MICHELINE'S STORY (Stock Market Investing Case Study 8 of 8)
Micheline started investing in the stock market with $300. Not a lot of money to start with, but it was a start. It is when she began to feel more in control of her finances that she started to save.
With her $300, she set out to find a financial adviser but no-one wanted her as a client because of the small amount. She persevered and she did find one. Today, her account is still with the same financial adviser. Micheline speaks very highly of her; she says she is an extraordinary woman. Micheline was her very first client and of all her clients, proportionately all things considered, Micheline’s account is the most impressive.
KEN'S STORY (Stock Market Investing Case Study 7 of 8)
Ken got the investing bug while visiting with a day trader friend, and watching him write a cheque in the high six figures to cover the current year’s income taxes. This man had started with 75K and subsequently turned it into a considerable sum.
One of his friends decided that he could be a day trader too, and tried to replicate the success but ended up losing his entire investment. This experience showed Ken that there are no guarantees when investing. He also learned that the stock market can fluctuate greatly, for example, during the market crash of 2008 his portfolio dropped almost 40%. The volatility taught him to roll with the ups and downs.
ELIAS'S STORY (Stock Market Investing Case Study 6 of 8)
Elias started investing over 30 years ago just before starting university. Today, the bulk of his investable assets are in the stock market.
Motivated by the possibility of making money, he bought his first stock when he was 17 or 18. It was a junior gold mining exploration company. Elias made some money selling some shares when it went up in value but in the end the stock didn’t perform well and eventually the company went bankrupt. He made a second investment a few years later in another junior mining stock. This one turned out extremely well because the company discovered a large gold mine. When he sold, the profit helped pay for his MBA degree.
IVAN'S STORY (Stock Market Investing Case Study 5 of 8)
Ivan began investing in the stock market more than 30 years ago. It all started one evening when he was sitting on his porch. He had just completed his university degree, and he realized he had too many bills to pay despite earning a great salary compared to his summer job. He decided in that moment to change his financial habits. At that time, his net worth was approximately 3K.
Over the course of the next 32 years, his investing and trading produced more than one million dollars in capital gains. On an annual basis, he achieved a positive return over 80% of the time, with about 34% being the best year and about -5% being the worst year. Active investing was a secondary activity until he retired from his traditional job in 2005. It’s been his primary occupation since, although he doesn’t do it for the money anymore. He does it for the peace of mind and to learn more about himself. He enjoys being in the flow of it.
NICK'S STORY (Stock Market Investing Case Study 4 of 8)
Influenced by his cousin who worked for Berkshire Hathaway, Nick first became interested in the stock market when he was 12 years old. He started to learn about mutual funds with a paper trading account at that time. He remembers how he idealised powerful people.
Building wealth came to be top of mind for him. As he grew older, he always knew he wanted to make money, but he didn’t have the passion to build a business. The stock market seemed like the best option to him. He started to use his real money at age 18 with mutual funds (stocks a few years later). Five years later, he withdrew his funds to purchase his condo. He started investing in the stock market again in January 2014.
TOM'S STORY (Stock Market Investing Case Study 3 of 8)
Tom has been investing in the stock market for quite some time. It is in year 2000 that he decided to manage his account himself after noticing that each buy and sell transaction made by his broker cost him $100. Prior to that, he managed his own graphic design firm for about 20 years. He became very motivated to grow his portfolio as a way to generate income since his largest consulting contract had been terminated as a result of his client’s change in business focus, and so his services were no longer needed.
And also, he was inspired by a former client who took his company public – Tom saw how the price of a stock can climb. He remembers the owner believed very much in “baby steps”.
LIZ'S STORY (Stock Market Investing Case Study 2 of 8)
Liz started investing in the stock market when she was in her 30’s over 25 years ago. Both she and her husband-to-be had lost money with their homes so they weren’t interested in real estate, but they agreed investing was a priority to secure their future. Early in their marriage, they were concerned about the outcome if one of them lost their job therefore they decided to live on one salary and they saved the other for five years while they were renting an apartment. They thought of buying a summer cottage, but realized that they wouldn’t go there frequently enough to make the expense worth it. They are both analysts by profession so analysing their situation was second-nature to them.
While studying for her MBA, Liz learned that investing in equities was the way to go. She also learned that expectations of outperforming the market were unrealistic. At the beginning, Liz and her husband invested in mutual funds to achieve diversification. Later on, they invested in exchange-traded funds (ETFs) to save on fees, and in guaranteed investments certificates (GICs) and bonds for security. But now with interest rates being so low, GICs and bonds are unappealing with the low returns they offer. Liz is now more focused on equities and she safeguards a cash portion in a high interest savings account.
Yes & No. That's because it depends on the timeframe. As an example, let's look at the technology sector.
JORDAN'S STORY (Stock Market Investing Case Study 1 of 8)
Jordan was first introduced to the stock market when he was in his early twenties, during the dot com technology bubble. At that time, he was working for a firm that provided technology services to investment banks. Since they had free access to trading tools and real-time market data, many of his co-workers were active day traders .
Early experience forms what later became Jordan's index investing strategy
Jordan witnessed first-hand the excitement that quickly rising markets produced. He also saw the flip side, the devastation when the market started to collapse in 2000 and his co-workers were losing large sums of money. He saw both extremes of the emotional roller coaster ride.
The Tips and Lessons Learned shared in this article are based on interviews with stock market investors. Their experiences range from more than 30 years to under 10.
Some built their net worth to over one million dollars while others are in the process of building their retirement account.
They found success through various methods; For example, Jordan chose an index investing strategy while Liz finds that a subscription service works best for her. Tom, Nick, Ivan and Elias on the other hand, prefer to analyze individual stocks. There are also investors who chose to invest through a financial advisor, Ken and Micheline.
While they each had their preferred method, they shared these core beliefs:
~ A Stock Market Entry and a Mindset Entry
If you’ve been reading stock market books and articles, you probably came across the idea that it's impossible to beat the market so don’t bother trying. And you may even have come across statistics that drive the point home.
This is why mutual funds and index funds are a popular alternative to buying individual stocks. I have nothing against funds per say, that’s how I was investing for a lot of years. It’s a hands-off and mostly worry-free way to invest. It frees up your time and your mind so you can focus on something that’s important to you, perhaps your family, your career, your business or your hobby.
~ A Random Thoughts entry
I like the stock market because it's a lot like us.
There are stocks that take off like a rocket, some that drop like a rock, and others that stay where they are for months and even years. There are strong stable stocks that stood the test of time, while others seem to be stuck in time. There are losers that become winners, and winners that become losers. Some go through ups and downs like a roller-coaster, some cry out for help, and some remain a mystery. There are stocks that are popular, others that aren't, and yet others that are forgotten. There are stocks that are a sure-thing, others that are a humongous risk and some that are a pleasant surprise.
Yet, for all it's ups and downs and twists and turns, over time, the market consistently goes up. It's a lot like us, with all our ups and downs, and twists and turns, over time, we grow.
Everything we do, every decision we make is a risk
About this blog
This is a blog about investing for beginners. You can count on quality information
Yvanne wrote a 2-part book series about investing for beginners. She is an investor with an entrepreneurial character and a creative spirit. In the context of her career, she was trained as an analyst, and later as a manager. Find out more here.