Born in the early 80’s, such incredible opportunities did not exist when I was growing up. Investing, whether it be in stocks, cryptocurrency, or art has never been so accessible. Anyone with cell service or an internet connection can jump on and participate. With apps like Robinhood, Binance and Coinbase, getting started has become as simple as sending a text.
I remember when I was a little kid being so excited hearing my father talk about his “stock options.” I had so many questions! Amazed at the idea of owning a portion of a company, I desperately wanted to give him any money I could scrape together so I could participate. Then I was informed, it would cost more than I could earn mowing lawns just to play (pay the broker). Today, with the ability to trade fractional shares of stock or crypto, even the smallest piggy banks can buy into the type of assets that in the past were only available to those with white collar paychecks.
Access to information and analysis is everywhere. The problem currently is sifting through all of it, and picking out the useful bits. There is no one guiding us smoothly through these waters. If you’re feeling some apprehension and anxiety, that’s good. It’s better to be mindful when it comes to your money. Often we are the only ones protecting our portfolios. No one is making sure our transactions go through smoothly, protecting us from scams, and no one telling us exactly what we should be investing in. To me this is both unbelievably liberating and sometimes scary as hell, and it’s the only way I truly learn. Play around with a paper trading account so you can get a feel for the markets, but treat it like it’s real money. Practice using strategies that you want to use with your real account. You can create a free account with thinkorswim or Webull, and practice to get a feel for the application. Try using a small balance, if you can build up a modest account you can probably grow a real account. Start with the basics and learn how to use the platforms you will be trading with. After, consider signing up for a free trial with an investment service like Market Rebellion, or Zacks. These tools will help you research the companies and teach you more advanced strategies. Don’t just copy and paste the information, try to understand why the asset has a good (or bad) valuation. Use reverse engineering. How did the analysts get to their conclusions? With all the information we all have at our fingertips it’s not difficult to even out our odds.
One thing a person starting out should understand, Trading is different then Investing. Apps like Robinhood and Webull want us to trade, they make more money if we trade. The boring reality is that we must have patience and grow our account size over time. Remember, time in the market is more important than timing the market. Dollar cost averaging really is a great way to invest and not feel the pain of putting aside large amounts of money. Remember, only invest what you can afford to lose, especially when it comes to crypto! With cryptocurrencies, use your preferred exchange to buy, sell and trade, only. Learn how to use a non custodial wallet to store any crypto you don’t want to lose. The recent, devastating events would have been a non issue if people had just followed this one rule.
When it comes to my own overall picture, diversification and dollar cost averaging are key. Being diversified across different industries, sectors and markets helps produce higher returns and exposes me to less risk. I currently have one traditional IRA account that is managed for me. These are typically slow and boring but safe. I also have two crypto and two self managed accounts for equities. I was able to purchase a condo a while back that I now rent out. Diversification is necessary, it will keep us safe and add some excitement to something that should be mostly boring. Remember, I am talking about investing not trading and investing is mostly boring. Most things worthwhile require patience. I’ll talk more about patience in a future article.
There’s an old proverb that says “The best time to plant a tree was 20 years ago. The second-best time is now.” This is especially true of investing. How are you diversifying your portfolios and investments as we head into 2023?
Stay informed my friends.
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This article is not intended as financial advice. These are my opinions and thoughts on my own journey in the markets and investing.
