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Newsletter

2021 6th Edition (Other Editions)

In December 2021, the global market experienced huge fluctuations. With the spread of Omicron and the Federal Reserve in US announced that it will raise the interest rate in 2022, both US and HK stock market, as well as crypto market, experienced big drops. Therefore, investors would like to know how the market moves and the investment strategies in 2022. Indeed, 90% short-term trading individual investors are losing money on the market. Therefore, adjusting investment strategies and managing your risk are the keys to succeed in the long run. There are some tips for you:

Tip 1: Avoid Using Margin and Derivatives

Security brokers provide margin and there are options on stock market. At the same time, crypto exchanges are providing future contracts with a leverage up to 125 times. Indeed, these tools are very dangerous as investors may face margin call and lose all their money when the market experienced a 10% drop.

Tip 2: Don’t Invest All Your Money at Once

Many investors saw that US stock and crypto had risen sharply in last years. Then they have the mindset of “Fear of missing out” and allocate most their money into the market at once. This is dangerous as you may buy all the asset at high price. Once the market experiences a pullback, investors would suffer loss. It is safer to buy an asset at different time (e.g. monthly, quarterly)

Tip 3: Diversification

Don’t invest all your wealth into the same type of assets even if you feel very optimistic about its future. Diversification is the key to manage risk. If you don’t feel optimistic about other assets, holding some cash is a good choice. This can provide flexibility to your portfolio.

Tip 4: Preparing for The Worst

There are numerous types of products and there is not a product which suits all investors. We should consider the expected return, risk and principal. Therefore, it is advisable for us to seek the advice from financial advisors to understand the natures of the products. At the same time, we should ensure that the loss won’t cost the livings of ourselves and our family.

Tip 5: Seek Advice from Financial Advisors

Many investors don’t acquire a deep understanding on the natures of assets and risk management before they make investment decisions. The reason behind is that their decisions are easily affected by their friends and online news. Therefore, it is wise to seek advice from financial advisors.