My investing career started back in 2014. I walked into a broker’s office, asked for Peter, and told him I wanted to start investing. I transferred some money to him, he put it in a mutual fund and that was it. I didn’t even know what a mutual fund was. Peter gave me some papers about the fund and the meeting was over. I never saw Peter again.
Now, Peter didn’t run off with my money or anything like that, I just never saw him again. We did business over the phone. The mutual fund was invested in small-cap companies. One of the companies was Rosetta Stone. That was the only name that stood out to me. I remember Peter asked me “What is your goal for this money? ” and I told him “I want to have $100,000 in 10 years.” He took out a calculator, ran some numbers, and then said, “For you to reach that you will need to invest X amount of money each year with an annual return of X.” I said to myself, “That sounds awesome!” and then I said, “I need to find a job.”
At the time I didn't know a whole lot about investing. I gave Peter my money and didn’t contact him again for a couple of years. I remember logging into my account online to see how I was performing and I didn’t even know if I was up or down in my investment. This is how clueless I was. There was so much to look at that it was overwhelming. I had the mindset that it was too complicated to learn. When do you buy or sell? What's the difference between an exchange-traded fund (ETF) and a mutual fund? How do I get a dividend? What's a dividend exactly?
So, I went to a professional because that seemed like the logical thing to do. "How could I know how to manage my own money?" I think these thoughts are common amongst most people. So we go to the professionals and do what they say, but do we have to?
Over the past few years, I’ve developed an interest in personal finance and investing. It started in 2018 when I saw the interest grow in my savings account each month. I would receive more and more and I didn't have to do anything but keep money in the account. What a wonderful thing. This led me to read about compound interest, which led to individual stocks, then to capital gains tax, and so on. My financial knowledge grew a little bit each day. I read financial blogs and subreddits, listened to podcasts, watched CNBC. All of these outlets shaped my learning.
I eventually closed my account with Peter and opened a taxable brokerage account with a different company. I then opened several retirement accounts such as a Roth IRA, HSA, and a 457b. My work offers the latter two in addition to a pension plan. With all these accounts, I only manage two. The taxable and the Roth. For the other three, I contribute to them each month from my paychecks.
Do I still own that mutual fund with Rosetta Stone? No. I sold that as soon as I opened up my new taxable account. I now own a handful of stocks and ETFs that are spread out across the different investment accounts. No, I’m not YOLOing my life savings on Gamestop or any other meme stocks. I have done some trading in the past* but no longer do so.
In the span of a few years, I learned how to become more financially literate. I manage all of my investments, create monthly budgets, and have zero debt. While I was once intimated by the thought of investing and managing my money, today I've never felt more confident about my finances.
*Spring of 2020, at the start of the coronavirus, I traded a lot of stocks. It was my first time doing it and it was exhilarating. Buy X amount of shares in ABC stock and sell it later during the day. It’s not a good way to accumulate wealth but it was a fun way to spend an afternoon during the pandemic. I did this for a few months and eventually stopped. Trading is too difficult and this was also around the time when I learned about capital gains tax. “Wait. I have to pay taxes on all these gains?”