Lessons Learned from Four Years of Self-Directed Stock Investing

Although I enjoy writing about personal finance and financial freedom etc. I will also be writing more on investing.

After all, this website is called Invested Wallet.

It is fitting that I write this article on the occasion of my four-year anniversary of investing in stocks alone.

Before September 2014, I did not know anything about investing in stocks. Notta. Zilch.

This website was created to help the average person understand how easy it is to invest money and learn about the stock market.

Many people have the misconception that understanding the stock exchange is difficult or only for wealthy people.

Nope! You can, because if I can with my lack of understanding and money you can too.

You will need to have patience, be willing to learn, and be careful with your investments until you are more confident. You may still want to consult an expert.

The beginning of it all
If you’re interested, I suggest that you visit my Start Here page.

In September 2014, I opened a Vanguard brokerage to begin putting money in (better than my savings account) and to eventually invest. The goal was to self-manage my retirement account there.

A friend of mine suggested I try this, and would help me set up an account. The onus was then on me to find out more.

This is a screenshot from my account for September-October 2014. Hey, I earned $32 on my $500 investment! I’m rich!

Four Years of Stock Investment on My Own: Lessons Learned

The company where I worked at the time had a 401k. It contained about $4,000, but I didn’t know where it was invested. I didn’t even contribute enough to get my full company match. Oompf.

It’s just that I didn’t care or understand.

I only knew that saving money for retirement is a good thing to do. Sometime I would like to go back in time and give myself a good smack.

This is a very common occurrence among the younger members of my generation, and I am no exception.

My knowledge and investment have taken off after reading finance and money books and blogs online, researching funds and being patient.

Before you think, no. I am not a multi-millionaire, nor do I have a 6-figure portfolio. We have, of course been in a good economy/bull market, which has kept my returns fairly healthy.

I would say that I have done well in the past few years, navigating through some corrections and selecting the right funds for a steady flow of returns. I look forward to being put through the ringer in a bearish market. I know it will come soon.

Check out my return on investment percentages. Not bad for self-managing, and knowing nothing in 2014.

Retirement Returns since 2014 – Present

Four Years of Stock Investment on My Own: Lessons Learned
Retirement Returns in 1 Year, Oct 2017 – Present

Four Years of Stock Investment on My Own: Lessons Learned
What I learned in four years of stock investing
It is not necessary to mention that I have learned many lessons in the past couple of years. Instead of listing all of them, I’d like to share with you some of the most significant ones that impacted my journey.

These tips will help anyone who is new to investing or has been thinking about it but is afraid to begin.

Anyone can learn about the stock market.
Even though some statistics are sad, such as: “Only about half of Americans own stocks in reality.” The wealthiest Americans own 81% of the value. According to MarketWatch, it is not necessary to be wealthy to invest in stocks.

I had about $4,000 and less than $1,000 in my company’s 401k. I didn’t make even $40,000 before taxes in 2014.

I was a novice in the field of investing and had to spend time learning. I became fairly confident in less than a month, but was still no pro.

The first step is always the most difficult, but with time it becomes easier.
The first step is always the most difficult, especially when it involves money.

You can find a lot of useful information online. How do you begin? What is the best way to start? This makes no sense at all!

You’re not alone. While my family encouraged me, they were still concerned. If you don’t have any experience in the stock exchange and start to talk about investing, your family will become protective.

You should create a plan and do your research before you start.

Even if you know a lot, reading books is important.
Reading books is essential to building a solid investing foundation. I have already mentioned this in my introduction. There’s a lot to be said online and in books.

Knowing your investment goals and why is key. You can find books and materials to help you stay grounded.

Avoid any books or topics that promise quick riches. Stock investing requires a long-term strategy. You can earn some money fast. Fast money can lead to greater losses in investing.

The top finance and money books I recommend will help you get on the right path to investing and finance.

The Dollar Cost Averaging is your friend
If you are new to investing in stocks, there are a few important things that you need to consider.

Stock picking is not recommended. (If you want to try it later, go ahead. But be cautious.
ETFs and Index Funds will be your best place to start
The Dollar Cost Averaging method is your best friend
You can look up the answers to the second bullet. The third bullet, I will cover briefly.

Dollar-cost-averaging is a technique for investing that involves buying shares in a specific investment at a regular rate, regardless of their actual price. Do not be concerned if prices are low or high one month. Stick to your investing schedule.

There is more to it. It is important to read this article and understand it fully.

Learn how to calculate the fees associated with stocks and funds
A beginner may not be aware of the fees involved in trading. Purchase of stocks, funds and account fees.

Many financial institutions charge 1-3% maintenance fees, or account fees as they may call them.

It’s a scam that can cost you thousands of dollars in future returns. Imagine you get 7% average returns on a portfolio of 3 mutual funds.

So, the annual fees for each fund is 1.4%. That means that 4.2% of all your investment returns are now going into the pockets of institutions. You are now left with just 2.8%. It happens to people ALL THE TIME.

Even my previous company’s 401k was high in fees, and there were even fees for rollovers! I was lucky to have caught this from the beginning and only chose 2 funds in order to keep my fees low.

You can save a lot by choosing a platform that has low fees, like Vanguard. Also, look at the expense ratios of funds and ETFs.

Although down markets may be frightening, DON’T panic sell
Every time a correction occurs or a loss occurs, I find myself rolling my eyes. It’s true.

Initially, I was scared when the corrections were made and then sold. D’oh! What’s this? It bounced back within a few days and has continued to grow ever since.

If I kept it and continued to average dollar costs, I would have been in a much better position.

You may feel like the end of the world, but you shouldn’t worry if the money invested is for your retirement or future.

Your money will not help you if the world ends.

Do not obsess about your investments
Oh, yes. This one. I believe I looked at it for a few moments almost every day during the first six-month period. Do not do this.

You will drive yourself insane, and you’ll either sell something, buy something stupid or change your funds, because it does not look like things are going in your favor.

Avoid checking in daily at first, especially if self-control is a problem. Do not download any financial apps on your phone.

Now I only look at my portfolio a few days a week, but I have learned to control myself and not make rash decisions about investing.

You’ve done well to read this far! If you scrolled down to the bottom, that’s okay too!

Extra! Blogging is a great way to earn passive income, and it can also be an asset in the long run. It’s easier than you might think to start a WordPress blog. Learn how to create your own WordPress blog, and then grow it so that you can start earning passive income.