When I first set out on my personal finance blogging journey, one of the areas I knew I needed to improve upon was investing.
Over the years I’ve been making the mistake of listening to the ‘financial advisors’ at my bank as I tried to venture into investing. At the time I didn’t realize that they were nothing but salesmen. They make money by convincing you to purchase specific investments. It doesn’t matter much to them if you actually make a decent return on that investment.
In the back of my mind I was aware of this, but I somehow thought they’d still be honest enough to want to make me money at the same time. I now realize that was pretty naive of me. People are often only looking out for themselves, especially when commission is involved.
So in the past I’ve been ignorantly accepting low returns on lousy mutual funds. Each year when I go in to talk to them they give me some excuse about the market conditions or how they have a better mutual fund for me to invest in. Thanks for the bullshit!
Do you know what? To hell with mutual fund salesmen. To hell with paying a hefty Management Expense Ratio (MER) for those mutual funds. Why am I wasting my time on that crap when the majority of mutual funds get outperformed by indexed funds. I could be doing nothing more than investing in indexes and making more money. Or better yet I could figure out this investing thing and make some real money.
So how did I finally wake up and smell the roses? First it was when I read a book all about Warren Buffet and his investment philosophies, titled The Warren Buffett Way. The book didn’t suggest investing in mutual funds, but it did highlight why mutual funds are such a bad choice. I learned that Buffett’s strategy was all about putting in plenty of time to properly research companies to determine which are run best. Unfortunately I just don’t have the time to do that.
Next I read Millionaire Teacher. The strategy outlined in that book really appealed to me since it didn’t take a lot of time but consistently outperformed the majority of mutual funds. This was all based around buying index funds and bonds.
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While this felt like the right strategy for me, I couldn’t help but long for the big stock market gains that I read about some investment bloggers pulling off. So recently I started reading The Neatest Little Guide to Stock Market Investing. I’m not far enough into it to get full picture of the strategy the author is pushing, but it seems to be more about analyzing companies and their stocks. I still might not have the time to pursue this strategy, but I’m awfully tempted to give it a shot.
One thing is for sure, I’m not going to rush into anything. I’m currently getting ready to buy my first home. So I’m not willing to risk that down payment money on an investment that I might have to wait on. That means putting up with some lower returns in the meantime knowing my money will be available sometime in the near future.
Once I’ve bought a place that’s when the real fun begins. Most likely I’ll wade in with some index fund investing. No that won’t be too exciting, but it’ll gradually get me more interested in paying attention to the market. As I get more comfortable with investing, stocks will be my next target but that will take some thorough research.
I’ll be bypassing the financial advisors at my bank this time around. Instead, my plan is to go online to buy shares and really reduce my fees. There’s no need to pay someone commission for trades that I can do manually on my own.
Maybe I’m better off just jumping in now and investing small. I could end up with decision paralysis if I do too much research beforehand. It’s just tough to know whose approach is best and what strategies to adopt.
For those of you who do your own investing, do you have any tips for getting started? For those who don’t do investing, is there a reason why not?