MENU

3 Timeless Lessons For Your Investing Success – Part 3

Hey there, and thank you for finding the final part of this series.

Here’s a quick recap: on occasion, my friends would ask me to “teach them about investing”. As such, I decided to organize my thoughts a little bit better and start with three timeless lessons that I feel any new investor can start with.

In the first part, I talked about viewing investing as “buying businesses, not tickers”. And then, I shared a story on the maxim of “Price is what you pay, value is what you get”.

With that in mind, here’s my take on the final maxim to remember:

Invest for the long term

Friend: “What’s your opinion on this penny stock? It looks cheap”

Me: “Hey, have you considered investing the company that you work in?”

Friend: “Very high share price leh. My company shares are also very slow”

Now, I wouldn’t mention the name of the company here (to protect a friend’s identity) but I did check and find out that the shares of my friend’s company has risen by more than ten-fold over the last ten years.

But how can this be?

On one side, my dear friend was sure that his company’s share price was a slow mover, but on the other hand, what I saw was a company that has handily crushed returns of the SPDR STI ETF (SGX: ES3) – a proxy for the market indicator the Straits Times Index (SGX: ^STI) – over the past decade.

The simple difference here is the timeframe that we were looking at.

When measured in days or months, it would appear to my friend that the stock price of his company had barely budged. But when we start lengthening our time horizons, the returns turn out to be quite sweet.

A Fool’s take

Now, I don’t know about you but a ten-bagger in ten years sounds like pretty sweet returns to me.

However, ten-baggers do not just happen overnight and can be years in the making. But if you keep your horizons long and your patience deep, you may stand a better chance in carving out a decent return for your invested money.

As such, if outsized returns are what you seek – then try investing with the long term view in mind. I wish you my Foolish best in your future endeavours.

For more (free!) investing tips and tricks and to keep up to date on the latest financial and stock market news, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn't own shares in any company mentioned.