My Investing Journey: From $100 to $2000 (and How You Can Start, Too)
- Katherine Minaya
- Mar 27
- 6 min read
Investing can be scary, and if you're feeling apprehensive about investing, you are not alone. I was terrified. Suffice it to say that I didn't start until I was 28 or 29.
Some of this fear is somewhat outdated. Technology has made investing so much easier than in the past. People used to have to walk their cash to the broker and fill out a ton of paperwork! Imagine that! Today, investors can manage portfolios, research companies, and execute trades with a few clicks on their smartphones or computers. If you'd like investing to be even easier, hi, AI! Roboinvesting, while expensive, super simplify the process.
The biggest hurdle for me was the simple fact that I didn't have a lot of money to start with. It felt pointless to even consider investing when I was barely scraping by. The idea of losing any of my limited funds was terrifying – it would be like throwing money down the drain.
My point of entry was Acorns- the app that invests your change. It worked well for me because it meant I was investing the smallest amounts I possibly could, and the risk was incredibly low. However, without risk, there is minimal reward, so I wasn't exactly rolling in it.
After after a million "explain it to me like I'm five" conversations with my financially savvy friends, I moved to Robinhood. Although it conjured memories of 12th-grade investing simulations and my 17-year-old self losing all of my "money" on Google, which in 2008 was losing money, I took the plunge with $100.
What I don't recall my Econ teacher emphasizing but that my friends seem to implicitly understand were two very important tenets of investing.
1. Time in the market is everything- "set it and forget it."
Don't panic and sell everything when the market dips. They swear it always bounces back over 20 years. Investing is a marathon, not a sprint. Do not sell your investments, and do not withdraw funds. Investing is a long game.
2. Do not put all your eggs in one basket- diversification is safety
If one investment is doing poorly right now, another may be thriving.
I was living in San Francisco and believed in the upward momentum of cannabis, so I bought 12 shares of SNDL Inc. I also bought a quarter of a share of Pfizer, which, in December of 2020, had a lot of promise. Other stocks doing well at the time and which I bought into were NEE, CAT, SBUX, TSLA (before… well, you know), ZM, DOCU, AMZN, PYPL, GOOG, C, and PCG.
Having spoken to friends about ETFs and Index Funds, I also thought it wise to purchase literally 0.03 shares of DIA, SPY, and VOO, 0.6 shares of PDBC, 0.4 shares of CPER and CEF, and 0.07 shares of ARKK. ETFs and Index Funds follow the market and, most beneficially, they boot out stocks that aren't doing well and swap them for stocks that are.
I then set up a monthly recurring $10 purchase of TSLA (sigh), and a weekly recurring $10 purchase of SPY. I automated my investments so that I didn't have to think about them all of the time.
In 4 years, my $100 had turned into $2000 between my recurring purchases, my dividends, and the magic of compound interest!
Many individuals experience fear when it comes to making investment decisions. The thought of losing money, uncertainty about economic shifts, or simply not knowing where to start can create a significant barrier. But investing doesn’t have to be synonymous with fear.
Understanding Your Fear of Investing
Fear often stems from a lack of understanding and knowledge. When we don’t fully grasp a subject, our minds tend to fill in the gaps with worry and doubt. The financial markets can seem like a complex puzzle, filled with uncertainties and risks.
Recognizing that fear is a natural part of the process is vital. Instead of allowing panic to prevent you from moving forward, embrace it as a signal that you need to educate yourself.
Education often lays a solid groundwork for confidence. Once you delve into investment concepts, you’ll begin to understand the risks, rewards, and strategies involved.
Setting Clear Investment Goals
Before pouring your hard-earned money into investments, it's crucial to identify what you hope to achieve. Whether you're looking to save for retirement, purchase a home, fund your child’s education, or simply grow your wealth, your goals should guide your investment choices.
Types of Investment Goals
Short-term goals: These might include saving for a vacation or a new car. Typically, these funds should be less exposed to market volatility.
Medium-term goals: For targets like a wedding or a long vacation, you might consider a mix of stability and growth in your investment approach.
Long-term goals: Efforts toward retirement savings or wealth accumulation generally allow for more aggressive investment strategies.
Establishing your goals clarifies your investment timeline and risk tolerance. It transforms your investing experience from a nebulous fear into a purposeful journey.
Building Your Knowledge Base
Investing knowledge starts with understanding the different types of investments available. Of all the books I have read about money, Scott Galloway's The Algebra of Wealth has been the most educational and reassuring. He goes over the nitty-gritty and explains what it all means better than I ever could. But here are your basic definitions (which may themselves be gibberish at this point but will be better understood with time):
Stocks: Shares of ownership in a company that can offer high potential returns but carry higher risks.
Bonds: Debt securities where you lend money to an entity (government or corporation) in exchange for periodic interest payments and return of principal upon maturity.
Mutual Funds and ETFs: Investment vehicles that pool money from multiple investors to purchase diversified groups of stocks and/or bonds.
Real Estate: Purchasing property as an investment to generate rental income or profit from appreciation.
Index Funds: A type of mutual fund or ETF designed to replicate the performance of a market index, like the S&P 500, providing diversification at a low cost.
Creating Your Investment Plan
With a clear idea of your goals and a foundational knowledge in place, it’s time to draft your investment plan.
Key Elements of Your Plan
Assess Your Risk Tolerance: Everyone has a different comfort level with market swings. While a younger investor might withstand volatility for potential long-term gains, those nearing retirement may prefer safer options.
Diversification: To mitigate risk, ensure your investments span across various asset classes. For instance, a mix of stocks, bonds, and real estate investments can buffer against market fluctuations.
Regular Contributions: Consider setting up automatic contributions to your investment accounts. This habit ensures consistency and takes advantage of dollar-cost averaging, smoothing out the impact of market volatility over time.
Choosing a Brokerage Account
A key step in the investment process is selecting a brokerage to manage your investments. When evaluating brokerages, consider:
Fees: Look for platforms with low or zero commissions and minimal account fees.
User Experience: A user-friendly interface enhances your overall experience, especially as a beginner.
Resources: Opt for brokerages that provide educational tools and resources to help you make informed decisions.
Notably, if your employer has set you up with a 401k or a 403b, you already have an account with a brokerage! You may even have a portfolio, meaning that your funds are already being invested for you! I discovered I had an account with Fidelity nearly 3 years into the job that set it up for me, and boy was I pleasantly surprised at the amount I had in there!
Once you have these elements in place, you’re ready to initiate your first investment!
Taking the Leap: Start Small!
The best way to face your investing fears is to take action. Remember, you don’t need to invest a large sum right away. Starting small is perfectly fine. Just look at my trajectory for inspiration!
Commit to Continuous Learning
As you embark on your investment journey, continue educating yourself. Financial markets evolve, and knowing current events, trends, and new investment strategies can significantly impact your decision-making. Opt for a mindset of lifelong learning—a key trait for all successful investors!
Very few investors succeed overnight, and it’s essential to stay patient and committed. An investment strategy doesn't yield fruits immediately; allow time for the power of compounding to work its magic.
Concluding Thoughts
While investing may evoke fear, it's ultimately a personal journey toward achieving financial goals and wealth growth. Take a step back, acknowledge that uncertainty is a part of the process, and choose education as a tool to conquer your fear.
By setting clear goals, educating yourself, creating a solid investment plan, and starting small, you’ll find that what once felt like a daunting endeavor can transform into financial security.
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