Investing can be confusing if you’re a complete beginner with no investment strategy. I’m here to spill the beans in how I manage my investment strategy.
First off, there are different types of investing strategies according to the so-called “experts.” There are: Value Investing, Income Investing, Growth Investing, Small Cap Investing and Socially Responsible Investing (also referred to as Ethical Investing). If you want to learn more about each of these types, this article on Wall Street Survivor explains them all.
Aside from the strategies mentioned above, one of the other biggest difference in investment strategies are day traders’ vs people who buy and hold stocks. Day traders are people who buy and sell stock within a day, hoping to take advantage of stocks going up in value during the course of a day. Investopedia says that some liken the strategy to gambling – and I don’t have the time, energy or interest in that. So, I prescribe to the buy and hold strategy.
I buy everything that I buy with the intention of holding on to it. Aside from the buy and hold vs day trader investment strategies, I think there are a lot of things that go into the strategies I use when considering how to invest my money in the stock market.
For example, I am slowly diversifying what I own between different Stocks, Exchange Traded Funds, Index Funds and Bonds (I don’t own any bonds yet, but that is what I plan to buy next) so that I am not dependent on just one specific investment. Right now, I don’t have a specific percentage of each that I am trying to own, but down the line I will consider trying to be more specific about the percentage I own of different type of investments, as I learn more about the investment world.
Aside from that, if I narrowed down the principals that use when deciding how to grow my investments (aka what I call my investment strategy) it would come down to the following:
Don’t overthink things, just get started
It is so easy to put off getting started because you feel like you don’t know enough. But you are short-changing yourself if you do this. I did not know much about investing when I got started, but I heard people say Vanguard was good. Many people also mentioned the S&P 500 Index-Fund as a good way to invest, so I just went for it. Since then, I have bought other stocks and funds and will continue to research new things to invest in, but I am glad I didn’t wait because I would have lost out on the money that I have made in the meantime. Also, I still believe investing through Vanguard is great and the S&P 500 is a solid investment, so I will likely keep putting money into that fund.
Consistently invest even if it is a small amount every month
When I quit my job and we started living off one income, I considered putting a hold on future investments. I realized though that even if I was just contributing $100 a month that would be worthwhile. So I have kept investing, and I am so glad I did because the value of our investments continues to grow.
Always try to learn something new about investing and the market
I follow multiple investment accounts on Instagram and watch at least 1-2 investing videos on YouTube a month. When I hear new terms, I google them or look them up on Investopedia. I am always striving just to spend a few minutes here and there to learn more. The more I learn the easier I realize investing is. They use all of these fancy terms and complicated words in the investing world but once you get the hang of it you will realize you don’t have to be a wall street bro to invest at all.
Work to learn about investing, and invest in things that align with my values
Although I have invested in the S&P 500, because investing in low-cost Index Funds are what Warren Buffet recommends, I am working to invest more of my future money in companies that treat their workers well and are better for the environment. This, however, can be very challenging because a company can be great for the environment but treat their workers badly. Another company could treat their workers great but not be the best for the environment.
There is no way for me to be perfect with my investments, but I am trying my best to figure out how to, in some ways, invest in my values. I had a call recently with a fund that does Socially Responsible Investing and I found out it is even more complicated than I thought (which I’ll share more of that in another post).
So far, I’ve invested in Costco and Starbucks because I know they both provide good benefits and pay their workers decently. Today, I also put $100 into an Exchange Traded Fund called TAN, which invests in companies that participate in renewable energy. If you have any companies that you know are amazing to their workers/environment, please let me know in the comment section… I’m on the hunt for my next investment.
As always, remember that I am not an expert. I am just sharing my journey and I am working to break the stigma that you must be an ‘expert’ to invest. I think everyone should do their research, assess the risks, and come up with a simple investment strategy to get started on their investment journey. And for more secure ways to invest, you can always look into your retirement options.