🚨 5 common mistakes in getting started with financial management in Hong Kong that new investors should avoid

Hello everyone! This time, I've carefully selected the five most common pitfalls for local financial management and investment beginners. No matter your monthly income, you're bound to encounter them once you start learning about financial management! Avoiding mistakes helps you save, and earning money helps you upgrade—every Hong Konger should know this! 🙅♂️💸

❶ Blindly following hot spots and relying on "tips" to invest

Many new investors rush in to buy stocks (especially hot tech stocks and IPOs) as soon as they see a stock trending or a friend sends them a "tip" about a rising market via WhatsApp. The result: entering the market at a high point makes them vulnerable to being tricked.

• A Hong Kong IFEC survey shows that 27% of people believe they will definitely make money when investing in new stocks/hot industries, and 55% believe that "investment tips will guarantee success."

• Editor's tip: "If you don't think independently, you will lose more than you win in the long run." One type loses money, and the other type gets so scared after entering the market that they dare not hold on.

❷ No clear financial goals and budget planning

Too many people think financial management is all about investing, but the most basic thing is to budget your income and expenses and set aside an emergency fund . Many beginners don't analyze their own circumstances and just invest recklessly, ending up with insufficient funds to cover emergencies.

• No goals = difficult to persist, and you will make wrong decisions due to market fluctuations.

• The editor recommends: first plan the target amount, term, and monthly available funds, and then manage before investing!

❸ Concentrated single asset, no risk of diversification

Going all-in on a single stock/industry/asset is extremely prone to problems - Meta and Tesla may both plummet in 2022, and diversification is the key to risk control .

• Black swan events and single industry cycles can cause heavy losses to newcomers.

• The editor recommends: Divide your investment into 3-5 categories each time you enter the market, depending on your risk tolerance, and diversify your portfolio of stocks, bonds, and funds.

❹ Emotional operations, prone to greed and fear

Many of my Hong Kong friends buy stocks when they see them rise, and sell them when they see them fall. They buy too much when they're greedy, and sell all their stocks when they're panicked—and the result is that "most losses are due to emotional decisions."

• Panic selling, speculation on news, and failed short-term speculation can easily lead to losses.

• The editor recommends setting take-profit/stop-loss levels, anticipating extreme situations before entering the market, and formulating a calm action plan.

❺ No risk management and stop-loss awareness

New traders rarely automatically set stop-loss orders, "thinking that if they hold on, they will return home." In reality, when risks arise, if they do not leave the market, they will lose more. Some friends even have their margin accounts liquidated.

• The survey found that 53% of novices did not make stop-loss arrangements, and their ultimate losses exceeded their expectations.

• The editor reminds you: Not setting a stop-loss order = a financial black hole. It is more important to tolerate losses reasonably and bravely stop profits.

🧠 Editor's Experience Summary (with additional common details)

• Overconfidence (thinking that a small win means strength).

• Without doing your homework and relying on "luck" and ignoring the cost, you will find out after buying that the commissions and management fees will eat up your returns.

• Ignoring the "power of compound interest" for a long time, delaying investment, and waiting to enter the market until you have enough money will result in missing out on the golden period.

🎯 Editor's Notes Conclusion

1. Not doing your homework and relying on tips is equivalent to slowly losing money.

2. Without a budget and goals, financial management will never be successful.

3. If you don't diversify your investments, you might get wiped out in one fell swoop.

4. Emotional buying and selling will ultimately help people to sell at a discount.

5. Without a risk defense line, good luck will not always come.

Avoid mistakes before you win, know when to fall into a trap before you turn - remember, newbies, continuous learning is your most powerful weapon in financial management! 💪📈