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Investing Is Easy and Yet So Hard

Finance is full of contradictions. Investing is, simultaneously, the easiest and the hardest thing I have ever done in my life. Confused?

Here’s why investing is both easy and difficult.

The easy bit

It’s not difficult to get the information that’s needed for you to be a good investor. There are tons of books and online resources available which can guide us.

In fact, some of the best pieces of advice on how we can improve as investors are simple-sounding things like developing a habit of lifelong learning and reading, forming a mindset of looking at stocks as a piece of a business, investing with a long time horizon that’s measured in years or decades, and being patient after we’ve invested in something.

Unfortunately, as humans, we’re all emotional creatures – and this makes some of the “easy” things mentioned above really hard to implement.

The hard part

So let’s look at what’s so hard about investing – the wait.

Imagine that after spending time researching a company, and coming away satisfied that it’s a good business that can deliver solid business results over the next decade, you decide to plonk some capital in it. Now… you wait.

During the waiting process, the company’s stock price need not necessarily rise just because you own some shares in it. In fact, the company’s shares may very easily fall and stay low for a good number of years despite having a growing business.

Alcoholic beverages maker Thai Beverage Public Company Limited (SGX: Y92) is a good example.

You would have been able to buy shares in the company at S$0.27 at the start of 2007. But in just two short years, Thai Beverage’s shares would have fallen by nearly 40% to S$0.17 at its trough during the Great Financial Crisis of 2008/09. Yet throughout that period, the company had generated consistent profits and strong cash flows, and was busily expanding its business.

If you had been a shareholder in the company, would you have been able to sit and wait to reap the eventual rewards while staring at a 37% loss on your shares? Thing is, if you had the patience, you’d be able to enjoy an eventual 172% gain on your investment with Thai Beverage’s shares trading at S$0.735 today.

Keeping your emotions in check while resisting the temptation to jump in and out of your shares is why investing can be so tough.

Foolish Summary

Investing does not require immense brain power, yet requires a huge amount of self-control. Investing is also both financially rewarding, yet mentally and psychologically frustrating at the same time.

These are what makes investing so special for me .

If you find investing a fascinating topic too, then come meet David Kuo and the rest of the Fool Singapore team on August 15!

Please join us at Invest FAIR Singapore on 15 August. (Suntec Centre, Booth B-16). Come chat with us at our booth, and see our MAS-licensed Director, David Kuo, give his official SGX investor presentation.

You won't want to miss this! Add Invest FAIR Singapore to your calendar today.

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 writer Stanley Lim does not own any companies mentioned above.