I often write answers on Quora, where I am the most viewed writer for investing, wealth and personal finance, with over 225 million views in the last few years.
On the answers below, taken from my online Quora answers, I focus on a range of topics including:
- What were the best investments I made in 2020? What can we learn from this?
- Markets rise long-term yet not everybody makes money. Therefore, what are the worst places to put your money in the stock market?
- How to invest in US stocks from Romania?
- What are the best ways to invest in Thailand? Local stocks or real estate? I present other options.
If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me, email (firstname.lastname@example.org) or use the WhatsApp function below.
Which broker can I use for long term investing in US stocks? I’m from Romania.
It depends on how much you want to invest and your future plans. If you are just going to live in Romania, or indeed another EU country, there are countless do it yourself (DIY) brokers that will give you access to US stocks.
They include Saxo, Swissquote and many others.
Remember some facts though
- Studies have shown that for a certain percentage of people, DIY works fine. These are people who have balls of steel during crashes and don’t have overly complex needs like many expats or high-net-worth individual have. The average DIY investor gets less over the long-term, even adjusted for fees, as Vanguard have found
- If you want to buy individual shares, which is riskier than the market, you will need to fill out a W8-Ben form
- If you want to mainly invest in the index or ETFs, which makes sense for many people, it is far better to own the London Stock Exchange version of the S&P500. Or the version listed in Ireland or anywhere outside the US, assuming you don’t have any American ties. For non-Americans, it is better not to invest directly in the US. You could face withdrawing and death taxes. Non-NYSE ETFs or funds, listed outside the US, will give you the same returns.
- Don’t engage in any high-leveraged or risky bets.
- Don’t try to time the right moment to get into the market (market timing). It doesn’t work. Look at the last 12–24 months for evidence of that. Markets, in both the US and internationally, have risen and fallen during the most unexpected of times.
- Focus on the long-term process of building wealth. Below is two graphs – a history of the S&P500 and some major crashes along the way:
You can see the trend. The easiest way to catch this upside whilst avoiding the downside is just to invest for decades.
Don’t press the sell button if there is a crash, then you haven’t lost anything in the long-term or even usually the medium-term – the average bear market only lasts a few months to a few years.
Also don’t just invest in US markets because they have had a good run.
During the 2000–2010 “lost decade”, more people wanted to invest in emerging markets because….they were doing well and the US (especially the Nasdaq) wasn’t.
Fast-forward over ten-years and people want to invest in the US and not the UK or emerging markets for the same reason.
The US Markets are a great investment. The S&P500, Dow Jones and Nasdaq have given any long-term investor a great return.
But don’t put all your eggs in that basket.
What is the best investment you have made in 2020?
The more things change, the more they stay the same.
Ultimately, there are only two good investments in life:
- Investing in yourself including your own business, education, learning etc.
- Investing in financial assets which have a great chance, long-term, of giving you a good risk-adjusted return.
There are some commonalities between these two things as I will elaborate below.
In terms of the first point, investing in yourself is always profitable. It is even more profitable when others aren’t doing that due to fear.
In March, during the major stock market hysteria, many businesses were downsizing.
Even many businesses that were doing well wanted to wait and see. The best decision I made then was dramatically increasing how much I reinvested back into the business during a crisis.
Prices are cheaper and competitors are off the field. Just like 2008–2009, I knew things wouldn’t be like that forever, but it was a good opportunity.
April and May were close to record months from a business point of view, probably due to the last point.
That leads me onto the second point – financial investments. Long-term financial investments, which are diversified, have always been profitable.
It has always been prudent not to put all your eggs into one basket, such as a company, as well.
Yet when there is a crisis, there is an even bigger incentive to invest, because you are buying at known down prices.
So, when this happened, I saw it as an opportunity:
It has to be mentioned that I didn’t try to time the markets. I didn’t have loads of cash to invest.
I simply invested in March, April and May like I did in February, January and every other month.
By the end of the year the portfolio was up by a double digits amount. I only wish markets had stayed lower for longer, but I can’t control that.
The commonalities are to focus on controlling emotions, keeping to a plan and being long-term.
A risk-adjusted approach is also important. Anybody can make loads of money investing short-term.
Where is the worst place to put your money in the stock market?
In general, the worst thing you can do, as opposed to “place”, is pull money out too quickly.
So many people either take money off the table after making decent money, or just panic sell.
The trick is to achieve compounded growth over decades, as opposed to having a good run.
Other things to remember are
- Having your eggs in just one basket/place is high risk
- Only focusing on your home country as most people do (below) can increase risks
3. Only investing in one sector. That happened during the 1990s with technology and is happening again with investors focusing on one industry they think will outperform.
4. Making any trades based on emotion. For instance, people are more likely to invest in the company they work with, even though it doubles your risk (if you lose your job due to a bankruptcy you also have lost your money), because it feels more comfortable and familiar.
5. Any high-risk trades or moves based on speculation unless it is 5%-10% of a portfolio
6. In any failing company in the hope that there will be a bounce. We saw this in 2008–2009. The banks fell hard. They did bounce but they have never recovered. They might never recover now there are many alternative banks online. Yet the general market did – the S&P500 and other stock markets have hit numerous record highs. The same thing could happen this time with the airlines. I am not going to try to predict the future, but the past (which isn’t always a perfect guide to the future) shows that whilst the general market tends to hit new record highs, some industries never do.
As a final point, following trends too closely can also be a mistake. It tends to lead to people buying high and selling low.
A great example of that is emerging markets. People loved them in the 2000s and then went cold.
They had a decade of underperformance. Now they are rising again. Few wanted to add during the lean years of stagnation. Many want to add during the periods where the market is rising.
We have seen the same thing with Japan. Very few people were interested when it was stagnating or falling.
It has had a great 12-year run and now many people are interested. I expect to see the same thing with some “unfashionable” markets like the UK FTSE when it will enviable have its good period.
It is far better to just stick to a plan and asset allocation strategy.
What are the best ways to invest money in Bangkok, Thailand?
It depends on if you mean business investments or personal ones. I will focus on both.
From what I have seen, the vast majority of expats in Thailand have lost money investing in:
- Local real estate or at least haven’t been able to sell off their condos thereby taking an indirect loss. The outlook isn’t great either as per the below information. In this context, it is unsurprising that the Thai Government is trying to stimulate the local market by offering residency programs in return for foreign buyers to purchase real estate. I have met others who have made money but not many who have made a decent profit long-term, adjusted for fees and taxes.
- Buying physical land as opposed to property. Again you have some of the same risks such as liquidity, needing to use go through a local spouse and many others I won’t go into.
- Incorporating local businesses and focusing on the local market from the ground. Obviously exceptions exist though. Plenty of multi-nationals have done well in Thailand, but I have met a greater number of smaller niche businesses that do better targeting Thailand from outside the country. At least if they are a digital firm that can do things online.
- Speculation in any asset, be that stocks, real estate or commodities. Can work short-term but seldom long-term. This isn’t just the case in Thailand though. This doesn’t work in any country.
- Putting money in somebody else’s name (a local spouse or business partner). Like the last point, this isn’t Thailand-specific. This is high-risk in any market around the world, or at least countries where you don’t understand the legal system. I have seen so many expats lose their money in divorces in Thailand and Indonesia by putting all their eggs in one basket – the spouses in this case.
In comparison, I have seen plenty of people make money from
- Targeting the local Thai market in business without incorporating locally. For example, the business is incorporated in Singapore or the UK, but some sales are coming from Thailand. Clearly, this isn’t possible in some industries which require a physical presence. We live in an online and digital world now, where you don’t need to be physically in Thailand to make money from the market.
- Investing in a cross-border, portable, international investment platform. Most expats will leave Thailand one day. US, and some other international stock markets, have done better than the local real estate and stock market in any case.
The commonality then is that it is probably best to invest from Thailand, as opposed to in Thailand, even if you live locally.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 225 million answers views on Quora.com and a widely sold book on Amazon.
I regularly answer questions from readers on Quora, YouTube and adamfayed.com.
These questions tend to be on financial matters such as wealth accumulation.
In the article below I discussed:
- How likely is it that the stock market will crash if there isn’t government stimulus in 2021? Are the two issues, stimulus and the stock market, really correlated?
- What are the alternatives to direct property investments? I look at REITS and loan notes, but what have been the returns and positives and negatives associated with these investments?
- Is economic collapse and hyperinflation likely in 2021 or 2022? Should we really listen to merchants of gloom who said the same thing in 2008-2009 due to 0% interest rates and QE over a decade ago?
- What is the value of wealth in reality? Is it just money or the ability to have choices, gain freedom and do things you otherwise couldn’t do?
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