March 8, 2020
In this video, I share with you three ideas on how beginning investors can invest their first $1,000 in the stock market. These ideas were born from my twenty years of experience as an investor.
Please note that I’m not a financial advisor. I received a bachelor’s in computer engineering, and I’ve been working in information technology ever since.
Even though I don’t have a finance background, I believe that one of the best ways to achieve financial freedom is investing in the stock market.
THE SCHOOL OF HARD KNOCKS
I learned about investing through the school of hard knocks – losing 50% in my first-ever investment in a telecom mutual fund circa 2000. I spent my life savings of $2,000 on that fund.
That experience taught me how much I didn’t know about the stock market. So I did what I always did when I wanted to learn about something. I took massive action by reading dozens of books on the subject. I read the writings of Peter Lynch, Warren Buffett, and other legendary (and not-so legendary) investors.
That reading paid off. It taught me the value of long-term investing in great companies that you know and understand well. It also taught me the immense power of index investing.
During my twenty years of investing, I’ve experienced three major economic disruptions.
- Dot-com Bubble (the early 2000s)
- Great Recession (the late 2000s)
- Coronavirus Pandemic (2020)
Each time, it seemed like the sky was falling. But instead, my portfolio would make it through the downturn and reach new heights.
THE INVESTING JOURNEY
In my 20 years of investing, I managed to grow my $2,000 investment portfolio to well over $200,000. Don’t get me wrong. I did hit some bumps along the way.
Throughout my investing journey, I experimented with and tested many different kinds of investments. Like many other beginning investors before me, I’ve made plenty of mistakes.
Despite all those mistakes, I still managed to grow my portfolio over 100-fold during that time. Had I committed to one of these three long-term investment ideas early on, I’d easily have doubled my money or more.
MY YOUNGER SELF
The advice in this video is advice I would have liked to give my younger self. Had I just known this information ten years earlier, I’d be a lot closer to my financial goals.
When it comes to long-term investing, time is of the essence!
Through the power of compound interest, it would be better to invest $10,000 at age 25 than to even invest $20,000 at age 35.
Consider this, $10,000 invested for 40 years with 10% theoretical returns would yield $452,592.56.
Investing $20,000 for only 30 years would only yield $348,988.05.
That’s $100,000 less even though you started with twice the amount.
That’s why it’s so important to start investing early.
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Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.
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