My Investment Thoughts – Past, Present and Future
Considering we are personal finance bloggers, I was relatively late to the investments game. Into my late mid to late 20’s I had a pretty decent chunk of debt that I wanted to pay off, and I was figuring out how to be responsible with my money. Like many people, I didn’t have any financial guidance coming from parents. Growing up we were certainly not well off, we didn’t go without, but there were very few “extras”. My impression of a retirement plan was that my father had a great pension from his job in public transit. I knew about stocks, but didn’t really realize they were accessible to the common person – only Wall Street types with pinstripe suits and slick haircuts. When we met Sarah more responsible with money than I was, which was an influence on my behavior in our early dating years.
With my debt paid off, rings on both of our fingers and a deposit on a house – I started to think about investments. My view of investing has changed drastically over the past decade – and now I’m looking to the future to try and figure out what I want my portfolio to look like. I’m not going to focus that much on the present. After all between the past, present and future the present is by far the shortest amount of time.
My first dip into the investment world was a small mix of a GIC and some mutual funds. I stayed away from the stock market (even though some of my mutual funds were tied into stocks), as I had this lingering impression that investing in stocks was for super wealthy business people. That said I found the concept of the stock market wildly entertaining. I’ve written about this before. In high school one of my classes was part of a competition (I believe it was run by one of the major newspapers) involving the stock market. We were enrolled on a website and each student received some fake money. I believe it was around $10,000.00 or so.
We would purchase as many stocks as we wanted and build a portfolio. Over the course of the competition you could go in and do as many transactions as you wanted (no fees…VERY realistic) and at the end the student with the highest portfolio value won $10K in real money. Unfortunately I didn’t win, but I did quite well. The whole experience didn’t change my impression of actually investing in the market – I saw it like playing the game of Risk vs being in an actual world war. I could play the game but thought the real life version was for others.
Self Directed Investments
Sarah was the first out of the two of us to sign up for a self-directed investment account through our bank. I was resistant to the idea as I was worried about heavy fees for buying and selling stocks that would eat up any potential gains. After several months, I decided I wanted in. My first purchase was in late 2013 – a telecom stock. My thought was that the company was well established and was low risk for a major meltdown. The stock had a consistent performance history, and paid out a wonderful thing called a dividend! I was almost instantly a dividend junkie. I got over my fear of constantly paying fees by picking purchases that I’d be willing to hold on to for a long time and that paid dividends.
I’m quite satisfied with how my investments have done. I feel like I’ve made some great choices (some not so great) and I have a solid base to build on. My bank and telecom stocks have met expectations and are seeing a 13% average annual return, while my ETFs (Exchange Traded Funds) are slowly building steam. There is one ETF I have that I purchased back in mid-2014 that has been a dud. I only invested about $640 in it but it after $44 in total dividends the overall profit is only $24.00 which is 1% growth per year. You can get a savings account that offers a better rate than that! Sarah has urged me to ditch it which I’m strongly considering more and more as I write this post.
As satisfied as I am with the returns I’ve received (for the most part) and the balance of my investments I know I have some focusing to do. With a substantial cut in income and a growing family, we have much less available for investments. I see what is rocking in my investments, and I know what is dragging me down. I’ll be disappointed with myself if I still have money in these duds 5 years from now. I need to start working towards what I want to see.
I know that I am very interested in proceeding with great dividend stocks. Generally speaking, stocks that pay great dividends don’t see as substantial growth. The company is paying more to investors and less reinvestment in the business. I like to find that balance between solid growth and respectable dividends. High Risk/High Reward doesn’t interest me when not using play money. I’m happy with a minimum annual return of 6%, and would like an average of around 10%. I’m not expecting that on a consistent basis as the market tends to have peaks and valleys – but I think that percentage is achievable with some educated movements.
To make the moves I need to make I know I’ll incur some additional fees, which I hate. I have to look at these fees as an investment in making smarter choices. I know it is going to hurt for a while, but as soon as the improved performance makes up for the initial cost I’ll feel better. Here’s to the future!
Have you ever done a complete refocus on your investments – was it a relief or a nightmare?