From $0 to $4600 in Investments in a Year!
Sharesies kindly informed me today that I have officially been investing for a whole year!
That’s a whole year of consistently investing every payday.
It’s fair to say 2023 was a big year for me – cutting my expenses by $23,881 and starting to invest. And my 1 year anniversary is as good a time as any to take a moment to look back on my investing journey so far.
What has gone well.
What hasn’t.
What would I do differently.
And what I am going to keep doing (at least for the foreseeable future)
Starting from the top….
What has gone well
I should say Nvidia as my investment is up 52.19% (at the time of writing this). But it’s the one investment that keeps me awake at night.
So it’s my Smartshares US 500 ETF – my biggest investment. I have $2,222.37NZD of this particular index fund and as of today it’s up 11.82%. And I sleep soundly at night knowing all those crazy capitalist Americans are working hard to line their pockets – and mine! 😊
What hasn’t gone well
My New Zealand investments.
My investment in the NZX50 has consistently been down for the whole 365 days I have owned it. I am sure one day it will turn around, but not quickly enough for me, so I stopped actively investing and am just holding the $77.09 I have for the moment.
And I bought a small amount of Black Pearl shares knowing little about the company other than it was being lauded as the next Xero – and we all know how well that went for early investors. So being greedy and hoping for some quick easy returns I bought $19 back in July and they are currently worth….. $19!
What would I do differently
Honestly, apart from starting earlier (like in my 20s!) there is nothing.
What I am going to keep doing
Auto-invest every fortnight
Automation is key. I want a set and forget approach.
There is still a novelty factor to investing for me – it’s so new and exciting, I want to keep watching it. But it’s only been a year and I suppose that’s natural. Plus I think when money is scarce, watching money literally grow in front of your eyes is soooo addictive. Hopefully when money is less tight I will have better things to do with my time than check Sharesies every day.
Investing every fortnight also means I am benefitting from what investing pros call dollar cost averaging 😊 AND last but not least it’s a way of immediately moving some of my wages out of sight and out of mind to somewhere I won’t spend it – win win!
Keep it simple
I make just 2 investments a fortnight – although I currently hold 6 investments, I am only actively buying 2. I might swap and change what I am investing in but I plan to always limit my portfolio.
I don’t want managing my investments to start taking as much time as managing my business.
Invest in low cost, broad based Index Funds
(In case you’re not sure what that means: low cost means low fees, broad based means across a wide variety of industry sectors and index funds are collections of companies)
At the moment every fortnight I auto buy $80 of the Smartshares US 500 ETF – that’s the top 500 companies on the US stock exchange. In my mind, as long as I believe the world will continue to operate in a capitalist system (which I do) and the US will continue to be a major player (which I do) then this is a fairly safe bet. And one that so far has given me good returns.
Buy Nvidia
I am sure one day I will live to regret it, but I think until I do it will remain part of my investment strategy.
At the moment I invest whatever $20 NZD a fortnight will get me in Nvidia shares (which isn’t a lot with the price as of the 23rd of January at $596.54USD)
I could well be buying at the top…. But I’ll never know until it’s too late.
So maybe once my investment has reached an amount that I am too afraid to lose I will sell and invest it all in a low cost index fund… that is if Nvidia shares haven’t tanked by then taking my investment with them.
Learn
Last but not least this year has been such a massive learning curve for me and I want to keep learning.
Learning through doing – continuing to invest, and make mistakes no doubt. But just keep investing.
And learning through reading – absorbing as much as I can from people who have been doing this for far longer than me. Some of the articles I love to read, aside from JL Collins and Mr Money Moustache is anything in which Warren Buffet or Charlie Monger is interviewed.
The Beginning.
Sometimes I can’t quite believe I am an investor…
And other times I can’t quite believe it took me 45 years to start (insert dramatic eyeroll here)
Strictly speaking that’s not quite true as I have always joined company pension schemes (even when I was a twenty something just starting out, years away from retirement)… they’ve all been a complete disaster though! (long story short: the first was a private company pension that ended up going tits-up leaving me with little to nothing, and when I moved to NZ I didn’t transfer my better performing pension over immediately so by the time I did Brexit and tax took their toll leaving me with just half of what I had saved/invested – from memory I lost about $75k overnight)
Anyway… pensions aside I had no investments until the start of 2023.
But all that changed when I decided that 2023 was going to be the year I would finally sort my finances and I started avidly consuming every bit of content I could find on personal finance. Now I consider myself of average intelligence, and yet, despite contributing to a pension and Kiwisaver (thanks Barb) it had never occurred to me to invest outside of a pension until I heard so many in the FI community talking about it.
I always thought investing was for toffs… or flash gits (neither of which I wanted to be)
But when you start reading the likes of Mr Money Moustache and JL Collins, you start taking note!
Apart from the belief that investing was for toffs and flash-gits, the other thing that held me back was the age old “I don’t know where to start” – and perfectionistic procrastination (the belief that if I couldn’t do it perfectly it wasn’t worth doing) has been the killer of progress, growth and good habits my whole life!
I thought starting to invest was going to take months or even years of education. That was until I read The Simple Path to Wealth by the aforementioned JL Collins – sooo good I have already gifted it to 3 people.
He couldn’t have made investing sound simpler, or more logical.
Whilst I could have procrastinated over platforms and fees and who to invest in, after reading The Simple Path to Wealth I opened a Sharesies account, set up 2 auto invests and a fortnightly auto transfer of $50 from my bank account on the day I got paid, sat back and let technology do the rest….
Of course periodically checking in!
(When I say periodically, it was daily to begin with – watching your money grow whilst you do nothing really is quite addictive. Now I have weaned myself down to once a month)
Am I using the best platform? Probably not.
Does Sharesies have the lowest fees? Definitely not.
Am I making the right investments? I have no idea… but probably not!
Whether I have it absolutely right or not isn’t what’s important.
The important thing is I have made a start.
I am not at the stage of being able to invest large sums of money where any mistakes are magnified. (Don’t get me wrong, $4,000 is a HUGE sum of money for me. But it is not huge in the grand scheme of investing. )
Investments Now.
As it stands at the moment I am sure Mr Collins would be dismayed if he saw my portfolio.
I made a promising start! Originally investing in just the US 500 and the NZX 50.
Both are low cost (ish) broad based index funds through Smartshares.
But quite honestly, watching one investment do nothing whilst the other consistently grew and paid dividends was too much for me.
Then back in April 2023 I read about a company called Nvidia and how it was the only company whose shares were beating Tesla (at a point in the year when everyone was investing in and talking about Tesla)
And whilst I was reading this article I looked down at my 10 year old, still functioning laptop and saw a sticker…. Nvidia Geforce.
Which I took to be a sign from the investing gods and duly started buying whatever I could afford of Nvidia.
As of today my investments in Nvidia are up over 52% – and I have been buying whilst the price is on the rise, so many people will have done significantly better than this.
In theory it should be the jewel of my investing crown – none of my other investments come close to that kind of return… but instead it is my dirty little (not-so-secret-anymore) secret.
I know (from all that content I mentioned earlier I have read and listened to) that individual stocks are gambling and a fools game. Low cost, broad based index funds are the wisest, most sensible and indeed best option…
But I have fallen foul of the trap of hoping to make big, quick, easy, gains…. and the price??
At the moment its just my peace of mind and sleep, but one day it could be the $1440 NZD I have invested so far.
Because individual company shares can plummet to $0 – and scarily easily! Look at companies such as Enron, Blackberry, and Yahoo. In fact according to a McKinsey study in 2016 the average life-span of companies listed in the S&P 500 is 18 years. So as I am 45, chances are Nvidia will have disappeared before I hit 60 – some 5 years before I retire.
How will I know when that’s going to happen? I won’t.
How will I know when its share price has peaked? I won’t.
How will I know when to cut and run with my $s? I won’t!
Which is why it’s a fool’s game investing in individual companies.
For an index fund like the S&P 500 to go to $0 it would take…. an apocalyptic event in which frankly I would have bigger things to worry about than my investments.
So why am I doing it?? Why do I keep buying Nvidia when all the advice out there says stay away from owning individual companies? I have no idea…. Except I guess I need to learn the lesson (probably the hard way).
That’s what I am seeing my current investments as. Lessons in what, and what not, to do in preparation for when hopefully one day (soon) I have far more money to invest. So that I can make my mistakes and learn my lessons whilst we are ‘only’ talking a few thousand dollars and not a few hundred thousand (or even a million!)
As of Today.
Currently I have investments in 6 shares, 2 individual companies and 4 ETFs.
Smartshares US 500 ETF is my largest investment and the one I have been investing in most consistently since I started. I now have $2,222.37 invested and I add $80 to this every fortnight (with a set and forget auto-invest)
Nvidia is my second largest investment at about $1,440 (I say about because this is held in USD so is impacted by not only the performance of the company but also the NZD against the USD) Most of this I have bought when I have received mini windfalls throughout 2023 – small unexpected income from my business. But at the end of 2023 I also switched my other auto-invest from the NZX50 to Nvidia. So I now invest $20 every fortnight… I may well change it back again. I undoubtedly should. I just can’t quite bring myself to at the moment.
I hold $738 of Smartshares Global Equities ESG ETF. ESG = Environmental, Social and corporate governance. It is me dipping a toe in ethical investing. Something I buy occasionally when I receive some unexpected money. Based on my values I would like to have my full portfolio is ESG companies and funds…. perhaps one day.
I have $122.22 invested in Vanguard ESG US Stock ETF. Jack Bogle is a hero of mine since learning about Index Funds and so no matter how small a piece, I wanted a piece of the Vanguard pie. Again these are in USD so the exchange rate becomes a factor for us Kiwis. But I still like to think I have some investments in Vanguard.
I have just $77.09 now in the NZX 50. Sometime during 2023 when I changed the amount I was investing each month I had inadvertently started investing in 2 very similar Smartshare funds (NZG and FNZ) so I sold one (NZG) and re-invested it into my Smartshares Global Equities funds just to simplify my holding and prevent any future confusion. For the moment I don’t invest in it regularly, but I will probably go back to doing so… either the NZX or an Australian equities fund.
And last but not least I have a tiny $19 in Black Pearl Group an NZ tech company that was being talked about as the next Xero and so I thought it was worth a try…
Apparently the secret to success when it comes to individual company investing is to diversify. Have shares of lots of companies and if you’re lucky one or two will do and make up for the losses you’ll make on all of the rest…. And that is why JL Collins recommends the simpler path which is low cost broad based index funds. And he will undoubtedly be proven right.
So anyway, all this to say… investing is a lot easier than it sounds.
Or at least it has been so far.
Opening a Smartshares account – easy.
Setting up a fortnightly auto-invest – super easy.
Setting a fortnightly transfer from mybank account to Smartshares – easy peasy.
Of course 2023 was a great year. So the hard I am sure is yet to come – who knows how I will feel the day I wake up to find my investments are now worth half what they were yesterday.
That will be the true test of my investing calibre – not picking the right ones, (apparently a monkey can throw 50 darts at a board of the S&P 500 and do well) but staying the course when the market gets rocky.
The best thing that could happen to my investments right now?? A market crash!
Because what I really need to know is not how I invest when the markets are strong (which they have been for the majority of 2023 – the S&P Top 500 returned a whopping 24%) but how I will react in a crash (a decline of 20%), or dare I say it, even a black swan event! (in the great depression stock markets plunged by 90%!)
Amy
XO$
