Lessons in Investing: My Personal Experiences and Progress
CHAPTER 1: WHERE DO WE BEGIN?
NO STORY IS COMPLETE WITHOUT A BACKSTORY
Before we get started, I think it is important for me to tell you that I am one of the most clueless beginners there is to find on the topic of personal finances. Everything there is to learn on this topic, I learned either on my own or through books and other resources, including some principles I learned growing up and watching my parents. How clueless are we talking here? Well, until the age of 25, I never owned a credit card, I had never owned my own bank account (probably since I didn’t start earning until I graduated) and I had no idea how to do an online transaction (I remember I did my first online transaction around October 2020, where I tried sending 500 bucks to one of my school mates to pay him back for a meal). But hey… we all get started somewhere right, and this little article I am writing is about getting started with investing.
Here is how it all started….
I came across this book called “Rich Dad Poor Dad” during the middle of 2021 thanks to my eldest brother who recommended Robert Kiyosaki for me and also got me to order this from Thriftbooks.com (a highly recommended site to get all your book needs to be fulfilled), which made me quite aware of my lack of personal finance knowledge, and to add to that, my lack of motivation to gain finance knowledge. I felt like it was extremely redundant for a 25-year-old graduate who is about to enter the best years of his life to not have a strong grasp on this subject. Reading this book convinced me more and more that there was a problem and I had to do something about it. But in the middle of 2021, I was getting ready to move to Canada to start my higher studies, so I took this book (the only non-academic book I brought to Canada) with me.
Here are some resources linked with this book.
The Rich Dad YouTube Channel — It has some pretty impressive videos like this recent one about “Escaping the Rat Race”, which is one you should definitely watch.
I was enjoying reading this book and learning the mindset of the financially independent adult and it was all thrilling and well, and I now had my own bank account, my own credit card and had gained control of managing my personal finances to some extent, but something seemed to be missing always. Here in Canada, you can open a student account in one of the major Canadian banks are start your own personal finance journey. You can responsibly improve your credit score (VERY IMPORTANT! — Link 1 and Link 2) and you can increase your savings by spending meaningfully, but it doesn’t feel like you are making money work for you even though you do this. Making money work for you essentially implies you need to have your saved up money grow, but as a student, you just don’t earn enough to see your money in your savings account grow enough (for those of you who don’t know, the interest rates of typical savings accounts are around 0.1% ). Sure you can always earn more money by working part-time maybe, but that means using more of your time to work and that might not be the most resourceful way to go about doing this. This was the problem that was building up inside me and the one I wanted to find a solution to, and finding the most resourceful solution to the problem was kind of my thing (or so I thought it was 😄).
THE INSPIRATIONAL MOMENT
It was around October of 2021 when I found myself adjusting to my new lifestyle, and I had not found the solution I had been looking for yet when one of those miraculous life events happened. I had started getting a feeling that my personal finances were getting nowhere towards improving, and had actually gone in the opposite direction to what I had intended it to go through (more spending and less saving), and my credit card bill was also not looking pretty on certain days. On top of that, trying to adjust to my new situation and academic workload didn’t leave much room for me to think about my personal finance take control problem. Then one day (thank god for twitter!), I stumbled upon this medium article here and decided to give it a read.
I read this article and found out about the Personal Finance Club and about the three important lessons that it reveals about personal finance.
- Invest to build wealth over the long term
- Live frugally to make the most of your earnings
- Build and maintain a high credit score
Even though I had gone through 13 years of school and 4 years of college, I had never come across any of these 3 lessons, so they were pretty new to me. I decided that I needed to hear about these lessons from people that I know and get them to share their views and opinions about this. So I spoke to a senior at my college, a childhood school friend studying in Germany (who had a pretty impressive investment portfolio he had started on his own by then), one of the lectures at my department who had learned about investing from his time during his PhD in USA, and also to few of my own batchmates. From those conversations, I sort of confirmed that investing might be the exact solution I was looking for! The advice that I heard most commonly from all of the people I consulted was,
- Investing is great!, but study it well and learn about it before doing it seriously
- You have to get started and learn by doing it, that is the best way
This was really good advice, and the kind of advice you want to get when starting something completely new, and so I had finally fallen on the right track and now it was all about getting started in a meaningful way. What was the meaningful way? I didn’t know yet, and I was getting too busy to even bother myself with finding out how to..
Here is an article I just saw today about Passive Income Ideas in 2022 –
You can see here that point 2 talks about Investing in mutual funds and ETFs, so a direction was starting to build up towards what I need to study about.
HOW I GOT STARTED: SHORT AND SWEET
It was the start of 2022, just 3 days into the new year when I realized something. It hit me as clear as day, and I started to regret not realizing it sooner. I had a little help of course, as I couldn’t realize it all on my own. It was my wife that helped me realize it and got me thinking about it, and later one of the most dependable videos I have ever watched on the internet made me realize it even better. I encourage you to watch this video and perhaps understand what I understood, as it will be a powerful source of consistency (perhaps patience) in your life 😉.
So as one of my two resolutions for this new year in 2022, I decided that I was going to get started with my investment journey. Lo and behold…. How cool is it that Jeremy also decided to come up with a new version of his course for 2022. This was just sweeet!… As far as first of the above advices was concerned with regards to gaining the right knowledge, this was exactly what I was looking for!
I am not going to reveal the entire course here since if you are interested in the course, you must surely take it yourself (consider it to be your first investment to building your own wealth 😉). I am mostly going to reflect on the key takeaways I got out of it and how I applied those to my own investing career..
But by all means let's begin..
So the main lesson is the most important principle to learn here. There are two basic rules you need to really keep at heart when getting into investing as pointed out by Jeremy,
- Always live below your means!
- Invest early and often!
I think these two are pretty good rules, and rule number 1 is a given since I’m still a student. Also, I think I am very capable of being addicted to rule number 2, which is why I have been having this feeling that I will be good at this investing gig, and hence my reason to start it in 2022.
NOTE — I just referenced two important articles from the Personal Finance Club here to remind you something before we get into this, and Jeremy often says this in his course as well. Investing is a Long Term Process, and it takes consistency and patience to make the most of this! It definitely is NOT a means for a “Get Rich Quick” scheme that people can get into. That would be an entirely wrong idea to have about this.
Awesome, so the first lesson in investing is always the principle of compound growth and understanding the basics of it. Clearly understanding this helps you to make better decisions when you are expanding and diversifying your portfolio. The best way to look at compound growth is to visually picture it, and there are so many free applications and calculators that can do that.
This Personal Finance Club Growth Retirement Calculator was really interesting.
Some other types of investment calculators to get an idea of compound growth
https://www.cibc.com/en/personal-banking/investments/investment-calculators.html
https://www.wealthsimple.com/en-ca/tool/tfsa-calculator
The theory of compound growth is pretty easy to grasp. Your investment grows over time with interest.
The summary of this was, living in a developed country (or not), saving is not enough, you have to invest!
So I hope I got the message across to you of what Chapter 1 was all about and how I got started. I have lots more to go through and I am hoping to do those each month while I go through this journey myself. This knowledge is very useful and very relevant right now, which is why I decided to personally engage in this manner and also share the knowledge in the process.
Time to end this Chapter! Thank you for reading!
CHAPTER 2: ESSENTIAL KNOWLEDGE FOR INVESTING — ACCOUNTS, FUNDS AND TAXES
Chapter 2: ESSENTIAL KNOWLEDGE FOR INVESTING is going to be a very exciting topic and I hope to complete it by February 2022. I will also introduce two more books shown below in Chapter 2. Thank you so much for reading and let me know if you have questions!
Cheers, and wish you a Happy New Year!
