Investment

If fun investing is stressing you out, it is time to exit – Mint

Published

3 years ago

August 23, 2021

A raging bull market and low interest rates have got people to get creative with their money. I often hear animated discussions about international investing in NFT, P2P, invoice discounting, fractional real estate, covered bonds, crypto, etc. As long as you are aware of the risks associated, and allocations for core goals are done properly, you can bet some money on new, happening products. Here is what you need to keep in mind with these fun investments.

Ask yourself why you want to make these investments. Is it for fun, or out of curiosity, or because everybody is doing it, or FOMO (fear of missing out), or TINA (there is no alternative)? Of course, you can only do these investments if you are saving sufficiently for financial goals and have financial security. Unfortunately, I see investors who haven’t even paid off loans, or started saving for goals, allocating capital to fun investments.

Invest only in regulated products: Cryptocurrency, or invoice discounting is not regulated. Regulation ensures some risk mitigation such as an independent oversight and grievance redressal for investors. Check the pedigree and experience of the manufacturer. Evaluate their privacy policy and processes such as whether the funds are held in a pool account.

Do not invest for instant gratification: Claims of quick wealth from these instruments, made on social media, show only one side of the journey. Seldom does one see videos from influencers when there is a downward trend.

Limit these investments to 5% of the portfolio and be ready to lose the capital. Ring fence it from the rest of the portfolio so that losses do not affect your financial goals. While trending markets may make you feel you know it all, these are high-risk investments.

Having got into it, follow the right information sources. Study the product and understand its workings. Do not rely on social media influencers. Many influencers have called covered bonds like fixed deposits with better returns but not spoken about the downside. Read up regularly to keep yourself informed and do not take reactive decisions based on what friends or colleagues are saying. Unless you research, you will not succeed.

Make rules for yourself: For example, have an automated trigger stop loss or profit booking level. This is to avoid getting skewed to one product and to take emotions out of the investment. Try out the product with a small amount before committing more capital. You may not really need to diversify in fun investments. In fact, having too many such products may be more harmful since they are open to vagaries of the system.

I find investors love tools and simulators or gamified content. These can supplement your plan, but it is your emotions which have a bigger impact on returns. Sometimes, to prove that an investment works, investors hesitate from taking action even when there are enough warning signs. Or after early success, one may invest more money. Rebalancing at regular intervals is equally important with fun investing.

Timing the exit: Fun investments need to be monitored regularly and probably more often than regular investments. Exit calls, too, need to be taken swiftly based on market movements. Beware of costs and taxes. Most fun investments have high built-in costs, which investors cannot decipher. In direct investment into international stocks, the costs are between 3% and 5% and the tax compliance increases manifold, and is cumbersome. With stocks/ETFs baskets, there is tax to be paid on each rebalance, thus increasing the costs.

If you find fun investing is stressing you out, you need to exit. If you cannot keep up with the volatility like was seen in the case of bitcoin or you hear some negative news about the platform, exit immediately.

Do you want to allocate precious time for this? Or would you prefer to use your time is a more meaningful way. Thankfully, the Buffett or the Bogle styles are not passé and you can decide to stick to simple investing and high thinking.

Mrin Agarwal is founder director, Finsafe India.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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