For Warchest: Catch the opportunity when it arises
For Income: Divest when fundamentals change, invest on dips
For trading: Win more and lose less, have a risk management plan
Main
I've traded quite a fair bit in the past 10 months, and with 25 fully executed trades, I've made an average of 5 transactions per month which is on the high side. Contrary to my earliest investment philosophy, i've evolved according to my personality and interests.
My current investment philosophy is to:
Apportion my money into: i)warchest; ii)income assets; iii)trades
i) warchest. keeping some amount of money to make opportunistic buys of income assets when opportunity arises. this is especially important, because i've seen friends who have had triggers on certain counters but lacked the ability to be vested because of the lack of a warchest. I'm looking at having approximately 25% of my investable money in liquid instruments.
ii)income assets. the idea of a self generating stream of money without doing much is the dreams of slackers like myself. This idea was also the primary initiator for my foray into stocks investing/trading. If you have followed or looked back into my earlier posts, this part of my portfolio has probably been the main driver keeping me in the Green, with the least numbers of post dedicated to it. it has indeed been quite "rewarding" if you consider the reward to effort ratio. My journey so far has also seen myself divesting on 1 counter to much relief, as i had reviewed it with different kinds of lens as i developed and grow as a smart money investor. i will indeed eventually look more into this!
iii)trades. this has been the bane of many retailers who enter in and out of the markets quickly without a proper risk management plan. I've been lucky to not have lost too much as i entered earlier without any exit strategy. and as illustrated in the earlier table, I've allowed myself to let losing trades fester for far too long, and that has manifested itself as a realized loss of about $1k for my portfolio. this trading journey has definitely been rewarding as a grapple with a day job that is mentally not as stimulating as I envisioned it would be. but if one thing i learn, is to always have a Risk management plan/ Exit strategy. i will write more on my trading soon!
Concluding, there is a need to have your investable money managed as a portfolio to achieve my end goal, which is to have a yearly recurring income from my investments comparable to my day-job salary, Of now which i am targeting 60K per year for comfortable living. each component of my investable funds play an important role of opportunistic, stability, and growth. and though i will add-on and revise as i develop and uncover new requirements with age and change of conditions.
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