Feeling a little lost in the market noise these days?
Not sure what to do with your money?
Scared of taking the plunge into investing?
I’ve got you, fam 👊
Here are five basic investing principles that can get you out of the rut and back to your best (money) self.
⬇️
Not sure what to do with your money?
Scared of taking the plunge into investing?
I’ve got you, fam 👊
Here are five basic investing principles that can get you out of the rut and back to your best (money) self.
⬇️
1️⃣ EMBRACE THE UNCERTAINTY.
Scared of the future? Thinking of pushing off this whole “investing” deal until things calm down?
I’ve got news for you.
Nobody knows what the future holds. Not even Wall Street.
(Sorry, even I don’t have a crystal ball)
🔮
Scared of the future? Thinking of pushing off this whole “investing” deal until things calm down?
I’ve got news for you.
Nobody knows what the future holds. Not even Wall Street.
(Sorry, even I don’t have a crystal ball)
🔮
Still, there can be value in investing, even if you don’t know what the future holds and things don't calm down for a while.
You just need to be patient.
You just need to be patient.
https://twitter.com/callieabost/status/1332697297952665604
2️⃣ INVEST AS SOON AS YOU CAN.
If you’re a long-term investor (like, years down the road), compounding is your superpower.
Compounding = the exponential growth that can happen on top of any previous growth in your portfolio.
If you’re a long-term investor (like, years down the road), compounding is your superpower.
Compounding = the exponential growth that can happen on top of any previous growth in your portfolio.
Fun fact: Albert Einstein reputedly once called compounding the “eighth wonder of the world”.
IDK about you, but I don’t argue with Einstein 🤷🏼♀️
IDK about you, but I don’t argue with Einstein 🤷🏼♀️
Look at this.
If you started putting $20 a month into a hypothetical, no-fee S&P 500 fund at an 8% annual return, here’s what your returns would be at the end of 5, 10 and 20 years.
That’s compounding in action. It all adds up, even if you start small.
If you started putting $20 a month into a hypothetical, no-fee S&P 500 fund at an 8% annual return, here’s what your returns would be at the end of 5, 10 and 20 years.
That’s compounding in action. It all adds up, even if you start small.
3️⃣ DIVERSIFY.
Wall Street looooves to throw around the term “diversification”.
Don’t freak out. It’s just a complicated term for spreading your money across multiple markets (/not putting all your eggs in one basket).
🍳
Wall Street looooves to throw around the term “diversification”.
Don’t freak out. It’s just a complicated term for spreading your money across multiple markets (/not putting all your eggs in one basket).
🍳
Diversification isn't sexy (to most of us), but it could be one of the most important things you do with your money.
If you put some money in stocks and some money in bonds (the classic Wall Street advice), you could cushion your money against big stock market drops.
If you put some money in stocks and some money in bonds (the classic Wall Street advice), you could cushion your money against big stock market drops.
Sure, you may give up a little return, but it’ll help you sleep at night.
And I’m all about that.
My motto these days is SANITY 👏🏻 OVER 👏🏻 EVERYTHING 👏🏻
And I’m all about that.
My motto these days is SANITY 👏🏻 OVER 👏🏻 EVERYTHING 👏🏻
Diversification was an underrated portfolio trait last year, even during one of the hottest rebounds in stocks of all time.
Here’s a thread I wrote on that:
Here’s a thread I wrote on that:
https://twitter.com/callieabost/status/1341404222806503428
4️⃣ REMAIN CALM 😌
TBH, this is good investing advice and life advice.
Don’t make emotional decisions with your investments.
🤪😜😅😂🙃😟😖🥺😩😳🤬
TBH, this is good investing advice and life advice.
Don’t make emotional decisions with your investments.
🤪😜😅😂🙃😟😖🥺😩😳🤬
Panic selling — or the act of selling when you don’t need to just because the market is falling — is one of the biggest mistakes you can make.
Why?
Historically, the S&P 500’s worst days AND best days have occurred in clusters.
Why?
Historically, the S&P 500’s worst days AND best days have occurred in clusters.
2020 was a great case study for why you shouldn't panic sell.
If you sold stocks on March 16 (the day the S&P 500 fell 12%, its worst drop since 1987), you would have missed some — or all — of the massive rebound that started just a week later.
If you sold stocks on March 16 (the day the S&P 500 fell 12%, its worst drop since 1987), you would have missed some — or all — of the massive rebound that started just a week later.
Avoid emotional decisions by knowing your why.
🔥Why are you investing?
🔥What are your life goals?
🔥What do you want to do with your money?
Besides, as I said earlier, TIME IN THE MARKET BEATS TIMING THE MARKET.
🔥Why are you investing?
🔥What are your life goals?
🔥What do you want to do with your money?
Besides, as I said earlier, TIME IN THE MARKET BEATS TIMING THE MARKET.
5️⃣THINK BIG PICTURE.
It may be super tempting to jump into the hot stocks when they’re going up.
HOLD ON ONE SECOND.
🔥Do they align with your goals?
🔥Do you really want to play that short-term game?
It may be super tempting to jump into the hot stocks when they’re going up.
HOLD ON ONE SECOND.
🔥Do they align with your goals?
🔥Do you really want to play that short-term game?
Often, the best strategy for a long-term investor is to keep it simple.
After all, most of us just want to retire comfortably or buy that Hawaii beach house, not stack the tendies.
🏝
After all, most of us just want to retire comfortably or buy that Hawaii beach house, not stack the tendies.
🏝
Single stock picking is HARD, too.
Last year, about 63% of all stocks in the Russell 3000 returned less than the index, and about 20% of them fell 20% or more during the year.
Last year, about 63% of all stocks in the Russell 3000 returned less than the index, and about 20% of them fell 20% or more during the year.
Don’t get me wrong.
Single stocks have a place in portfolios.
They’re a great way to support an idea you’re excited about, and some of them may turn out to be market success stories.
Single stocks have a place in portfolios.
They’re a great way to support an idea you’re excited about, and some of them may turn out to be market success stories.
But they typically swing up and down more, and you have to hold through those swings.
Easier said than done.
Just look at Apple, the market's darling stock.
Easier said than done.
Just look at Apple, the market's darling stock.
https://twitter.com/callieabost/status/1309185149427384320?lang=en
Don’t worry. If you want a piece of the stock market instead of just one stock, there are plenty of exchange-traded and mutual funds that could give you exposure to sectors and indexes (like the S&P 500).
Why pick one stock when you can own them all, am I right?
Why pick one stock when you can own them all, am I right?
Alright. Are you taking notes?
Hope so.
Lots of people like to overcomplicate investing, but it’s SO personal. And we’re all investing for different reasons.
We’re all different, and so are our portfolios.
Hope so.
Lots of people like to overcomplicate investing, but it’s SO personal. And we’re all investing for different reasons.
We’re all different, and so are our portfolios.
The best investors stick to the basics, though.
You’ve got this 👊
You’ve got this 👊
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