My Journey from Amateur to Competent Investor
The Beginning
In the fall of 2008, I had my first real exposure to a formal business education. I was enrolled in an accounting course during my senior year of high school. I was interested in accounting because of my natural affinity with numbers and the constant advice from adults that accounting is a stable profession that pays well. By week two of this class, I realized how dull accounting was and quickly lost interest.
Fast forward to today and roughly 85% of my net worth is invested in stocks across taxable and non-taxable accounts (e.g. 401K, IRAs). What happened over the past twelve years? What was the catalyst that sparked my interest in investing? It certainly was NOT accounting from high school. I believe it was access to a user-friendly app, called Robinhood, which shocked the investing world with the launch of zero-fee trading. Once the barrier to entry for investing was removed, I was able to register and purchase stocks in the blink of an eye with the simple Robinhood mobile interface. After I bought a few stocks and had skin in the game, that was all the incentive I needed to start learning more about investing.
When Should You Start Investing?
If you want to get started investing, my advice to you is to get started ASAP. The longer your time horizon, the better the returns for your investments. It is an urban legend that Albert Einstein once said, “Compound interest is the most powerful force in the universe”(Source). If you want to take advantage of the effects of compounding assets, the sooner you invest, the better. Take a look at this chart from Vanguard that shows the contributions at age 55 earn only 25 percent of those at age 20.
$1 could grow to much more by retirement—but it depends what age you contribute it
How Do You Start Investing?
To get started, all it takes is signing up for a brokerage account on Robinhood or one of the many other brokers. Then, transfer over some money from your checking or savings account. Finally, make a few purchases of stocks or ETFs once the market is open. You can buy stocks of your favorite companies (e.g. Nike/NKE, Apple/AAPL, Target/TGT, Amazon/AMZN) or if you want something safer you can purchase ETFs, which hold a basket of stocks or bonds (e.g. VOO, SPY, BND). Once you have a little skin in the game, I believe you will have the incentive you need to start watching your investments closely, learning more about finance, and become self-sufficient in investing.
Note: Robinhood is a taxable account. There are important tax benefits for investing in non-taxable accounts, such as a 401K, 403B, or IRA. Professionals typically have investments in both taxable and non-taxable accounts.
My Journey
Follow my journey below where I mapped out the path that I took to become a self-sufficient investor. You will see the progression of my knowledge from a high school accounting class all the way to holding my own in a conversation with a VP of Investor Relations at a fortune 500 company. FYI, most of these dates are approximations.
- Jan, 2008- Enrolled in an Accounting class in High School
- 2009- Started watching a new show, called Shark Tank, featuring Mark Cuban.
- 2010- Accepted into the Robert H. Smith School of Business
- 2013- Graduated with two BS degrees: Business and Mathematics
- Jan, 2014- Indirectly purchased my first stocks and bonds through my 401K contribution. I chose my employer’s default allocations.
- Dec, 2014- Robinhood Launches Zero-Fee Trading Mobile App
- May, 2015- Opened a Roth IRA through Fidelity and transferred my 401K assets to the IRA because I left the company. Purchased “Fidelity recommended” mutual funds that were expensive (i.e. high expense ratio)
- Nov, 2015- Purchased my first stocks, including TWTR (3 shares) and NTDOY (3 shares) through my Roth IRA.
- Jan, 2017- Accumulated a decent amount of cash in my savings account after several years of working full-time.
- Jul, 2017- Started googling for financial/investing advice, including Reddit threads and basic advice from the Bogleheads.
- Aug, 2017- Created a spreadsheet of desired stocks/ETFs to purchase.
- Sep, 2017- Created a Robinhood account and purchased my first stocks through a taxable account. Some of the purchases included GOOGL (2 shares) and AYX (12 shares).
- Oct, 2017- Purchased more stocks, including 10 shares of MDB.
- Nov, 2017- Purchased more stocks. Some of which included DIS (5 shares), VOO (5 shares), ARKQ (30 shares), TSLA (3 shares).
- Dec, 2017- Purchased “The Only Investment Guide You’ll Ever Need“, by Andrew Tobias, based on a recommendation by Mark Cuban in an article.
- 2018- Started reading SeekingAlpha investing articles (FYI, 80% of these articles are junk. Use them solely for idea generation).
- 2018- Fell in love with the concept of MoviePass. Purchased and eventually lost several hundred dollars in HMNY, the parent company of MoviePass.
- 2018- Found a few recommended investing podcasts on Reddit. Started listening to Animal Spirits, hosted by Michael Batnick and Ben Carlson, two wealth management professionals in the heart of “FinTwit”, the unofficial finance community on Twitter.
- 2018- Started following dozens of finance experts on Twitter (i.e. several are listed on my resources page)
- 2019- Consistently read blogs and listened to podcasts hosted by wealth management experts on a daily basis.
- 2019- Started reading “The Intelligent Investor” by Benjamin Graham.
- 2019- Sold my shares in MDB and AYX for a profit of about $2,000 before taxes.
- Jul, 2019- Sold my TSLA shares for a small loss prior to the HUGE rally.
- Apr, 2020- Lost several hundred dollars in high risk oil ETFs because I invested in a product that I did not understand.
- Apr, 2020- Started publishing my own financial tools on The Data Generalist site.
- May, 2020- Hosted an Investor Relations virtual presentation at work, including an improvised Q&A session with the VP at the end.
- May, 2020- Enrolled in a graduate level Financial Modeling course.
- Jun, 2020- My current Robinhood portfolio is up ~38% since Sept, 2017 as of June 1, 2020. For comparison, the S&P 500 is up ~23% during the same time period.
Final Thoughts
Throughout this journey, I have learned many costly lessons; however, I still made a profit and am currently up a large percentage in my portfolio. Putting money aside, the amount of investing knowledge that I have acquired since the beginning is priceless. Understanding the importance of compounding is not only applicable with money, but also with knowledge. As you start your own investing journey, I highly recommend you take a look at the resources I have listed on this site. It is a collection of the best investing and personal finance resources that I have encountered over the past decade. For beginners, I would suggest focusing on the blogs, tools, and podcasts rather than the research-type links provided. Good luck and go start investing!
~ The Data Generalist