Investing in the Digital Age
As a first-generation American, I experienced firsthand some of the pitfalls that came with financial illiteracy and the lack of understanding around investing. During my tenure in Business School, I learned the founding principles of investing along with simple, effective strategies that can snowball into big wins down the line.
Where’s the Finish Line?
Before I bought my first stock, I had to ask myself a basic (but very important) question: What’s my goal? Having an idea of what I wanted to achieve would make it easier to align my investing strategy. If I wanted to invest in companies I believed would continue to grow and dominate their respective industries over the long term, I’d choose companies that aligned with that strategy - like Microsoft. Charlie Munger, a billionaire investor, invested $1,000 in a stock that went on to pay him $70,000 a year in dividends. Ask yourself what you want out of your investments, then buy stocks that will do just that.
Diversify, Diversify, Diversify
As much as I believe in Microsoft as a company long-term, any given day could see a drastic change to its stock value - such as Open AI’s CEO being fired. For this reason and others, I spread my money across multiple investments. I wouldn’t want all my eggs in one basket for the sake of losing everything in a single accident. Exchange-traded funds, or ETFs, make this process simple: you buy one stock, and that one stock contains hundreds of companies within it. Some well-known and trusted examples would be:
QQQ - Invesco Trust
VOO - Vanguard S&P 500 ETF
VUG - Vanguard Growth ETF
IJR - iShares S&P Small-Cap ETF
Don’t Buy the Hype
One mistake I made as a young investor was following the trends or advice I’d see on social media. Oh, GameStop is the hot stock? I guess I should jump on the bandwagon. Is Everyone talking about how much money they made on Tesla stock? I don’t wanna miss out. I made poor investments because I was following the trend. It wasn’t until I began researching the companies I was interested in and making my own decisions (regardless of social influence) that I felt comfortable with my strategy.
Investing my hard-earned money felt scary at first, and fortunately, there were plenty of resources that helped me learn more about investing. Two resources I’d recommend starting with are Visual Capitalist’s chart with The 20 Most Common Investing Mistakes, as well as Andrei Jikh’s video linked below on how to get started picking stocks. If you have any advice or stories you’d like to share about investing, please comment below.