Invest To Start Building Wealth

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Stock market investing has been interesting to me ever since I first learned about it. Just the simple fact that you put money into a pot, and it can grow or shrink depending on something as basic as the way sun rises, is amazing to me. This is the way most have built their wealth, so I made it a point to invest as much as possible throughout life.

My first lessons of investing came from a college roommate. It took 20+ years for the topic to become apparent in my life so every word was like water, and I, the sponge. I learned about trading, options and even penny stocks. Here I was, learning another way people build wealth other than the tradition academia through upper management route that had been beat into our heads. I was hooked, and decided to take the plunge into investing.

When you don’t a lot of money on hand, options are limited and that translated into my first few investing activities. Finding a platform to trade on was the first step, so I picked Capital One Investing because at the time, they offered the lowest cost per transaction I could handle. Afterwards, I began analyzing stocks that were under $100, paid dividends, and had a increasing trend on a long term level. This was in the early 2010’s and I either didn’t know how to buy fractional shares or they didn’t exist, so I landed on HP, Coca Cola and Sirius. I bought the shares and started watching the daily changes like a hawk. A few people recommend not doing this and now I know why. Each share value increase made me happy and decreases were met with the need to sell. Trading these shares would put me at a negative after transaction costs and I didn’t extra money money to buy more, so the account essentially became dormant. I didn’t log in for a few years and in that time, my attention shifted to other investment avenues.

After getting into the workplace, I learned about how people use retirement accounts to build long lasting and sustainable wealth. Mutual funds now became my muse because instead of relying on a single stock to break out or trying to time the market, the risk can be mitigated by picking a mutual fund that has many well performing stocks in it. I saw endless possibilities and contributed as much as possible, got the company match and started investing in my own future. For the most part, picking the target retirement funds of the year I project to retire has allowed me to put everything in cruise control.

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Lately, l’ve become really interested in how my investment portfolio has been performing which led me to start analyzing my past decisions. I logged into my Capital One Investing account and to my surprise, everything was in the positive. In 5 years, my stocks portfolio currently sits at 47.45% positive. At first glance, I was happy and then I realized this is only a +$65.96 from my initial investment of the near $120. Crazy small gains I know, but it’s a gain. I checked out the mutual funds in the retirement accounts and found them averaging around 9% after 3 years. Recent average mutual fund returns are around 9%, so i’m trending along the curve. One account as about a 12% return after a year, but it's been a bull market so I'm not expecting that to happen all the time. I even did some analysis to pick funds that are beating the SP 500 which is used as the baseline for many funds. I figured if I pick funds performing better than the base, then I can win even more, but available funds in retirement funds are limited so I chose the best I could.

Apart from the total balances, some extra nuggets showed up in forms of dividend payments and extra shares I didn’t know about. For example, I now see DXC Technology Co and Perspecta Inc fractional shares in my stocks portfolio and after some research, it seems these two came from my initial investment in HP. Seeing the fruits from years ago is motivation to keep investing. There are many more options now to invest in the stock market with the ability buy fractional shares easily with Acorns and Stockpile. Instead of buying the whole share, smaller portions can be bought and traded.

During my experience investing in the stock market, there’s two apparent things I’ve learned. There’s no need to complicate things and to put in as with as much money as possible. I picked stocks way back then simply based on the reputation and positive market trend. Trying to deviate from that and risking on lesser known companies could have brought more gains, but I’d have to keep up with the news around the company in order to time the market and that’s a job in itself. Even though I built a positive portfolio, it’s still a small that I can’t justify taking out. Had I put in $1,200, I would now have over $2,000 in the account, and that increases exponentially with more money invested. There’s no way to guarantee this though since the market goes up and down. The best thing to do is to put in what’s possible and enjoy the ride.