Yoonly Enterprise, a leading memento maker in Singapore.

At this point, it’d be completely understandable if you wanted to simply dismiss Teng as “some guy who got lucky”. But wait, he actually isn’t, and he believes that the financial success he’s found can belong to anyone who is willing to learn.

In fact, Teng’s life story was far from smooth-sailing. While he told The Straits Times that he grew up “comfortably”, Teng was a failure in school who was involved in petty crime and eventually went on to lose $10,000 by making the wrong choices.

It turns out, a naive attitude towards investing was the culprit. After believing in investment pitches, he ended up being cheated of his money a number of times.

“From there, I thought to myself, I will only believe in products from reputable companies including huge financial institutions,” he told Business Insider over e-mail. But it was not meant to be, and he lost money on these products too.

On the bright side, the burns he suffered forced him to re-look his investment strategy. In his email, he told us that he has learned to make investments that are safe and consistent, and that take up as little time as possible.

Perhaps it sounds a little too good to be true, but Teng says some of the top mistakes Singaporean investors make are avoidable and can be corrected.

If you’re looking to invest, here’s what Teng says you need to watch out for.

1. Investing without understanding

“It’s funny how people won’t pay $3 a day to get properly educated, and would rather throw a huge sum to someone or some company to invest for them.

“When the investment goes south, they have nobody to blame but themselves,” he said.

Ouch.

2. Not looking at the opportunity cost

Investors who choose to keep their money in the bank because they think the stock market is too high are actually incurring great opportunity costs, he said.

“Little do they realise that the opportunity cost far outweighs their (losses in) the long run,” he said, adding that the stock market has been proven to be “the most effective way to hedge against inflation”.

3. Overlooking the fees

Teng says he avoids paying local broker fees which are usually calculated based on a percentage of your trades.

“I use international brokers who are regulated by MAS, (and) the sum assured is several times more than local brokers, with flat fees,” he said.

4. Buying cheap

“It’s about finding value,” he said.

Just because a stock is cheap, doesn’t mean it’s a good investment.

5. Not having a way out

Teng told us that many people do not know when to take a profit or cut their losses..

He recommends having an exit strategy at all times to help protect yourself when things don’t work out.

6. Short-sightedness

Financial goals are all about the long term.

Teng said: “In the short run, markets are always crazy.”

So instead of focusing on the short term, investors should always look at their long term goals.

7. Thinking you can predict the market

Think you know what’s coming? You’re kidding yourself.

“No one, (and I say) again, no one can consistently predict the stock market,” Teng said.

8. Getting advice from someone inexperienced

If you’re seeking advice about investments, make sure the person you speak to has done well and can provide sound advice.

Listening to someone who does not have enough experience is a dangerous move, he warned.

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