Views from Everyday Investors: Vincent Chan, product manager and ex-banker

What is your time horizon, risk tolerance, and investing strategy? What are you currently investing in? 

I’m 25 years old so I have a very long time horizon (10+ years). For some blue chip stocks, I plan to hold until retirement assuming the companies keep up with the times. For others, I’ll occasionally offload shares when I believe the market is performing too well (i.e. be fearful when others are greedy and be greedy when others are fearful). On these occasions, my minimum requirement is that I have held the stock for at least 1 year to reduce taxes on my capital gains. In addition, if it’s a company I love, I will only partially unload shares (~50%) and dollar cost average back in when and if it dips.

On the other hand, when a stock price (or market) dips, my rule of thumb is to never sell. Despite what my mind is telling me, I acknowledge this is a psychological trap and instead I’ll purchase more shares. The reason for this is because I invest in companies for their fundamentals. If the fundamentals are solid, then I personally believe in the company and that the stock price will rise again.

In the next few years, I plan to sell a portion of my portfolio to get into real estate. I want to diversify my investments through rental properties and use my capital gains to pay for down payments. From there, I’ll leverage my existing property’s equity to expand my property portfolio.

What advice do you have for new investors on how to get started with investing?

My advice for new investors is to get started. The best time to invest in the stock market was yesterday but the next best time is today. 

In terms of what to invest in, I always recommend index funds, either ETFs or mutual funds. The reason is because index funds are a great way to effortlessly diversity your investments, reduce risk, and simplify the investing process. A major reason people don’t get into the stock market is because of analysis paralysis – there’s just way too much to learn so it’s easier to not start at all. Index funds significantly reduce the barrier to entry so it’s a great place to start.

In addition, I believe new investors should always invest for the long term. Long term can mean a lot of different things to many people (e.g. 10 years, 5 years, 3 years etc.). Regardless, I believe the most important minimum “long term” year to hit is one year to reduce taxes on capital gains.

What is your outlook on markets in the current state with the pandemic?

Before I share my market outlook, I want to clearly state that no one actually knows. The stock market is random and no one knows with 100% certainty how it will perform. The only certain thing in the world is uncertainty.

However, I can give my best personal guess about the next few months. I believe the two biggest catalysts to the stock market will be 1) the discovery of the COVID-19 vaccine, or lack thereof and 2) who will be elected to be the next president of the United States. However these two events turn out, I believe the market will be very volatile.

What is your biggest investing mistake?

My biggest investing mistake is not getting started earlier. I started investing at 23 but, in retrospect, I could’ve started earlier. I started working since I was a teenager so it would have been awesome to have already developed an investing mindset. Instead of spending money on unnecessary and superficial things, I could have invested it in the market and sped up my FIRE (Financial Independence, Retire Early) dreams.