November 2020. Wow, that honestly feels like a lifetime ago. Since then I’ve graduated uni (after having spent way too much time in my room/lecture theatre) and have started my very first job in the city. Not to mention a whole host of weird and wonderful things that have happened in between.
So here I am. Reflecting on my first two years as an investor. No idea if people make milestones of this sort of thing, but here’s me going for it. Though maybe that’s because I don’t have an actual anniversary to celebrate – not yet anyway(!) so investment anniversary it is. Any chance to celebrate and learn – you know I’m all for it.
I’m writing this to you in the hope that you can take something away, learn from some of my silly (and not-so-silly) mistakes so that you can avoid them and jump over these obstacles. Quicker than I! A smart person is someone who learns from others but I would also add that you should also give yourself the space to make your own errors. You’ll learn 10x more that way.
Okay, so what have I learnt?
1. Cash is king
This was the hardest but probably best lesson I learnt. It was March of 2020 and the entire stock market went on sale.
Unlucky for me, I had devoted my entire life’s savings (literally) on a bunch of start-ups (that’s a schmooze for another day!) and had nothing to show for my investment account.
So, I had to wait till November 2020 before I was able to invest in the stock market. I then bought a handful of investment trusts, mostly.
And as you’ll know, the super-rebound in markets happened between March-Nov. By that point, many markets (incl the S&P 500) were back to where they were pre-covid — if not higher!
Learn from my mistake. If possible, always have cash on hand so that you’re able to take pounce when markets get a little (too) discounted.
2. Keep calm and DCA!
I’m from England, so we pound-cost average but PCA doesn’t sound nearly as good as DCA so I’m gonna stick with that!
Markets went beserk this year. And if you tried to time things or guess which way the Fed will move (and when), you’d have got burnt.
The best — and smartest — thing to do is to invest each month. Timing markets are 99.99% impossible. Plus, stressing over things that aren’t in our control will only make us feeling anxious.
This is not a recipe for investment success.
Invest whether you feel like it or not. Which brings me onto my next learning:
3. If it feels hard, it’s probably the right thing
The months when I felt “ooh, do I really want to be investing right now”, those turned out to be low-ish points and were a good time to load up on cheaper stuff!
As inflation deepens, as companies are clearly struggling and as the housing market looks like it’s gonna crack, among a gazillion other things, investing might be the last thing you feel like doing.
But markets are resilient. They’ll rebound. And since they move anywhere between 6–18 months ahead of the economy, the time to step into stocks is not when the economy looks dandy. It’s when it doesn’t.
If you feel a bit sick, that’s probably a brilliant time to invest — despite what you think!
4. Pessimists sound smart; optimists get rich
In the space of 2 years, we’ve had covid, a war in Ukraine, 40-year-high inflation, record-high interest rates, a bear market, and now a recession.
There’s no shortage of bad stuff going round! And you’ll sound like a right smartypants for calling it as it is: dire financial — and economic — times.
Sure, optimists don’t sound nearly as smart. But they believe that things will get better. It’s just a question of when, not if.
They’re able to look beyond the darkness to see that sliver of sunshine.
One of the best quotes: “if it’s in the press, it’s in the price”.
A lot (not all) of the negative news is already priced into markets.
Yup, more nasty stuff can keep coming our way, but if history’s anything to go by, markets will chug on. And compound.
Just give it time. And some sunshine!
So ignore the doomsayers. And don’t worry about not sounding smart.
As long as your money is hard at work for you, that’s all you gotta worry about.
The rest, my friend, is pure noise.
5. Don’t chase the hype
2020-21 was the year of growth stocks on steroids. From crypto to tech, they were flying.
Of course I had tech stuff in my portfolio but not nearly enough that I felt like a cool (and rich) kid.
I remember a bunch of uni mates piling into all sorts of cryptos and the hottest tech stuff.
I invested in Bitcoin a couple months ago after reading up on the space for ages but I didn’t have the pleasure of 10x’ing my money or anything close!
At the time I felt really dumb for not owning more tech-growth-goodness but time is a funny thing. And now, I’m nursing smaller losses than others are.
It’s super easy to run after hypes. Don’t get caught out.
Do your own research and invest in things you’re comfortable with. Try not to pay too much attention to where others are putting their money!
6. Have fun — and get talking!
Most of all, try to enjoy the process. Enjoy building your financial future. And never put too much pressure on yourself.
Markets are uncontrollable. They really will just do their thing! The less you fuss about what they’re doing, the better you’ll feel. Trust me.
But don’t keep it all to yourself.
Get talking about investing with your friends and fam — especially the girls! We don’t invest nearly as much as our boys and this has gotta change.
And it’ll only change if we talk. So get those convos going. You could have a bigger impact than you think!
These two years have honestly felt like ten. So my wish is for these next two to be blissfully quiet!
But who am I kidding?!
Buckle up. Enjoy the ride. Remember, your journey counts as much as the destination!
Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.
Knead Your Dough 